Officials have known for years that some Medicare Advantage plans overcharge for treating serious medical conditions they cannot prove their patients have.

This article was first published on Tuesday, July 16, 2019 in Kaiser Health News.

By Fred Schulte and Lauren Weber

Health insurers that treat millions of seniors have overcharged Medicare by nearly $30 billion the past three years alone, but federal officials say they are moving ahead with long-delayed plans to recoup at least part of the money.

Officials have known for years that some Medicare Advantage plans overbill the government by exaggerating how sick their patients are or by charging Medicare for treating serious medical conditions they cannot prove their patients have.

Getting refunds from the health plans has proved daunting, however. Officials with the Centers for Medicare & Medicaid Services repeatedly have postponed, or backed off, efforts to crack down on billing abuses and mistakes by the increasingly popular Medicare Advantage health plans offered by private health insurers under contract with Medicare. Today, such plans treat over 22 million seniors, more than 1 in 3 people on Medicare.

Now CMS is trying again, proposing a series of enhanced audits tailored to claw back $1 billion in Medicare Advantage overpayments by 2020 — just a tenth of what it estimates the plans overcharge the government in a given year.

At the same time, the Department of Health and Human Services Inspector General's Office has launched a separate nationwide round of Medicare Advantage audits.

As in past years, such scrutiny faces an onslaught of criticism from the insurance industry, which argues the CMS audits especially are technically unsound and unfair and could jeopardize medical services for seniors.

America's Health Insurance Plans, an industry trade group, blasted the CMS audit design when details emerged last fall, calling it "fatally flawed."

Insurer Cigna Corp. warned in a May financial filing: "If adopted in its current form, [the audits] could have a detrimental impact" on all Medicare Advantage plans and "affect the ability of plans to deliver high quality care."

But former Sen. Claire McCaskill, a Missouri Democrat who now works as a political analyst, said officials must move past powerful lobbying efforts to hold health insurers accountable and demand refunds for "inappropriate" billings.

"There's a lot of things that could cause Medicare to go broke. This would be one of the contributing factors," she said. "Ten billion dollars a year is real money."

Catching Overbilling With A Wider Net

 

In the overpayment dispute, health plans want CMS to scale back — if not kill off — an enhanced audit tool that, for the first time, could force insurers to cough up millions in improper payments they've received.

For over a decade, audits have been little more than an irritant to insurers because most plans go years without being chosen for review and often pay only a few hundred thousand dollars in refunds as a consequence. When auditors uncover errors in the medical records of patients they paid the companies to treat, CMS has simply required a rebate for those patients for just the year audited — relatively small sums for plans with thousands of members.

The latest CMS proposal would raise those stakes enormously by extrapolating error rates found in a random sample of 200 patients to the plan's full membership — a technique expected to trigger many multimillion-dollar penalties. Though controversial, extrapolation is common in medical fraud investigations — except for investigations into Medicare Advantage. Since 2007, the industry has successfully challenged the extrapolation method and, as a result, largely avoided accountability for pervasive billing errors.

"The public has a substantial interest in the recoupment of millions of dollars of public money improperly paid to health insurers," CMS wrote in a Federal Register notice late last year announcing its renewed attempt at using extrapolation.

Penalties In Limbo

 

In a written response to questions posed by Kaiser Health News, CMS officials said the agency has already conducted 90 of those enhanced audits for payments made in 2011, 2012 and 2013 — and expects to collect $650 million in extrapolated penalties as a result.

Though that figure reflects only a minute percentage of actual losses to taxpayers from overpayments, it would be a huge escalation for CMS. Previous Medicare Advantage audits have recouped a total of about $14 million, far less than it cost to conduct them, federal records show.

Though CMS has disclosed the names of the health plans in the crossfire, it has not yet told them how much each owes, officials said. CMS declined to say when, or if, they would make the results public.

This year, CMS is starting audits for 2014 and 2015, 30 per year, targeting about 5% of the 600 plans annually.

This spring, CMS announced it would extend until the end of August the audit proposal's public comment period, which was supposed to end in April. That could be a signal the agency might be looking more closely at industry objections.

Healthcare industry consultant Jessica Smith said CMS might be taking additional time to make sure the audit protocol can pass muster. "Once they have their ducks in a row, CMS will come back hard at the health plans. There is so much money tied to this."

But Sean Creighton, a former senior CMS official who now advises the industry for healthcare consultant Avalere Health, said payment error rates have been dropping because many health plans "are trying as hard as they can to become compliant."

Still, audits are continuing to find mistakes. The first HHS inspector general audit, released in late April, found that Missouri-based Essence Healthcare Inc. had failed to justify fees for dozens of patients it had treated for strokes or depression. Essence denied any wrongdoing but agreed it should refund $158,904 in overcharges for those patients and ferret out any other errors.

Essence also faces a pending whistleblower suit filed by Charles Rasmussen, a Branson, Mo., doctor who alleges the health plan illegally boosted profits by overstating the severity of patients' medical conditions. Essence has called the allegations "wholly without merit" and "baseless."

Essence started as a St. Louis physician group, then grew into a broader holding company backed by prominent Silicon Valley venture capitalist John Doerr with his brother, St. Louis doctor and software designer Thomas Doerr, in 2007. Neither would comment on the allegations.

How We Got Here

 

CMS uses a billing formula called a "risk score" to pay for each Medicare Advantage member. The formula pays higher rates for sicker patients than for people in good health.

Congress approved risk scoring in 2003 to ensure health plans did not shy away from taking sick patients who could incur higher-than-usual costs from hospitals and other medical facilities. But some insurers quickly found ways to boost risk scores — and their revenues.

In 2007, after several years of running Medicare Advantage as what one CMS official dubbed an "honor system," the agency launched "Risk Adjustment Data Validation," or RADV, audits. The idea was to cut down on undeserved payments that cost CMS nearly $30 billion over the past three years.

The audits of 37 health plans revealed that on average auditors could confirm just 60% of the more than 20,000 medical conditions CMS had paid the plans to treat.

Extra payments to plans that had claimed some of its diabetic patients had complications, such as eye or kidney problems, were reduced or invalidated in nearly half the cases. The overpayments exceeded $10,000 a year for more than 150 patients, though health plans disputed some of the findings.

But CMS kept the findings under wraps until the Center for Public Integrity, an investigative journalism group, sued the agency under the Freedom of Information Act to make them public.

Despite the alarming results, CMS conducted no audits for payments made during 2008, 2009 and 2010 as they faced industry backlash over CMS' authority to conduct them, and the threat of extrapolated repayments. Some inside the agency also worried that health plans would abandon the Medicare Advantage program if CMS pressed them too hard, records released through the FOIA lawsuit show.

CMS officials resumed the audits for 2011 and expected to finish them and assess penalties by the end of 2016. That has yet to happen amid the continuing protests from the industry. Insurers want CMS to adjust downward any extrapolated penalties to account for coding errors that exist in standard Medicare. CMS stands behind its method — at least for now.

At a minimum, argues AHIP, the health insurers association, CMS should back off extrapolation for the 90 audits for 2011-13 and apply it for 2014 and onward. Should CMS agree, it would write off more than half a billion dollars that could be recovered for the U.S. Treasury.

Fred Schulte: fschulte@kff.org, @fredschulte

Lauren Weber: LaurenW@kff.org, @LaurenWeberHP

Legal experts say it's unusual for an administration to shift its own legal opinions during a case. The Trump DOJ has done it three times.

This story was first published on Friday, July 12, 2019 in Kaiser Health News.

By Julie Appleby

Once again, the fate of the Affordable Care Act is before the courts. The health law has traveled all the way to the Supreme Court (twice!) and is highly likely to make another visit.

On that path, the law made a stop Tuesday before a three-judge panel of the 5th Circuit Court of Appeals in New Orleans. Both sides presented arguments, interrupted, at times, by sharp questions from two of the judges.

For those just tuning in, the Trump administration is not defending the nine-year-old ACA.

It instead has sided with the 18 "red" states that seek to have the law overturned.

In doing so, Department of Justice lawyers appeared to use strategies and take positions that sounded somewhat unconventional to a layperson. But are they?

KHN checked with some legal experts for their take.

For starters, this is the third time the administration has changed its position. Does this often happen?

No. It's unusual for an administration to shift its own legal opinions during the case, say experts.

When the lawsuit was filed, the administration said only the parts of the law tied to a requirement that most Americans carry insurance, the so-called individual mandate, should be tossed. (That's a pretty big part, which includes protections for people with preexisting conditions.)

The red-state plaintiffs, conversely, argued that the entire law should go, pointing to Congress' 2017 vote to zero out the individual mandate's tax penalty. The Supreme Court's 2012 decision to preserve the ACA hinged on that penalty.

But, last December, a United States district court judge in Texas sided with the states, saying the whole law should be tossed, which would affect provisions as diverse as the preexisting condition protections, Medicaid expansion and calorie counts on restaurant menus.

That's when the Trump administration shifted its position to agree that, indeed, the whole thing had to go.

And that's rare.

"You don't usually say, 'Oh, never mind,'" said Tom Miller, resident fellow at the conservative American Enterprise Institute. "It's unusual to do that flip."

But that's not the last flip. Another change came up in legal papers filed shortly before the Tuesday hearing and in oral arguments.

DOJ attorney August Flentje told the appeals court that, well, maybe only those provisions of the law that directly affect the plaintiffs — the 18 states — should be struck.

"It's complicated," he admitted, calling to mind a similar statement made in 2017 by President Donald Trump amid the repeal debate in Congress: "Nobody knew that healthcare could be so complicated."

Even as this legal challenge works its way through the courts, the ACA remains the law of the land. The evolving legal positions, however, are fodder for professors.

"I'm teaching a class this fall and this gives me more material," said Miller. "But if I had to consistently try to argue a position at the DOJ, I would go crazy."

So, the government wants to skewer some provisions of the law, but not others — and have those changes apply only in some states. How would that work?  

Questions about that argument came from 5th Circuit Judge Jennifer Walker Elrod, appointed by President George W. Bush in 2007.

The government wants to have it apply "in certain states and strike it down in certain states?" Elrod asked. "The government believes that's a possibility?"

Unasked but implicit: How would some states enforce the law and not others?

Flentje said "a lot of that would have to get sorted out" but not until after all the appeals in the case are exhausted.

Behind the argument may well be an ongoing dispute in the legal community about whether lower-court judges should make decisions that have nationwide implications, said John Malcolm, director of the conservative Heritage Foundation's Edwin Meese III Center for Legal and Judicial Studies. Still, it would be difficult, he said, for the ACA to be declared unconstitutional in some states, but remain in effect elsewhere.

Beyond that legal question, such a position has financial and policy implications for consumers and state regulators.

"It would create a very untenable situation for the rest of the states," said Mila Kofman, executive director of the DC Health Benefit Exchange Authority, where individuals and small businesses buy health insurance.

Some of the very sickest people in the states where the rules were dropped would likely move to states keeping the preexisting condition protections so they could maintain their insurance, she said. That could drive up costs in those areas.

Arguments Tuesday revolved around whether parts of the law were "severable" from other parts. Did it seem the government wants it both ways — to toss the entire law, but also keep parts of it?

Elrod again queried Flentje.

The government wants the health insurance provisions to go, but "you would leave in the calorie guide?" Elrod asked, referring to the ACA's requirement that chain restaurants display calorie counts of menu items.

Flentje said the government's "argument on scope is totally separate from argument on severability."

She pressed him for clarification: "So, are you saying it's entirely inseverable, or arguing that some parts can be kept?"

The government's position remains that "the entire act is not severable," he replied, adding, however that the judgment could be "narrowed a bit to provisions that injure and impact the plaintiffs."

He suggested some of those details would still have to be worked out.

"They've gone from saying a couple of provisions have to go to the whole thing has to go, to now there are some things we might not have to get rid of," said Miller. "But they've never defined how far back down the ladder to go."

A ruling by the appeals court isn't expected for weeks or months, and some questions may well return to the district court.

Julie Appleby: jappleby@kff.org, @Julie_Appleby

This drop mirrors statewide and national trends for all children enrolled in Medicaid and the Children's Health Insurance Program.

This article was first published on Tuesday, July 9, 2019 in Kaiser Health News.

By Ana B. Ibarra

As California prepares to expand Medicaid coverage to young adults living in the state illegally, the number of undocumented immigrant children in the program is slowly declining, new state data show.

Unauthorized immigrant children have been eligible for Medi-Cal, the state's Medicaid program for low-income residents, since May 2016, and their enrollment peaked nearly a year later at 134,374, according to data from the state Department of Healthcare Services.

Since then, enrollment has stayed mostly flat or fallen. Last February, the latest month for which data are available, 127,845 undocumented immigrant children through age 18 were enrolled in Medi-Cal, down about 5% from the April 2017 peak.

This drop mirrors statewide and national trends for all children enrolled in Medicaid and the Children's Health Insurance Program, a separate public program that some states use to cover low-income children.

From December 2017 to December 2018, overall child enrollment in both programs dropped 2.2% nationally and 3% in California, according to a recent report from Georgetown University's Health Policy Institute.

Some experts attribute the enrollment drop among all children to a strong economy because more people have jobs — and access to employer-sponsored health insurance. But Medicaid researchers say there are likely other factors at play for immigrant children.

The decline in their enrollment is more likely due to a shift in migration patterns and rising fear among their families in response to anti-immigrant rhetoric and federal crackdowns on unauthorized immigrants, said Edwin Park, a health policy research professor at Georgetown University.

"It's likely the overall hostile environment for immigrant families is playing a critical role in enrollment," Park said. "You should have seen a continued ramp-up" in sign-ups because the program is still relatively new. California along with Illinois, Massachusetts, New York, Oregon and Washington, plus the District of Columbia, provide public health coverage for undocumented immigrant children.

Last year, California allocated $365.2 million to cover these children. Even though Medicaid is a joint state-federal program, California must pay for the expanded benefits for unauthorized immigrants itself.

Starting next year, as part of the 2019-20 state budget signed last month by Gov. Gavin Newsom, the state will expand Medi-Cal coverage to young adult unauthorized immigrants ages 19 through 25. Officials estimate 90,000 young adults will join in the first year.

President Donald Trump criticized California's move and threatened to "stop it."

"The Democrats want to treat the illegals with healthcare and with other things, better than they treat the citizens of our country," Trump said on July 1.

The state Department of Healthcare Services, which administers Medi-Cal, said undocumented immigrant children might be leaving the program because they age out of eligibility when they turn 19 or move out of state.

Randy Capps, director of research at the Washington, D.C.-based Migration Policy Institute, said a shift in immigration patterns into and out of California could also affect their enrollment.

The number of people coming into the country illegally is down, especially from Mexico, according to a Pew Research Center report released in June. That is notable in California, where Mexican nationals make up the majority of the state's undocumented immigrant population.

The report estimates there were 4.9 million unauthorized immigrants from Mexico in the U.S. in 2017, down from 6.9 million in 2007.

"All data suggest a downward trend on illegal immigration, especially of Mexican origin," Capps said.

In California, "with the recent economic boom, that may be accelerating because the cost of living is escalating astronomically," he said. "Housing is becoming prohibitively expensive for undocumented immigrants in large parts of the state."

Although there have been an increasing number of Central American migrants trying to enter the U.S. at the southern border this year, most are claiming asylum and are not considered undocumented immigrants.

As a result, most of those children wouldn't qualify for Medi-Cal under this program, explained Gabrielle Lessard, a staff attorney with the National Immigration Law Center.

But the rhetoric surrounding the Central American refugees has been heated, and Trump has made tough talk on immigration a centerpiece of his presidency.

Last month, Trump warned of "massive" deportation raids that would have targeted about 2,000 families — but they were postponed after he gave members of Congress time to make changes to asylum laws. He said the raids might begin this week.

His administration also has pursued policies targeting immigrants. For instance, last fall, the federal government introduced its "public charge" proposal, which would consider immigrants' use of public benefit programs including Medi-Cal, CalFresh and Section 8 housing vouchers as a reason to deny lawful permanent residency — or green card status.

That proposed rule has not taken effect, and it's not clear whether it will. If implemented, the policy would mostly affect legal immigrants, but it could also affect undocumented immigrants should they become eligible to seek legal status in the future.

In response, unauthorized immigrant families have been forgoing care, missing doctors' appointments and asking whether they should disenroll from Medicaid coverage, health centers across California and the country have reported.

Lessard suspects that unauthorized immigrants could be pulling their children out of Medi-Cal or simply not renewing their coverage.

"This community has been so terrorized by the administration that people are afraid to show up to their appointments at health centers," she said. "So the prospect of giving your information to the government, even though it's the state government, is really terrifying to a lot of people."

This KHN story first published on California Healthline, a service of the California Healthcare Foundation.

Ana B. Ibarra: aibarra@kff.org, @ab_ibarra

This year, the percentage of primary care positions filled by fourth-year medical students was the lowest on record.

This article was first published on Wednesday, July 3, 2019 in Kaiser Health News.

By Victoria Knight

Despite hospital systems and health officials calling out the need for more primary care doctors, graduates of U.S. medical schools are becoming less likely to choose to specialize in one of those fields.

A record-high number of primary care positions was offered in the 2019 National Resident Matching Program — known to doctors as "the Match." It determines where a medical student will study in their chosen specialty after graduation. But this year, the percentage of primary care positions filled by fourth-year medical students was the lowest on record.

"I think part of it has to do with income," said Mona Signer, the CEO of the Match. "Primary care specialties are not the highest paying." She suggested that where a student gets a degree also influences the choice. "Many medical schools are part of academic medical centers where research and specialization is a priority," she said.

The three key primary care fields are internal medicine, family medicine and pediatrics. According to the 2019 Match report, 8,116 internal medicine positions were offered, the highest number on record and the most positions offered within any specialty, but only 41.5% were filled by seniors pursuing their M.D.s from U.S. medical schools. Similar trends were seen this year in family medicine and pediatrics.

In their final year of medical school, students apply and interview for residency programs in their chosen specialty. The Match, a nonprofit group, then assigns them a residency program based on how the applicant and the program ranked each other.

Since 2011, the percentage of U.S.-trained allopathic, or M.D., physicians who have matched into primary care positions has been on the decline, according to an analysis of historical Match data by Kaiser Health News.

But, over the same period, the percentage of U.S.-trained osteopathic and foreign-trained physicians matching into primary care roles has increased. 2019 marks the first year in which the percentage of osteopathic and foreign-trained doctors surpassed the percentage of U.S. trained medical doctors matching into primary care positions.

Medical colleges granting M.D. degrees graduate nearly three-quarters of U.S. students moving on to become doctors. The rest graduate from osteopathic schools, granting D.O. degrees. The five medical schools with the highest percentage of graduates who chose primary care are all osteopathic institutions, according to the latest U.S. News & World Report survey.

Beyond the standard medical curriculum, osteopathic students receive training in manipulative medicine, a hands-on technique focused on muscles and joints that can be used to diagnose and treat conditions. They are licensed by states and work side by side with M.D.s in physician practices and health systems.

Although the osteopathic graduates have been able to join the main residency match or go through a separate osteopathic match through this year, in 2020 the two matches will be combined.

Physicians who are trained at foreign medical schools, including both U.S. and non-U.S. citizens, also take unfilled primary care residency positions. In the 2019 match, 68.9% of foreign-trained physicians went into internal medicine, family medicine and pediatrics.

But, despite osteopathic graduates and foreign-trained medical doctors taking up these primary care spots, a looming primary care physician shortage is still expected.

The Association of American Medical Colleges predicts a shortage of between 21,100 and 55,200 primary care physicians by 2032. More doctors will be needed in the coming years to care for aging baby boomers, many of whom have multiple chronic conditions. The obesity rate is also increasing, which portends more people with chronic health problems.

Studies have shown that states with a higher ratio of primary care physicians have better health and lower rates of mortality. Patients who regularly see a primary care physician also have lower health costs than those without one.

But choosing a specialty other than primary care often means a higher paycheck.

According to a recently published survey of physicians conducted by Medscape, internal medicine doctors' salaries average $243,000 annually. That's a little over half of what the highest earners, orthopedic physicians, make with an average annual salary of $482,000. Family medicine and pediatrics earn even less than internal medicine, at $231,000 and $225,000 per year, respectively.

Dr. Eric Hsieh, the internal medicine residency program director at the University of Southern California's Keck School of Medicine, said another deterrent is the amount of time primary care doctors spend filling out patients' electronic medical records.

"I don't think people realize how involved electronic medical records are," said Hsieh. "You have to synthesize everything and coordinate all of the care. And something that I see with the residents in our program is that the time spent on electronic medical records rather than caring for patients frustrates them."

The Medscape survey confirms this. Internists appear to be more burdened with paperwork than other specialties, and 80% of internists report spending 10 or more hours a week on administrative tasks.

The result: Only 62% of internal medicine doctors said they would choose to go into their specialty again — the lowest percentage on record for all physician specialties surveyed.

Elsa Pearson, a health policy analyst at Boston University, said one way to keep and attract primary care doctors might be to shift some tasks to health care providers who aren't doctors, such as nurse practitioners or physician assistants.

"The primary care that they provide compared to a physician is just as effective," said Pearson. They wouldn't replace physicians but could help lift the burden and free up doctors for more complicated care issues.

Pearson said more medical scribes, individuals who take notes for doctors while they are seeing patients, could also help to ease the doctors' burden of electronic health record documentation.

Another solution is spreading the word about the loan forgiveness programs available to those who choose to pursue primary care, usually in an underserved area of the country, said Dr. Tyree Winters, the associate director of the pediatric residency program at Goryeb Children's Hospital in New Jersey.

"The trend has been more so thinking about the amount of debt that a student has, compared to potential income in primary care," said Winters. "But that's not considering things like medical debt forgiveness through state or federal programs, which really can help individuals who want to choose primary care."

KHN data correspondent Sydney Lupkin contributed to this report.

Victoria Knight: vknight@kff.org, @victoriaregisk