The Second Opinion

A FOIA find for CPI: Government study identified inflated payments in Medicare Advantage

March 16, 2015

Fred Schulte of the Center for Public Integrity has been covering concerns about waste, fraud, and abuse in the Medicare Advantage program since last June. His latest story suggests that the federal government has been aware of problems for a lot longer than that—and it reminds us why reporting on Medicare, which has largely fallen out of the news cycle, remains important.

In a three-part series last summer, Schulte and his CPI colleagues showed how some sellers of Medicare Advantage plans have taken advantage of the program’s structure to overcharge the government. Under the program, the federal government pays the plans a set fee each month based a “risk score” which measures how sick each patient is. Sicker patients mean higher payments, and some insurers have figured out how to game the system and inflate those risk scores. From 2008 to 2013, “improper” payments amounted to $70 billion, mostly due to overbilling, according to CPI’s coverage.

On Friday, Schulte reported that at least some in the government have been aware of these issues for years. A 2009 study commissioned by the Centers for Medicare and Medicaid Services found that Medicaid Advantage risk scores began rising in 2004, and that between 2004 and 2008 enrollees’ scores grew twice as fast as they would have had the same person remained in traditional Medicare—and that it was “extremely unlikely” the MA patients were actually getting that much sicker. The coding inflation resulted in “inappropriate payment levels,” in the words of the report—or “widespread billing errors and overcharges that have since wasted billions of tax dollars,” as Schulte puts it.

The CMS report was never published on a government website. CPI obtained it through a Freedom of Information Act request.

If the overbilling concerns have been known for so long, why do they persist? Schulte’s coverage explains that, too. Medicare Advantage is popular with many seniors, and the insurance industry lobbies hard for the program, often through “grassroots” efforts like a recent “food truck” promotion that drew visits from Sens. Mark Warner and Orrin Hatch. In past years, these lobbying efforts have helped turn proposed rate cuts into increases, and there is bipartisan support in Congress for the status quo.

Sustained coverage of this issue, from CPI and other outlets, is important because we’re in the time of the year when CMS sets annual payment rates to MA plans. The government has proposed a 2016 plan that, taking rising risk scores into account, would boost payments just over 1 percent. The Obama administration has also proposed $36 billion in cuts over the next decade. Congress is pushing back: Sen. Chuck Schumer, a Democrat, drafted a bipartisan letter to call for “maintaining current payment levels,” and House and Senate Republicans sent their own letter. This kind of lobbying is hard for an agency to ignore.

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The debate over Medicare Advantage—and the apparent disinterest in overbilling concerns from some quarters—is also important in the broader context of Medicare’s future. Paul Ryan’s budget plans haven’t made headlines in awhile, but in a year-end interview the chair of the House Ways and Means Committee said, “the best days are yet ahead on comprehensive Medicare reform and premium support. It’s an idea whose time is coming.” That’s a reference to plans that could make traditional Medicare look a lot more like the Obamacare exchanges—saving the government money, and likely making many seniors and disabled people pay more for their healthcare.

So much of Congress thinks payment cuts for Medicare Advantage should be off the table, but if Ryan is right, big changes to regular Medicare may soon be back on. We’ll need some connect-the-dots coverage about where Washington chooses to cut costs, where it doesn’t, and what the consequences are. It’s time to resurrect Medicare as a story for press scrutiny.

Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for CJR's Covering the Health Care Fight. She also blogs for Health News Review and the Center for Health Journalism. Follow her on Twitter @Trudy_Lieberman.