The Health and Human Services inspector general takes on a $400B program

Managed care. It's a substantial part of the gigantic Medicare program. The Centers for Medicaid and Medicare Services figures half of Medicare enrollees gets h...

Managed care. It’s a substantial part of the gigantic Medicare program. The Centers for Medicaid and Medicare Services figures half of Medicare enrollees gets health care from the Medicare Advantage program. In the words of the Health and Human Services Office of Inspector General, the growth of managed care has transformed how the government pays for and covers health care. This for 100 million people. That’s why the IG has made managed care a top priority. For more on its new strategic plan, Federal Drive Host Tom Temin spoke with the Senior Adviser for Managed Care in the OIG’s Office of Audit Services, Carolyn Kapustij.

Interview Transcript: 

Tom Temin And so this is a $400 billion expenditure. Maybe if you would just give us the brief explanation of how managed care is defined under Medicare versus the rest of the care that is paid for.

Carolyn Kapustij Oh, sure. So managed care, which most of us are familiar with, is an attempt to manage costs and provide better, more coordinated care through a health plan. In the Medicare population. Medicare Advantage has emerged as the predominant form for coverage for beneficiaries, and Medicare Advantage allows beneficiaries to choose a plan to provide their coverage. In turn, the Centers for Medicare and Medicaid Services pay a set amount each month per member per month to the plan to provide that care for people. The plan then takes on the responsibility of setting up a provider network, and the plan will then enter into arrangements to pay for the care that the enrollee receives.

Tom Temin Again, it adds up to $400 billion a year, the payments for Medicare Advantage. What are some of the issues here that you think the OIG is concerned with and that are driving the strategic plan for auditing it and watching it?

Carolyn Kapustij Sure. So there are a couple trends we have observed in this area and that we have done work on. One of them has to do with prior authorization and denials of prior authorizations. And what that amounts to is an enrollee goes to the provider and the provider has to get prior authorization or approval from the plan to provide that service. And we found in our report that in 13% of those cases, plans denied the service that actually met the Medicare coverage rules. The work receives some attention and clearly there was a congressional hearing. Legislation was introduced and CMS is looking at regulatory action. We’ve also, by the way, seen the same issues in Medicaid managed care in our work we did on that, we saw that 12 plans had a denial rate of over 25%.

Tom Temin That’s kind of the opposite then of the fraudulent type of activity where people try to get paid for what they did not do, which is another branch of, you know, auditing. This is where they would get paid back if they went ahead and authorized this. So then the angle then is the denial of legitimately earned care on the part of the patient here.

Carolyn Kapustij I guess another way to put that is that it’s a planned way to control costs. But in these cases, the enrollees are not receiving services that they potentially need.

Tom Temin Got it. So this would be under like a fixed cost system that they’re getting reimbursed for. They’re trying to give as little service as they can get away with in some of those cases.

Carolyn Kapustij That could be. Our work did show that, you know, that 13% of cases, the plans denied services that should have been covered by Medicare.

Tom Temin All right. So in your strategic plan, then, what are the major elements that you’re going to be looking at over the next few years and how are you going to go about it?

Carolyn Kapustij Our strategic plan is we have three main goals. One is to promote access to care, which has to do with things I just talked about. Beneficiaries are enrolled in these programs. They have the right to receive care. They have the right to be able to find a doctor and to be able to get that care. The second is to provide comprehensive financial oversight. There’s an incredible amount of money going to the Medicare Advantage program, over $400 billion. And we want to make sure the taxpayers receive value for that and that enrollees receive the care they need. One major part of the financial oversight has to do with how plans are paid, a system called risk adjustment. And that just means plans receive a higher amount to cover sicker beneficiaries. That was instituted in order to avoid cherry picking and for plans to be able to cover these people. However, what we’ve seen is there has been some inaccuracy as in that. We’ve conducted 28 audits of plans and we have identified $377 million in overpayments. That is that the plans could not substantiate that the enrollee did have that condition that they reported for payment. One focus of these audits is what we call a high risk diagnosis, and those are some things that we found to be especially prone for error and just honing in on those across the board as we found an error rate of 69%.

Tom Temin Yikes.

Carolyn Kapustij That is, there are certain problems that, you know, plans need to be looking for and should be addressed. Another similar component and risk adjustment that we’ve done work on is related to what we call health risk assessments and chart review and what that means in a health risk assessment. A plan will send a person into an enrollees home. Or maybe do it over the phone and assess what conditions that person has. Chart review in a similar vein is going back and looking through the medical record to find diagnoses that were never submitted on claim for payment. But the OIG work has shown that there are 9.2 billion in payments that were solely related to diagnoses reported on health risk assessments or chart reviews. What that means is there were no other services submitted for the year for that enrollee, which raises some questions. If the diagnosis is indeed accurate, then what is the plan doing to provide services for these beneficiaries?

Tom Temin Sure. Yeah. If they had a horrible diagnosis and they only went in for one appointment, you got to wonder, well, what happened with the rest of the patient, or was that diagnosis correct? We’re speaking with Carolyn Kapustij. She is senior advisor for managed care in the Health and Human Services Office of Inspector General’s Office of Audit Services, and to execute this audit plan over the next few years. How are you reorganizing? Are you putting more auditors on it? I mean, there’s a PowerPoint on it, but there’s more to it than a PowerPoint.

Carolyn Kapustij So we are having coordinated meetings. We’re trying to use all of our resources to address this, and we’ve made it a priority outcome. I will say it is a challenge. As you know OIG’s budget is we only get two cents to oversee every $100 that are spent on HHS programs.

Tom Temin Right. So the plan then is maybe just to focus the staff. Here’s where we want you to be looking.

Carolyn Kapustij We’re still working through that. But IG has designated this as a priority for us to focus our resources on.

Tom Temin I imagine there’s a lot of congressional interest in this also.

Carolyn Kapustij Yes, there has been more congressional interest as of late, I believe, just due to the sheer increase in enrollment. Managed care has been a popular topic on the Hill.

Tom Temin And when you look at the managed care industry, maybe briefly characterize that for us. I mean, there’s some large national health care plans that offer Medicare Advantage, but there’s a lot of smaller ones. And is it possible to know where most of the issues occur, whether they’re large or small, or does that really play a role here? Is that really a factor?

Carolyn Kapustij That’s an interesting question, and I think more research would be needed to kind of identify the answer to that question. But again, we’ve done a lot of work in this area. Another one of our goals is to promote data accuracy and data driven decisions. And we have found that in some cases the data simply is not available. The data is incomplete or not even set up for reporting, and that kind of makes it challenging.

Tom Temin But still, it must be daunting thinking about the volumes of dollars that you’re looking at here. You mention in one case there were 9.2 billion payment transactions, and it must be daunting to have these numbers of transactions in dollars to get at the heart of what’s happening at the individual level.

Carolyn Kapustij It is daunting, but we have a wonderful, experienced staff of auditors, evaluators and investigators and counselors to really look at what’s going on. One interesting thing that our investigators have investigated and discovered is oftentimes there will be fraud scheme to start off in the fee for service program and they later move into the Medicare Advantage program. Once the issue is addressed in one program, it moves to another. There was a nationwide orthotic brace scam, and we saw a claims drop 9% for those. But after they stopped submitting them in fee for service in the same brace submission of the claim for payment for that increased by 22%. That’s another thing to keep in mind is just all the areas where there can be room for fraud, waste and abuse.

Tom Temin Right. Yes. So CMS, HHS has lots of doors and the bad guys will keep trying a door till they can find a way in after you’ve locked up the last one.

Carolyn Kapustij There are always emerging areas, and that’s part of our strategic plan too, is that as the program evolves and grows, our oversight has to evolve and grow and become more sophisticated. We take that very seriously to try to keep up and try to identify where the next area of risk will be.

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