OIG Report Raises Concerns About Medicare Advantage Organizations Using Chart Reviews to Obtain Billions of Dollars in Inflated Risk-Adjusted Payments

On December 10, 2019, HHS-OIG issued a report examining the extent to which Medicare Advantage Organizations (“MAOs”) leverage chart reviews to increase risk-adjusted payments. OIG undertook its review due to concerns that MAOs “may use chart reviews to increase risk adjusted payments inappropriately.” Based on its analysis, OIG estimated that MAOs received approximately $6.7 billion in additional payments based on codes added during chart reviews. While OIG did not conclude that these payments constituted overpayments, it raised concerns about “the completeness of payment data submitted to CMS, the validity of diagnoses on chart reviews, and the quality of care provided to beneficiaries.”

OIG analyzed chart reviews from the 2016 MA encounter data stored in CMS’s Integrated Data Repository (IDR) to determine the amount of 2017 MA risk-adjusted payments that would have resulted from diagnoses reported only on chart reviews and not in any service records. OIG found that “MAOs almost always used chart reviews as a tool to add, rather than to delete diagnoses” and that over 99% of the chart reviews OIG analyzed added diagnoses.  Additionally, OIG found that CMS paid MAOs approximately $2.7 billion based on chart review diagnoses that were not linked to specific services.  Further, OIG found that nearly half of the MAOs included in the analysis received payments from “unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016.”

Although the report raises concerns about MAOs potentially leveraging chart reviews to inflate payments, OIG made it clear that CMS has not yet reviewed the financial impact of chart reviews on risk adjusted payments, variation in chart review submissions across MAOs, or any impact on quality of care for patients. Importantly, CMS also has not yet performed audits to validate diagnoses reported on chart reviews. In light of these findings, OIG recommended that CMS take the following steps:

  • Provide oversight of MAOs that had payments resulting from unlinked chart reviews for beneficiaries that had no service records in 2016;
  • Conduct audits that validate diagnoses reported on chart reviews in the encounter data; and
  • Reassess the risks and benefits of allowing unlinked chart reviews to be used as a source of diagnoses for risk adjustment.

CMS agreed with OIG’s recommendations and plans to begin audits that include chart reviews later this year.

OIG’s report reinforces the concerns the government has previously raised about potential overpayments to MAOs for inflated risk scores and signals its continued focus on potential fraud in the MA space. As we have previously discussed here, in 2017 DOJ intervened in an FCA suit alleging, among other things, that an MAO used chart reviews to add diagnosis codes that were not originally reported by the treated physician but did not delete unsupported codes. In the last two years, DOJ has become increasingly aggressive in its enforcement of the Medicare Advantage space under the FCA despite setbacks in the courts, as previously discussed here, here, here, here, here, here, and here.  With CMS now committing to taking more robust steps to monitor MAO activities, we expect that enforcement activity directed at MAOs, including on the basis of chart reviews used to “add” risk adjusting codes, will only increase.  We will continue to monitor and provide updates on these issues.

A copy of OIG’s report can be found here.