More MA Insurer Audits Mean More Scrutiny on Providers

Modern Healthcare | By Lauren Berryman
 
Tougher audits of Medicare Advantage insurers could lead them to more stringently review the patient codes providers submit and the physician-enablement companies that help clinicians take on patient risk.
 
That may dampen the already cool market for value-based primary care startups and digital health businesses, and intensify contract disputes between insurers and companies such as Oak Street Health and Agilon Health, said Jason Silberberg, a partner at Frier Levitt’s healthcare litigation section and co-chair of the law firm’s value-based care litigation group.
 
“Medicare Advantage organizations are going to do whatever they can to try and offset the major losses they're going to take onto the providers,” said Silberberg, who primarily represents providers. “One way I could perceive that happening is them effectively pushing the fraud narrative on the providers.”
 
On Feb. 1, the Centers for Medicare and Medicaid Services is slated to finalize the Risk Adjustment Data Validation rule, which would increase the amount of overpayments Medicare Advantage insurers must return to the government. Private Medicare carriers generated an estimated $17 billion through overpayments last year, according to a report the Medicare Payment Advisory Commission, a federal expert panel that makes policy recommendations to Congress, issued this month.
 
The insurance industry is gearing up to fight the policy. Industry lobbying group AHIP, which declined to comment, reportedly would sue if the rule were enacted as-is. Medicare Advantage heavyweights Humana, CVS Health's Aetna and Centene have also signaled they would fight the regulation in court.
 
The Alliance of Community Health Plans called on CMS to reopen the comment period on the rule, which has been pending since 2018. “The comments that [CMS is] using for this rulemaking are now several years outdated and therefore require additional review and new consideration,” said Michael Bagel, associate vice president of public policy for the Alliance of Community Health Plans, a trade group for nonprofit insurers.
 
Insurers could ask a court to stay the regulation, which would delay implementation, Silberberg said. But the sue-to-stop strategy has not been successful so far, he said. The Supreme Court dealt the industry a blow in June when it declined to hear UnitedHealth Group’s challenge to a regulation that makes Medicare Advantage insurers liable for False Claims Act lawsuits when they fail to return overpayments. That opened the door to more Justice Department lawsuits against Medicare Advantage carriers—and providers.
 
Companies such as Oak Street Health and Agilon Health bear the greatest legal and financial risk if the Medicare Advantage audit process changes, Silberberg said.
 
Insurers typically pay these risk-bearing providers flat, monthly rates to cover members’ anticipated expenses. Providers that take care of sicker patients, and document more risk codes, receive higher capitated rates. These companies therefore have a financial incentive to capture as many codes as possible, and potentially to exaggerate patient conditions, Silberberg said. Insurers that ink shared savings agreements with these companies often also dispense bonuses when they help reach savings targets.

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