OIG Audits Add to Debate Over Extrapolation in Recovering MA Overpayments

As the Medicare Advantage industry draws attention for millions of net overpayments identified in a recent Kaiser Health News report on audits conducted by CMS, the HHS Office of Inspector General in two new reports seeks to recover estimated MA overpayments for inaccurate diagnosis codes. Separate from the contract-level Risk Adjustment Data Validation (RADV) audits used by CMS to verify the accuracy of MA organizations’ risk adjusted payments, the OIG audits may further support the notion that MA plans are overpaid. They also exemplify insurers’ fierce opposition to the use of sampling to approximate a plan’s true payment error rate.

In two reports released last month by the OIG’s Office of Audit Services, auditors found that most of the selected high-risk diagnosis codes submitted by the two MA sponsors did not comply with federal requirements. The reports determined that, based a sample of enrollee records, the government overpaid Blue Cross & Blue Shield of Rhode Island (BCBSRI) and California Physicians’ Service, Inc. (CPS) by roughly $4.9 million and $2 million, respectively, and recommended that they return the estimated overpayments. Additionally, OIG advised that the insurers should identify similar instances of noncompliance and submit associated overpayments, and that they should examine and improve their respective compliance procedures.

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