Medicare Advantage Fraud: Heat on Justice Dept. to Investigate
Policy + Politics

Medicare Advantage Fraud: Heat on Justice Dept. to Investigate

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The way the federal government calculates benefits for the Medicare Advantage program has been under scrutiny for years—with reformists and health policy experts claiming that the formula used to calculate benefits can be easily inflated and potentially wastes billions of tax dollars a year.

Criticism of Medicare Advantage’s rating system, which determines how much the government spends on each beneficiary, has just ratcheted up, with at least two high-ranking senators calling on the Justice Department to investigate the program.

Related: Medicare Advantage Has a Multi-Billion Dollar Program

Sens. Claire McCaskill (D-MO), the ranking Democrat on the Senate Committee on Aging, and Senate Judiciary Committee Chairman Chuck Grassley (R-IA) have separately asked newly appointed Attorney General Loretta Lynch to investigate fraud within the $150 billion Medicare Advantage program, the Center for Public Integrity first reported.

The senators, as well as most critics, cited the “risk score” rating system used to calculate benefits as a vulnerability that makes the program susceptible to abuse.

The Government Accountability Office recently joined the growing chorus of critics saying that the so-called risk score is easily manipulated and can result in fraudulent payments.

The risk score rates how healthy or sick patients are. The rating determines how much money the government pays into the plan. The sicker the patient, the higher the score. The higher the score, the more money Medicare Advantage spends on them.

The problem is, critics say, doctors can exaggerate the risk scores to seek more money from the program.

Related: $8 Billion Wasted on Medicare Bonus Program 

The GAO estimated that the government doled out about $12 billion in improper payments in 2014—with some of those payments being made because of the formula that was used.

An internal study commissioned by the federal government in 2009 but made public earlier this year through a Freedom of Information Request by the Center for Public Integrity concluded that risk scores were being inflated at an alarming rate.

It reviewed the growth in risk scores from 2004, when the formula was first used, to 2008. The researchers said during that time risk scores for Medicare Advantage patients grew twice as fast as those in traditional Medicare.

One piece of the study looked at rates for people with diabetes and found that twice as many people reported having diabetes with health complications if they were enrolled in Medicare Advantage, compared with those enrolled in traditional Medicare. The researchers concluded that the formula had overstated how sick patients actually were, which “resulted in inappropriate payment levels.” 

Related: Health Plans Undergo Major Changes to Cut Costs

Now, lawmakers wants more information about what the government is doing to combat the potential abuse of the program. McCaskill sent a letter to the Centers for Medicare and Medicaid Services (CMS) administrator Andrew Slavitt, asking for details on the steps the agency is taking. 

"With fraudulently inflated risk scores potentially costing taxpayers billions of dollars every year and resulting in less money in the Medicare Trust Funds for our seniors, this is an issue that must be investigated further," the letter said. “Time and again we've seen whistleblowers allege outright fraud when it comes to risk scores, and to me that's a sign there's simply not enough oversight taking place.” 

Separately, Grassley sent a letter to Lynch and CMS last week asking that the Justice Department to crack down on the alleged fraud within the program. The Senator included a number of questions for both CMS and Justice about how they are working together to ramp up oversight of the program and improve fraud prevention. He also asked how many risk score audits CMS has conducted each year, how much the government has overpaid because of the formula and how much CMS has recovered via settlement or other measures. 

"If the reports of abuse are true, CMS should increase its auditing practices,” Grassley said. “Safeguards become all the more important as Medicare Advantage adds more patients and billions of dollars of hard-earned taxpayer money is at stake.”

Grassley asked the agencies to respond no later than June 3.

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