HHS-OIG MA Organization Audit Suggests CMS Overpaid $3.7 Million Due to Submission of Incorrect Diagnosis Codes
The Centers for Medicare and Medicaid Services (CMS) makes monthly payments to organizations under the Medicare Advantage (MA) program according to a risk adjustment system that depends on the health status of each enrollee. When MA organizations provide benefits to enrollees who have diagnoses that are associated with more intensive use of health care resources, they are paid more than when benefits are provided to enrollees with diagnoses that typically require fewer health care resources. The CMS bases the payments on the diagnosis codes that are collected by MA organizations from providers and are submitted to CMS.
Some diagnoses are at a higher risk of miscoding, which could result in CMS overpaying MA organizations. To assess this, HHS-OIG conducted an audit of one MA organization – MediGold – to determine if the diagnosis codes submitted to CMS for use in the risk adjustment program complied with federal requirements. HHS-OIG found that most of the diagnosis codes submitted by MediGold to CMS did not comply with federal requirements and resulted in CMS overpaying MediGold by an estimated $3.7 million for 2017 and 2018.
The HHS-OIG audit was based on seven high-risk groups and out of the 210 sampled enrollee-years, 189 diagnosis codes submitted to CMS by MediGold were not supported by medical records. As a result, for those 189 individuals, MediGold received $469,907 in net overpayments from CMS. Based on those findings, HHS-OIG calculated that MediGold received at least $3.7 million in overpayments for 2017 and 2018.
HHS-OIG found there was room for improvement in MediGold’s policies and procedures to prevent, detect, and correct noncompliance with CMS program requirements and recommended MediGold repay $2.2 million in overpayments. The recommended repayment was reduced due to federal regulations that limit the use of extrapolation in Risk Adjustment Data Validation audits for recovery purposes for payment years 2018 and beyond. As such, for the sampled enrollee-years for 2017, MediGold should repay $224,001 plus an estimated $2 million for 2018.
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In addition to reviewing and enhancing its existing compliance procedures with respect to diagnosis codes that are at a high risk of miscoding, HHS-OIG recommended that MediGold review all instances where the seven high-risk diagnosis codes have been transmitted to CMS outside of the audit period to identify overpayments and ensure that any overpayments are refunded.
MediGold disagreed with some of the findings of the audit and requested that HHS-OIG withdraw all of its recommendations. HHS-OIG said MediGold disagreed with the HHS-OIG audit methodology, use of extrapolation, the medical record review process, and standards for data accuracy. MediGold also disagreed with the findings of 30 of the enrollee-years in the draft report and neither agreed nor disagreed with the remainder. MediGold provided additional information for the 30 enrollee-years it disagreed with and after reviewing the comments, HHS-OIG reduced the number of enrollee-years in error and the amount that should be paid. The other recommendations were deemed to be valid and were not withdrawn.
The HHS-OIG audit was conducted on just one MA organization but it would appear that MediGold is far from unique. Federal audits conducted between 2011 and 2013 uncovered around $12 million in overpayments based on the 18,090 patients sampled and last year, research conducted by the University of Southern California Schaeffer Center for Health Policy and Economics estimated the CMS likely overpaid at least $75 billion in 2023.
