PROVIDER ALERT: OIG Report Appears to Indicate that Medicare Advantage Organization, Humana, Inc. May Be Significantly Underpaying Downstream Contracted Providers in Global Risk Capitation Arrangements

Following the release of an April 16, 2021 HHS Office of Inspector General (“OIG”) report entitled “Medicare Advantage Compliance Audit of Diagnosis Codes that Humana, Inc. (Contract H1036) Submitted to CMS” (the “OIG Report”), headlines seemed understandably fixated on the OIG’s finding that Humana had received nearly $200 million “in net overpayments” from CMS. See, e.g., https://www.npr.org/sections/health-shots/2021/04/20/988817003/humana-inc-overcharged-medicare-nearly-200-million-federal-audit-finds. Few, if any, however, commented on pages 5, 10-12 of the Report, which contain, from a provider-side perspective, arguably the most interesting agency findings – Humana failed to submit correct or accurate diagnosis codes to CMS, leading to underpayments and, in certain cases, net underpayments, from CMS to Humana, and such failures resulted from Humana “policies and procedures to prevent, detect and correct noncompliance with CMS’s program requirements . . . [which] were not always effective.” Stated another way, the OIG Report appears to indicate that Humana may be regularly underpaying its downstream capitated providers by failing to submit complete and/or accurate diagnosis codes for its providers’ attributed patient populations, resulting in improperly downwardly adjusted patient risk scores and, in turn, lower capitation payments to providers. While similar reports have not been released as to other MAOs, there is no obvious reason to presume this issue is specific to Humana.

  In 2018, Frier Levitt encouraged downstream capitated MA providers to ask themselves whether their “MAO [was] Effectively Capturing and Processing Medicare Advantage Risk Adjustment Data[,] https://www.frierlevitt.com/articles/service/healthcarelaw/mao-effectively-capturing-processing-medicare-advantage-risk-adjustment-data/.[1] Now, more than ever, providers should be asking themselves the same question. Failing to take the steps necessary to ensure your MA risk adjustment data is being fully captured and properly submitted by your MAO to CMS may result in the loss of untold amounts in capitated revenues for your practice and chronically imprecise risk scores for the patients you care for. Moreover, while the report allows for the possibility that some of the missing diagnosis codes could have resulted from the corresponding providers’ failure to identify and submit them to Humana in the first instance, a provider cannot determine if they are the leak in the data pipeline without comparing their data to that of the MAO. 

Retaining competent healthcare counsel, along with a team of actuaries and/or healthcare data scientists, is one way to address the issue. Counsel can review your MAO contracts to determine whether you have data audit rights and then leverage the threat of litigation (or the commencement of litigation) to ensure those rights are vindicated. Under certain circumstances, should your MAO remain intransigent, counsel may be able to secure the raw data from CMS directly. And, once in the hands of a skilled actuary or healthcare data scientist, this data will allow you to verify whether and how much your practice has been underpaid as a result of an error on the part of the target MAO. Frier Levitt, working alongside actuaries and data scientists, has successfully implemented these strategies for clients in the past.

How Frier Levitt Can Help

If your practice wishes to ensure it is receiving all of the MA capitation payments it is owed, contact the firm for a consultation.  

[1] Frier Levitt is not asserting that the issues in that article overlap in with the issues raised in the OIG Report. 

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