Government Auditor Finds Billions in Improper Payments to Medicare Advantage Plans Coupled with Inadequate Oversight by Federal Regulator

This week the General Accounting Office (GAO) issued a report entitled “Medicare Advantage: Fundamental Improvements Needed in CMS’s Effort to Recover Substantial Amounts of Improper Payments.  The report states that the Centers for Medicare & Medicaid Services (CMS) estimates that about 9.5% of its annual payments to Medicare Advantage (MA) organizations were improper – totaling $14.1 billion in 2013 alone – “primarily stemming from unsupported diagnoses submitted by MA organizations.” This plan-initiated billing practice is commonly referred to as “upcoding” when an MA plan reports an enrollee as being more sick than they actually are in order to obtain a higher risk-adjusted payment from the Medicare program.  The report also highlights the significant flaws in CMS’ current efforts to address and recoup such payments.

The Center is deeply troubled by these ongoing improper payments to MA plans and CMS’ lack of progress in recouping previous payments and deterring future misconduct.  In an NPR story about the GAO report, “GAO Audit: Feds Failed To Rein In Medicare Advantage Overbilling” (May 9, 2016) the Center is quoted as stating: “We hope that policymakers who protect MA (Medicare Advantage) profit at all costs, while at the same time often proposing to shift more costs on to the majority of beneficiaries in traditional Medicare, take heed of this GAO report and ensure that the recommendations are implemented.”