Earlier this year, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released the results of an audit it conducted on the accuracy of diagnosis codes submitted to Centers for Medicare and Medicaid Services (CMS) by Humana, Inc. for dates of service in 2015.
Under Medicare Advantage (MA), CMS makes monthly capitated payments to organizations participating in the program using a risk adjustment system that considers the health status of beneficiaries, which is communicated by MA organizations to CMS via diagnosis code submission. CMS then maps certain diagnosis codes, on the basis of similar clinical characteristics and severity and cost implications, into Hierarchical Condition Categories (HCCs). CMS makes higher payments for enrollees who receive diagnoses that map to HCCs.
HHS OIG used an audit approach similar to CMS’ historic Risk Adjustment Data Validation (RADV) audits, sampling all diagnosis codes submitted for 200 beneficiaries with at least 1 diagnosis code that mapped to an HCC for 2015.
OIG found that Humana did not submit some diagnosis codes to CMS for use in the risk adjustment program in accordance with Federal requirements. While most of the diagnosis codes Humana submitted were supported in the medical records, 203 HCCs were not validated and resulted in overpayments. The 203 unvalidated HCCs included 20 HCCs for which OIG found 22 other HCCs for more and less severe manifestations of the diseases. There were also 15 HCCs for which the medical records supported diagnosis codes that Humana should have submitted to CMS but did not.
OIG then extrapolated an overpayment amount, recommending Humana return a jaw-dropping $197.7 million in alleged overpayments for 2015. OIG also recommended Humana enhance its policies and procedures to prevent such overpayments again in the future by detecting and correcting noncompliance with Federal requirements for diagnosis codes used to calculate risk-adjusted payments independently.
Humana disagreed with the OIG audit results and challenged OIG in both its coding and audit methodology. Humana was successful in overturning some of the coding determinations made by OIG, driving the error rate down and reducing the extrapolated overpayment from $263.1 million (in the draft report) to $197.7 million. Humana also argued that OIG did not actually follow CMS’ established RADV methodology; that OIG did not incorporate underpayments in its estimates of overpayments; that OIG did not correctly calculate the overpayment amount; and that the identification of unsupported diagnosis codes do not indicate a failure of Humana’s policies and procedures.
The findings and recommendations by OIG did not represent final determination by CMS, as the determination of whether an overpayment exists is in the discretion of CMS officials. Humana will have the right to appeal CMS’ ultimate determination through the RADV appeals process.