On September 20, 2021 the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG) issued a report suggesting that certain Medicare Advantage (MA) companies were leveraging chart reviews and health risk assessments (HRAs) to increase higher risk-adjusted payments. While not concluding that there was any wrongdoing, OIG encouraged the Centers for Medicare and Medicaid Services (CMS) to:

• provide oversight for the twenty MA companies that had a disproportionate share of risk-adjusted payments from chart reviews and HRAs;

• take additional action to determine the appropriateness of the payments, particularly with respect to one unnamed MA company; and

• perform periodic monitoring to identify MA companies that had a disproportionate share of risk-adjusted payments from chart reviews and HRAs.

This OIG report is especially noteworthy because both OIG and the U.S. Department of Justice (DOJ) have indicated that MA plans are a priority focus for False Claims Act enforcement. MA companies thus are well advised to prepare for additional government scrutiny.

Background

Under the MA program, CMS pays MA companies a monthly per person amount for each beneficiary enrolled in the MA company’s plan to reflect the expected cost of providing care to the beneficiary. Through a risk-adjustment program, the per beneficiary fee is adjusted to account for beneficiaries who need a costlier level of care because of their health condition. Risk adjustment payments are made based on beneficiary diagnoses. MA companies report to CMS the beneficiaries’ diagnosis based on the services provided to the beneficiaries as supported by the medical record. Typically, diagnoses are reported through the Risk Adjustment Payment System or the Encounter Data System where the services provided are reported. In addition, MA companies may perform chart reviews, in which an MA company reviews the medical record to identify diagnoses not captured by the services reported to add diagnoses. MA companies also perform HRAs, , which are often used as a tool for early identification of health risks to improve outcomes or identify gaps in care, to report or update diagnoses not reflected in the medical record. . Certain MA companies also  doing home visits to conduct HRAs to capture diagnoses for risk adjustment purposes in circumstances where  home visits are not related to the provision of treatment or follow-up care.

Report Findings

In the study, OIG found that twenty MA companies were disproportionately paid risk-adjusted payments based on diagnoses found on the chart review or HRAs that were not reflected in the reports of services provided, and thus were the sole source of the diagnosis. Risk-adjusted payments based solely on chart reviews and HRAs totaled $9.2 billion and twenty MA companies received a disproportionate share of the payments than would be suggested by number of enrollees. The enhanced risk-adjusted payments from the chart reviews or HRAs from those twenty MA companies generated payments that were more than 25% higher than their share of enrolled MA beneficiaries. OIG reported that these twenty companies generated 54% of the risk-adjusted payments solely from chart reviews or HRAs but they  only had 31% of the MA beneficiaries enrolled in their plans.

OIG indicated in the report that it has previously indicated potential concerns about the use of chart reviews and HRAs for risk-adjustment purposes. In 2017, OIG found that $2.7 billion of risk-adjusted payments resulted from diagnoses found in chart reviews that were not reflected in the reported service data and $2.6 billion resulted in increased risk-adjustment payments from diagnoses not found in the reported encounter data.

OIG further found that twelve health conditions accounted for two-thirds of the risk-adjusted payments that resulted solely from chart reviews and HRAs for the twenty MA companies. The leading diagnoses found only in chart reviews or HRAs that led to the increased risk-adjusted payments, included Vascular Disease; Major Depressive, Bipolar, and Paranoid Disorders; Diabetes with Chronic Complications; Chronic Obstruction Pulmonary Disease; Morbid Obesity; and Congestive Heart Failure.

In the report, OIG further noted one unnamed MA company stood out in its use of chart reviews and HRAs to obtain higher risk-adjusted payments. As stated  above, the OIG study does not conclude there was any wrong-doing. It may just be the twenty MA companies have utilized legally available methods to accurately capture diagnoses that their enrollees had. All the same, OIG does raise the concern that certain MA companies “may be using both chart reviews and HRAs more than others to maximize risk-adjusted payments inappropriately.” The report adds that the

“…findings also reinforce the three types of potential concerns identified during prior work on chart reviews and HRAs: (a) a data integrity concern that MA companies are not submitting all service records as required; (b) a quality-of-care concern that beneficiaries are not receiving needed services to address diagnoses identified on these mechanisms; and (c) a payment integrity concern that if diagnoses are inaccurate or unsupported, the associated risk-adjustment payments could then be inappropriate.”

OIG Recommendations

The OIG recommends that CMS perform oversight of the twenty MA companies. The report encourages CMS to assess:

• whether there are quality of care concerns regarding beneficiaries for whom there were diagnoses reported only on chart reviews or HRAs (i.e., whether the lack of additional service records for some serious conditions raises concerns about the adequacy of care provided);

• whether MA companies are submitting records for all services for beneficiaries with diagnoses reported only on chart reviews or HRAs; and

• whether the diagnoses reported solely on chart reviews or HRAs submitted by the twenty MA companies are accurate.

OIG further recommends that CMS focus specifically on the one MA company that was the most significant contributor to increased risk-adjustment payments based solely on chart reviews and HRAs. Finally, OIG also recommends that CMS undertake periodic monitoring to identify MA companies that had a disproportionate share of risk-adjusted payments from chart reviews and HRAs.

CMS’s Response to Report

The report attached CMS’s comments on OIG’s report. CMS indicated that it neither agreed nor disagreed with OIG’s recommendation, but that it would take them under consideration. CMS pointed out that it does valuation audits to verify the accuracy of diagnoses reported by MA companies. CMS further noted it has issued guidance to MA companies concerning the proper use of chart reviews and HRAs. CMS acknowledged concerns with HRAs conducted in a beneficiaries’ home by some MA companies primarily to gather diagnoses rather than to provide treatment or follow-up care.

What this Means for MA Companies

The OIG’s report reflects a trend of increased government scrutiny of MA plans. As we have detailed before, OIG and DOJ leadership have expressly stated that their enforcement priorities include MA plans that, in the government’s view, improperly manipulate the risk adjustment process. This enforcement focus is resulting in enforcement actions. Earlier this month, for example, DOJ intervened in a False Claims Act qui tam suit against Independent Health Association and related defendants, alleging that they coded conditions that were not documented in a the patient’s medical record in order to inflate risk scores, causing increased payments.  

MA companies should proceed with care in this environment of heightened scrutiny. That said, the OIG report acknowledges that it did not find any particular wrong-doing. There is nothing inherently suspect with MA companies conducting chart reviews and HRAs that result in accurate risk adjustments. Thus, although MA companies should engage in robust compliance efforts, they also should be ready to defend their perfectly legitimate activities against unfounded accusations.