Quote-of-the-day mailing list
-------- Original Message --------
Subject: qotd: PacifiCare's massive Medicare Advantage fraud
Date: Tue, 18 Dec 2012 12:33:44 -0800
From: Don McCanne <firstname.lastname@example.org>
To: Quote-of-the-Day <email@example.com>
Department of Health and Human Services
Office of Inspector General
Risk Adjustment Data Validation of Payments Made to PacifiCare of
California for Calendar Year 2007
Under the Medicare Advantage (MA) program, the Centers for Medicare &
Medicaid Services(CMS) makes monthly capitated payments to MA
organizations for beneficiaries enrolled in the organizations' health
care plans. Subsections 1853(a)(1)(C) and (a)(3) of the Social Security
Act require that these payments be adjusted based on the health status
of each beneficiary. CMS uses the Hierarchical Condition Category (HCC)
model (the CMS model) to calculate these risk-adjusted payments.
The diagnoses that PacifiCare submitted to CMS for use in CMS's risk
score calculations did not always comply with Federal requirements. For
55 of the 100 beneficiaries in our sample, the risk scores calculated
using the diagnoses that PacifiCare submitted were valid. The risk
scores for the remaining 45 beneficiaries were invalid because the
diagnoses were not supported by the documentation that PacifiCare provided.
As a result of these unsupported diagnoses, PacifiCare received $224,388
in overpayments from CMS. Based on our sample results, we estimated that
PacifiCare was overpaid approximately $423,709,068 in CY 2007. The
confidence interval for this estimate has a lower limit of $288 million
and an upper limit of $559 million.
The following are examples of HCCs that were not supported by the
documentation that PacifiCare submitted to us for medical review:
* For one beneficiary, PacifiCare submitted the diagnosis code for
"spinocerebellar disease, other cerebellar ataxia." CMS used the HCC
associated with this diagnosis in calculating the beneficiary's risk
score. However, the documentation that PacifiCare provided described an
evaluation for fever and cough. The documentation did not mention
cerebellar ataxia or indicate that cerebellar ataxia had affected the
care, treatment, or management provided during the encounter.
* For a second beneficiary, PacifiCare submitted the diagnosis code for
"malignant neoplasm of the prostate." CMS used the HCC associated with
this diagnosis in calculating the beneficiary's risk score. However, the
documentation that PacifiCare provided appeared to describe suture
removal and left shoulder bursitis/tendonitis. The documentation did not
mention prostate cancer or indicate that prostate cancer had affected
the care, treatment, or management provided during the encounter.
* For a third beneficiary, PacifiCare submitted the diagnosis code for
"unspecified septicemia" (commonly referred to as "blood poisoning").
CMS used the HCC associated with this diagnosis in calculating the
beneficiary's risk score. However, the documentation that PacifiCare
provided noted that the patient was admitted for a "left total knee
revision arthroplasty." The documentation did not mention blood
poisoning or indicate that blood poisoning had affected the care,
treatment, or management provided during the encounter.
Comment: It has long been recognized that the private Medicare
Advantage plans (offered as an option to the traditional Medicare
program) have been cheating the taxpayers, initially by selectively
enrolling the healthy while being paid at rates that include a mix of
the sick, and, more recently, by gaming the process of risk adjustment
(which seeks to correct for the health status of the beneficiaries
actually enrolled by the private plans). This new report from the HHS
Office of Inspector General is helpful because it provides a perspective
of the enormity of the problem.
In one year alone (2007), one California insurer - PacifiCare (acquired
by UnitedHealth Group in 2005) - used their Medicare Advantage program
to cheat taxpayers out of almost half a billion dollars! Extrapolate
that to all Medicare Advantage plans in all states for all years, and
think of the impact this must have had on our Medicare budget.
The private insurers pride themselves on their innovations. Based on
their past behavior, we can be assured that they will continue to
innovate in opaque ways that cheat not only the taxpayers, but also the
health professionals and institutions, and, most importantly, the
patients. Without transparency, they will get away with it for extended
periods of time, with new innovations introduced as they get tripped up
on the old.
Although the Affordable Care Act calls for a reduction in overpayments
to these plans, the legislation leaves them in place. That is a terrible
We need to shut down the Medicare Advantage plans, and, while we're at
it, shut down all private insurers and replace them with an improved
Medicare for everyone. We may not be able to do that before we reach
"The Cliff," but we should start working on it immediately.