OIG: BCBS of Michigan overpaid the federal government $14.5 million for certain high-risk diagnoses

Findings from an Office of Inspector General (OIG) audit show that Blue Cross Blue Shield (BCBS) of Michigan submitted claims with high-risk diagnosis codes that did not comply with federal requirements, resulting in at least $14.5 million in overpayments to Medicare Advantage (MA).

Under the MA program, CMS makes monthly payments to MA organizations (MAO) according to a system of risk adjustment that depends on the health status of each beneficiary. MAOs are paid more for providing benefits to individuals with severe (high-risk) diagnoses as opposed to healthier individuals, who would likely require fewer healthcare resources.

To determine the health status of MA beneficiaries, CMS relies on MAOs to collect data on ICD-10-CM codes billed by providers, and to submit this data to CMS for review. The OIG conducted this audit to ensure that select diagnosis codes that BCBSM submitted to CMS for use in CMS’ risk adjustment program complied with federal requirements.

For this audit, the OIG focused on seven groups of high-risk diagnoses:

• Acute stroke
• Acute heart attack
• Acute stroke and acute heart attack combination
• Embolism
• Major depressive disorder
• Potentially miskeyed diagnosis codes
• Vascular claudication

The audit included 248 beneficiaries on whose behalf providers documented ICD-9 and ICD-10-CM codes that mapped to one of the seven high-risk groups during the 2014 through 2015 service years, for which BCBSM received increased risk-adjusted payments for payment years 2015 through 2016.

The OIG found that most of the selected diagnosis codes that BCBSM submitted to CMS for use in CMS’s risk adjustment program did not comply with federal requirements. Specifically, 188 of the 248 reviewed cases were linked to diagnosis codes that were unsupported by medical documentation. As a result of these errors, Hierarchical Condition Categories for these high-risk diagnosis codes were not validated.

On the basis of its sample results, the OIG estimates that BCBSM received at least $14,312,424 in net overpayments in 2015 and 2016. The OIG recommends that BCBS of Michigan:

• Enhance procedures for identifying noncompliant coding practices
• Refund CMS $14,534,375 in estimated net overpayments
• Identify, for the high-risk diagnoses included in its report, similar instances of noncompliance that occurred before and after the audit period