MAOs may have used chart reviews to increase risk-adjusted payments, OIG says

January 13, 2020
Medicare Web

Findings from a December Office of Inspector General (OIG) report show that CMS based an estimated $2.7 billion in risk-adjusted payments on chart review diagnoses that Medicare Advantage organizations (MAO) didn’t link to specific services. Their findings highlight concerns about the validity of payment data submitted to CMS.

Many MAOs perform chart reviews to ensure that encounter data is complete and accurate prior to submitting claims to CMS for payment. As part of the chart review process, MAOs may add and delete diagnoses in encounter data to more accurately capture reported services.

However, MAOs can abuse this process by circumventing documentation requirements to inflate risk-adjusted payments. The OIG states in its report that unsupported risk-adjusted payments are a major driver of improper payments in the Medicare Advantage (MA) program.

To identify potential issues with the chart review process leveraged by MAOs and overseen by CMS, the OIG reviewed 52.6 million chart reviews from 2016 MA encounter data stored in CMS’ Integrated Data Repository for data and payment integrity issues. The OIG found that in 99% of cases, MAOs used chart reviews as a tool to add rather than to delete diagnoses prior to submission for payment.

The OIG then calculated the amount of 2017 MA risk-adjusted payments that would have resulted from diagnoses reported only on chart reviews (i.e., diagnoses that were added to the encounter data by the MAO and not supported by documentation). It found that MAOs generated an estimated $2.7 billion in risk-adjusted payments for diagnoses that were reported without supporting documentation.

Upon further review of the data, the OIG found that 56% of the diagnoses that MAOs did not link to specific services corresponded to 10 hierarchical condition categories (HCC) that describe serious and chronic health conditions including:

  • HCC108, vascular disease
  • HCC18, diabetes with chronic complications
  • HCC111, chronic obstructive pulmonary disease

In addition, the OIG found that 67% of unlinked chart reviews with procedure (CPT/ICD-10-PCS) codes contained default procedure codes. According to the OIG, this suggests that MAOs were unable to determine the actual procedure codes associated with the chart review for most services with unsupported diagnoses. MAOs also may have intentionally selected default procedure codes that were risk-adjustment eligible.

According to the OIG, these findings raise three types of potential concerns:

  1. Data integrity concerns: MAOs may not be submitting all service records as required.
  2. Payment integrity concerns: Chart reviews leading to the reporting of unsupported or inaccurate diagnoses would lead to inaccurate, risk-adjusted payments.
  3. Quality of care concerns: Beneficiaries may not be receiving needed services for potentially serious diagnoses listed on their chart reviews.

To ensure the validity of diagnoses on chart reviews, OIG recommends that CMS:

  • Conduct audits that validate diagnoses reported on chart reviews in the MA encounter data
  • Provide targeted oversight of MAOs that had risk-adjusted payments resulting from unliked chart reviews for beneficiaries who had no service records in the 2016 encounter data
  • Reassess the risks and benefits of allowing chart reviews that are not linked to service records to be used as sources of diagnoses for risk adjustment

CMS agreed with these recommendations. Page 21 of the report details actions that CMS intends to take with the aim of improving the MA chart review process.