During a United States House of Representatives Energy & Commerce subcommittee hearing, Health and Human Services (HHS) Inspector General Christi Grimm asked for additional funds to combat Medicare and Medicaid fraud, noting that her office declines investigating between 300 and 400 viable fraud cases involving Medicare and Medicaid fraud each year, due to lack of resources.
In noting that the agency is “struggling to keep up” and is “unable to keep pace with the health care industry that has ballooned to one fifth of the economy,” Grimm highlighted that the large sums of money involved in the Medicare and Medicaid programs make them particularly susceptible to fraud, waste, and abuse.
In her testimony, Grimm stated that HHS OIG oversaw more than $2 trillion in HHS expenditures in FY 2023, nearly one quarter of the Federal budget. To carry out that oversight, the HHS OIG FY 2023 budget was $432.5 million, or roughly 2 cents for every $100 of HHS spending. Grimm went on to note that for every $1 “invested” in HHS OIG, the agency returns about $10, including expected and actual recoveries of funds to HHS programs.
Grimm stated that during FY 2023, HHS-OIG’s investigative work yielded roughly $3.16 billion in expected investigative recoveries and 1,453 criminal and civil actions. HHS-OIG also excluded 2,112 untrustworthy individuals and entities from participation in Federal health care programs, including bad actors convicted of patient abuse, neglect, and fraud, and the agency’s audit work identified nearly $283 million in expected recoveries, as well as nearly $1.5 billion in questioned costs.
In her testimony, Grimm had a specific focus on Medicare Part C and managed care, what she referred to as “a fast-growing sector with significant emerging risks and practical opportunities for improvement.” Grimm noted that Medicare Part C now serves most Medicare beneficiaries, with enrollment greater than that of traditional Medicare. In managed care, the Government pays private health insurance plans a fixed monthly payment per enrollee to provide coverage for Medicare beneficiaries. The private plans then pay health care providers to provide items and services for the patients enrolled in their plan. Private plans can benefit financially if the costs of items and services for an enrollee are less than the per-enrollee monthly payment per-enrollee. However, a plan must pay for all covered items and services, even if the items and services cost more than the monthly payment.
Risk Adjustment Payments
One problem that Grimm referenced in her testimony was risk adjustment payments, noting that they are “designed to ensure that Medicare Advantage plans are paid appropriately based on the health status of enrollees who may need more care due to significant health conditions and to discourage plans from preferential enrollment of healthier individuals.” The risk adjustment payments are based on enrollee diagnoses found in encounters or claims submitted by Medicare Advantage plans. In practice, however, plans may be “gaming” risk adjustment “by overstating how sick enrollees are so the plans can receive higher payments than they should,” referencing a 2021 HHS OIG report that found Medicare Advantage companies received more than $9 billion in risk adjustment payments in one year for serious medical conditions that only appeared on health risk assessments or chart reviews, not on any service records. Grimm noted that the discrepancy raised three possibilities, all troubling: (1) the diagnoses codes and, therefore, payments to plans are inaccurate; (2) plan enrollees have serious unmet health care needs; or (3) Medicare Advantage companies are not reporting all service records as required.
Grimm suggested that CMS fortify the Medicare Advantage risk adjustment, including making it so that diagnoses that appear only on health risk assessments or chart reviews – without evidence of appropriate health care services or meaningful actions by plans to connect beneficiaries to those services – are restricted for the purposes of risk adjustment calculations.
Combatting Fraud
Grimm also discussed the prevalence of fraud within Medicare Advantage, noting that fraud schemes in traditional Medicare have crept into Medicare Advantage, particularly durable medical equipment fraud. To help combat that problem, Grimm notes that the agency “cannot arrest our way out of the complex” problem. Instead, she suggests that CMS require plans to include ordering National Provider Identifications (NPIs) in plan data submitted to CMS to help ensure proper payment for high-risk services and for investigating fraud and abuse.