2022 Medicare Advantage Audit Report Reflects Modest Penalties, Familiar Failures

There wasn’t much to be gleaned from CMS’s latest annual report on program audits of Medicare Advantage and Part D sponsors, and CMS wants it that way. According to the 2022 Part C and Part D Program Audit and Enforcement Report, published on July 18, just three MA insurers received a civil monetary penalty as the result of a program audit last year, with the average CMP around $21,000 — compared with an average of $65,247 in 2021 and $200,000 in 2019. CMS in the report said the amount of the CMP “does not automatically reflect the overall performance of a sponsor” and, similar to last year, warned against reaching “broad conclusions about the significance of deficiencies or performance across” the MA, Part D or Medicare-Medicaid Plan (MMP) programs.


News Briefs: CMS in 2022 Issued $200,000 in Fines for One-Third Financial Audit Findings

Only three Medicare Advantage insurers received a civil monetary penalty (CMP) as a result of a program audit last year, according to the 2022 Part C and Part D Program Audit and Enforcement Report published on July 18. CMPs based on 2022 program audit referrals totaled $63,220, and another $200,000 in fines stemmed from one-third financial audit findings. By contrast, the previous audit cycle resulted in approximately $1 million in CMPs issued based on 2021 referrals, and nearly half of that amount related to one-third financial audits. The latest audit cycle included 291 contracts under 25 separate parent organizations covering approximately 33.6 million, or 62%, of beneficiaries enrolled in the Parts C and D programs. CMS in the report said the amount of the CMP “does not automatically reflect the overall performance of a sponsor” and that the summary of findings is “not intended to reflect overall industry performance and should not be interpreted to mean that there are pervasive issues throughout the industry related to the noncompliance we identified.”


Facing Familiar Legal Challenges, NYC Must Put Aetna Retiree Plan on Hold

The City of New York and its retirees this month are experiencing déjà vu, and CVS Health Corp.’s Aetna is caught in the middle. The health insurer was slated to begin serving retired municipal workers and their eligible dependents on Sept. 1 via a Medicare Advantage PPO plan. But thanks to the latest court order in a years-long series of setbacks, the city’s plan to privatize retiree health coverage again is on hold.

Led by Mayor Eric Adams (D), the city was initially supposed to transition some 250,000 retirees and dependents to a private Medicare plan administered by Elevance Health, Inc., in January 2022. The move was delayed by a petition from retirees, and state Supreme Court Judge Lyle Frank ruled that the proposal violated city law by charging retirees $191 per month to maintain their fee-for-service Medicare coverage. Amid the legal challenges, NYC Comptroller Brad Lander declined to register the contract. After Elevance backed out of the deal, the city struck an agreement with Aetna to make its PPO plan the only premium-free coverage option.


CMS Treats MA Plans to Suspension of Auto-Forward IRE Data in Stars Calculation

In an effort to improve Medicare Advantage and Part D sponsors’ timeliness in processing Parts C and D coverage requests, CMS several years ago launched the Timeliness Monitoring Project (TMP) and began issuing fines to Part D plans with excessively high rates of “auto-forwarding” to the Independent Review Entity (IRE). And while CMS historically deducted one star from the appeals measure-level ratings based on IRE data integrity issues, the TMP also resulted in a scaled reduction intended to reflect the severity of the plan’s failures. Now, CMS is relieving MA organizations of that penalty by suspending the collection of Part C Organization Determinations, Appeals and Grievances (ODAG) universes for non-audited organizations that impacted the appeals measures.

Parts C and D sponsors are required to notify enrollees within specific time frames of their decisions on a coverage determination or redetermination. When plans miss that window, it’s considered an adverse decision, and sponsors are expected to automatically forward the case to the IRE within 24 hours. There are two Part C Star Ratings appeals measures that rely on data submitted to the IRE:


Experts Urge Strict Vendor Vetting Amid Reports of Trouble With ‘Papa Pals’

As health insurers increasingly try to address members’ social needs, some have turned to the company Papa Inc. to help tackle the problem of loneliness and isolation among seniors. Papa works by pairing homebound, elderly individuals with “pals” who provide companionship and help with daily tasks. But in certain cases, those interactions go terribly wrong — resulting in thefts, sexual harassment and even assaults, according to a recent Bloomberg Businessweek report in which the publication reviewed complaint reports.

One incident — in which a Capital District Physicians’ Health Plan (CDPHP) member reported lewd behavior from a pal — led the New York-based insurer to suspend all in-person pal visits and launch an investigation of the company’s practices. Another insurer tells AIS Health, a division of MMIT, that its members speak glowingly of the service. Still, industry experts say that the allegations against Papa should serve as a stern warning that health plans must thoroughly vet all vendors that interact with their members.


News Briefs: New York Insurer Raises Red Flag About In-Home Visits From Papa ‘Pals’

After learning of a disturbing interaction between a Papa Inc. employee and a Medicare Advantage member, Capital District Physicians’ Health Plan (CDPHP) last year stopped all in-person visits from the supplemental benefits vendor and launched an investigation into Papa’s security protocols. The incident, which involved a Papa worker making lewd comments while visiting a homebound member, and CDPHP’s ongoing investigation was detailed in a Bloomberg article on May 30. After learning of the incident in early 2022, the New York-based insurer banned the “pal,” but eventually paused all future visits. Since then, it has been closely monitoring all customer service interactions to ensure the safety and wellbeing of members, a spokesperson tells AIS Health, a division of MMIT. CVS Health Corp.’s Aetna and Humana Inc. — two other insurers that have partnered with Papa — declined to comment when contacted by AIS Health.


Supreme Court Removes ‘Potent’ Defense Option for Health Care Firms Accused of Fraud

In a unanimous 9-0 vote, the Supreme Court on June 1 overturned a lower court’s decision pertaining to the False Claims Act (FCA) and allegations that two large pharmacy chains overcharged the federal government for prescription medications. Experts tell AIS Health, a division of MMIT, that the ruling is significant for health insurers because the FCA disproportionately impacts the health care industry.

The Department of Justice (DOJ), for instance, said it obtained more than $2.2 billion in settlements and judgments involving fraud and false claims for the 12 months through Sept. 30, 2022. More than $1.7 billion of that total involved the health care industry.


News Briefs: SCOTUS Sides With Gov’t in Fraud Liability Case

In a case closely watched by the health insurance industry, US ex rel. Schutte v. SuperValu, Inc., the Supreme Court on June 1 reversed an appeals court decision that would have hobbled the government’s use of the False Claims Act (FCA) to pursue fraud cases. The SuperValu case — which was consolidated with another whistleblower case, U.S. ex rel. Proctor v. Safeway, Inc. — concerned whether the two pharmacy/grocery chains knowingly filched the U.S. government by “usual and customary” prices for prescription drugs that failed to account for various discount programs. The Seventh Circuit Court of Appeals previously ruled that the companies aren’t liable under the FCA because they could prove they made an “objectively reasonable” interpretation of an ambiguous statute, regardless of whether they intended to commit fraud. But in a unanimous Supreme Court opinion, Justice Clarence Thomas wrote that FCA liability instead should hinge on “what the defendant thought when submitting the false claim — not what the defendant may have thought after submitting it.” In an amicus brief submitted in April, AHIP and the American Hospital Association warned that a ruling in favor of the government’s position in the cases would “create a Wild West of ramifications for any well-intentioned and legitimate hospital or insurance provider that seeks to serve Americans in partnership with the government.”


Proposed Rule Targets PBMs’ Medicaid Practices, Creates Pharma Pricing Audit

In a new regulation released on May 23, the Biden administration proposed increasing drug price transparency reporting by pharmacy benefit managers and pharmaceutical manufacturers supplying Medicaid — and requiring Medicaid managed care organizations to remove pharmacy benefit administration costs from medical loss ratio (MLR) reporting. Experts say the proposed rule is a marginal but meaningful step forward in prescription drug cost containment, but they add that the proposed rule won’t do as much as bills under serious discussion in Congress to rein in controversial PBM business practices such as spread pricing.

The proposed rule, which CMS says in a fact sheet “implement[s] new statutory authorities included in the Medicaid Services Investment and Accountability Act of 2019,” is meant to improve the Medicaid Drug Rebate Program by “proposing new policies that would assure greater consistency and accuracy of drug information reporting, strengthened data collection, and efficient operation of the MDRP.” Per the fact sheet, notable elements of the regulation include:


New PA Constraints May Not Satisfy Lawmakers’ Appetite for Industry Change

Over the next few years, Medicare Advantage organizations face a host of new requirements around the use of prior authorization (PA), including recently finalized policies that take effect next year. While some of the changes promulgated by CMS aim to curtail the use of PA, they’re not likely to satisfy lawmakers who are keeping a close watch on the MA industry, especially as the program serves more and more seniors.

For one, the proposed 2022 Interoperability and Patient Access Rule, which was first issued in 2020 and later updated to include MA organizations and new implementation timeframes, establishes various application programming interfaces (APIs) for the sharing of patient information. That rule also aims to automate certain PA functions with the implementation of a Fast Healthcare Interoperability Resources Prior Authorization Requirements, Documentation, and Decision API.