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How one reporting team used public records to find questionable Medicare Advantage spending Date: 07/21/14

Fred Schulte
Fred Schulte

Medicare billing records are all the rage. Almost every day, it seems, there’s a new article about doctors cheating Medicare, based on billing data released earlier this year by the Centers for Medicare and Medicaid Services.

But there’s a lot federal officials don’t want the public to see when it comes to Medicare Advantage, a type of Medicare plan administered by private insurance companies. Federal officials refuse to disclose detailed financial records of these health plans – even though these plans are growing fast and insure almost one in three people eligible for Medicare. That’s nearly 16 million people, at a cost to taxpayers likely to top $150 billion this year.

Dominated by some of the nation’s mightiest insurance carriers, Medicare Advantage has faced little scrutiny from lawmakers or the media despite years of audits and research papers showing that overbilling is widespread. So while it’s open season on “fee-for-service” charges by doctors and hospitals, Medicare Advantage data remain under wraps. One government official called it a “black box.”

We decided to look at Medicare Advantage as a follow up to our 2012 series "Cracking the Codes." That series found that thousands of medical professionals had steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees — despite little evidence that elderly patients required more treatment. (I wrote about the 2012 project and “upcoding” for AHCJ here.)

Centers for Medicare and Medicaid Services showed little interest in helping us dig into Medicare Advantage. I filed a Freedom of Information Act request in May of 2013 asking for a wide range of billing and enrollment data, audits and policy papers. We didn’t get squat, and after a year of waiting the Center for Public Integrity sued CMS to shake loose these records. The case is pending in federal court in Washington.

Fortunately, the government can’t run a program as big, complex and controversial as Medicare Advantage without putting a ton of documents and other information online. We relied mainly on these records and human sources for the three-part investigative series, “The Medicare Advantage Money Grab,” which we published in June on our website and on nbcnews.com.

The series traced tens of billions of dollars in “improper” payments over the past five years to flaws in a Medicare billing formula known as a “risk score.” Basically, Medicare pays the health plans more for sicker patients and less for those in good health. But there’s little to prevent health plans from overstating how sick their patients are in order to run up patient risk scores and collect money they don’t deserve.

Here are some of our key sources:

Securities and Exchange Commission filings: These records will help you understand how a business works and where the trouble spots are. For instance, I saw repeated worries about something called Risk Adjustment Data Validation, or RADV, audits. These obscure audits became a major focus.

Federal court records: With so much money at stake, health care companies often resolve disputes in federal court. Look for civil and criminal cases that allege fraud as well as qui tam “whistleblower” suits that may expose systematic problems with regulation.

Track proposed regulations: You can search the text of proposals as well as some public comments. Look to see if government yields to industry pressure. That’s happened repeatedly with Medicare Advantage oversight.

Health care law experts: Many law firms that assist the industry post articles online, which can help explain the significance of technically complex regulations. Some will talk to reporters, though many are shy.

Health policy data experts: I contacted George Washington University Professor Brian Biles after discovering through court searches that he had sued CMS several times to get access to very basic Medicare Advantage enrollment and bid data. Biles helped our data team analyze the data showing how risk scores had grown over time.

The Medicare billing cottage industry: Just by scrolling the web, you can quickly identify companies that assist Medicare Advantage plans in raising risk scores and getting higher payments from the government. Most drum up business by promising higher revenues. Watch for buzzwords such as “ROI” (return on investment).

Congressional Record and other political sites: Medicare Advantage started out as a Republican idea to “privatize” Medicare and for that reason Democrats disliked it. But now the program enjoys broad support. That clout has helped the industry fight back against rate cuts mandated by the Affordable Care Act.

Venture capital: Big time investors flock to areas where they see potential for profit. So keep an eye on companies that are attracting these investors.

Companies that perform in-home patient health assessments for Medicare Advantage health plans offer an example. Federal officials worry that these house calls inflate costs needlessly by running up risk scores without offering patients any more treatment. CMS officials wanted to restrict the home visits earlier this year but backed off after Medicare Advantage groups argued they would lose as much as $3 billion a year as a result.

The government’s failure to crack down on health plans that overbill by inflating patient risk scores doesn’t bode well for Obamacare. Officials are relying on a similar system of “risk” based payments to hold costs in check.

It remains to be seen how much of this data CMS will make public. For starters, we are hoping that our FOIA lawsuit will compel officials to release the names of Medicare Advantage companies suspected of overbilling—and push them to do a better job of protecting Medicare resources for future generations.

Fred Schulte is a four-time Pulitzer Prize finalist, most recently in 2007 for a series on Baltimore’s arcane ground rent system. Schulte’s other projects exposed excessive heart surgery death rates in veterans’ hospitals, substandard care by health insurance plans treating low-income people and the hidden dangers of cosmetic surgery in medical offices. He spent much of his career at The Baltimore Sun and the South Florida Sun-Sentinel. Schulte has received the George Polk Award, two Investigative Reporters and Editors awards, three Gerald Loeb Awards for business writing and two Worth Bingham Prizes for investigative reporting. He is the author of “Fleeced!,” an exposé of telemarketing scams. Schulte can be reached at fschulte@publicintegrity.org or 202-481-1210.