HHS Investigation Finds Medicare Insurers Drew $9.2 Billion Through Controversial Billing Practices

One company received approximately $3.7 billion while enrolling only 22% of Medicare Advantage customers.

Medicare insurers collected $9.2 billion in federal payments in 1 year through controversial billing practices, with most of the money going to 20 insurers, according to a report from the HHS Office of the Inspector General (OIG).

The billing practices and the findings were reported in The Wall Street Journal.

The OIG report found the 20 companies drew 54% of that total while representing 31% of enrollment. The other 46% was distributed among 142 companies that collectively enrolled 69% of the Medicare Advantage (MA) membership.

According to the report, insurers use certain procedures to document health conditions and determine how much they get paid, and the focus of the investigation was how insurers specifically in the MA program document diagnoses for enrollees. The inspector general suggested insurers may be altering the process to boost federal payments. The federal government pays the companies based on the health status of their patients, meaning patients with more, and more serious, diagnoses generally pay more for their health plans.

Among the 20 companies that collected more than half of the $9.2 billion, 1 company received approximately $3.7 billion, or 40% of the payments, while enrolling only 22% of Medicare Advantage customers. The unnamed company also generated about 58% of the payments in the analysis drawn by health-risk assessments. According to the OIG, the company’s share was particularly large in payments tied to certain diagnoses, such as respiratory arrest, protein-calorie malnutrition, and major depressive, bipolar, and paranoid disorders.

The report did not state the name of the company, but the Wall Street Journal reported that analysts at BMO Capital Markets compiled federal data to determine the company is likely UnitedHealth Group Inc. According to the analysts, the Journal said, the enrollment share closely matched that of UnitedHealthcare during the 2016-2017 period covered in the report.

CMS responded to specific recommendations within the report, but in sum said the agency said it is continuing to monitor how insurers assign diagnoses and the patterns outlined by the OIG would make certain insurers subject to audit.

The investigation focused on 2 potential strategies MA companies have used to tally diagnoses:

  • The insurers or their contractors reviewed patients’ charts for evidence of diagnoses, but doctors did not specifically flag them
  • Health-risk assessments (HRAs) were conducted by the vendors in patients’ homes

Both strategies are technically allowed under Medicare rules, however the report focused on diagnoses generated using these strategies that were not found in the insurers’ records of services rendered to patients, implying that patients did not get care tied to these diagnoses. The report stated that these findings “raise concerns about the extent to which certain MA companies may have inappropriately leveraged both chart reviews and HRAs to maximize risk-adjusted payments.”

While these concerns are longstanding, the focus of federal prosecutors and investigators’ focus on industry practices has increased in recent years.

In total, more than 26 million people are enrolled in MA in 2021, a Kaiser Family Foundation analysis said in June. The number accounts for about 42% of all Medicare beneficiaries and increased by 11% from 31% in 2016.