By Fred Schulte, KFF Health News

A new federal watchdog audit is ratcheting up pressure on government officials to crack down on billions of dollars in overcharges linked to Medicare Advantage home visits.

But so far, the Centers for Medicare & Medicaid Services has rejected a recommendation from the Health and Human Services Inspector General to limit payments stemming from house visits that don’t result in any medical treatment — a potential red flag that may signal overcharges.

In late October, the HHS watchdog found that the health plans pocketed $7.5 billion in 2023 from diagnosing health conditions that prompted no medical services — about $4.2 billion of it through health assessments done in patients’ homes. And court records show that for a decade or more, CMS officials have failed to act on their concerns that the home visits waste tax dollars and should be limited.

UnitedHealthcare, the largest Medicare Advantage contractor, accounted for about two-thirds of the payments tied to home visits and chart reviews, in which health plans mine patient medical files to add new diagnoses that can bring in additional revenue, according to the audit.

The health plans, Assistant Inspector General Erin Bliss said, are making billions without offering any treatment for medical conditions they flag during the visits, such as diabetes and major depression.

“Frankly, it needs to stop,” Bliss said.

CMS, which runs the Medicare program, disagrees.

In a statement to KFF Health News by spokesperson Alexx Pons, the agency said it “appreciates the OIG’s review in this area” and will continue to study the issue.

But CMS disagreed with the OIG’s call to restrict use of home health assessments in computing how much to pay health plans. People on Medicare “should have access to care that is appropriately provided in the home setting,” CMS wrote in a written response included in the audit report.

“One would think that CMS would kick its regulatory oversight up a notch or two,” said Richard Lieberman, a Colorado health data analytics expert. “In contrast, CMS appears to be unconcerned and is telling OIG to stay out of their lane.

UnitedHealthcare spokesperson Heather Soule said in a statement that the OIG had drawn “inaccurate conclusions” in the audit.

The home visits are “among the most comprehensive and thorough assessments of a patient’s health and physical environment available in the healthcare system, helping to identify and drive needed follow-on care for the vast majority of the patients with whom we engage,” according to the company.

No care provided

Government spending on Medicare Advantage, which is dominated by UnitedHealthcare and a handful of other health insurance companies, is expected to hit $462 billion this year.

The industry, whose more than 33 million members make up more than half of people eligible for Medicare, argues that most enrollees are satisfied with the care they receive and typically pay less out-of-pocket than those on original Medicare.

Whether Medicare Advantage is a good deal for taxpayers is another matter, largely because many health plans exaggerate how sick patients are to boost their payments, multiple federal audits and other investigations have shown. Medicare pays the health plans higher rates for sicker patients.

For fiscal year 2023, CMS identified $12.7 billion in overpayments linked to diagnoses not supported by patients’ medical records.

The OIG audit tied $7.5 billion in payments to health conditions that prompted no treatment, including serious diseases such as diabetes, congestive heart failure and major depression. That suggests that the medical condition either didn’t exist or that the health plan failed to treat it adequately, auditors said.

“These are serious conditions. You would think you would see additional care during that year,” said Jacqualine Reid, who led the OIG audit team. “We are asking CMS to step up its oversight.”

Homegrown

The in-home visits have sparked controversy for more than a decade.

A June 2014 media investigation found that a sharp rise in home visits had inflated Medicare’s costs by billions of dollars. The visits, which typically last less than an hour, are often conducted by nurse practitioners, who do not treat the patient, but go over a checklist of possible health conditions.

Sabrina Skeldon, a Texas lawyer who advises physicians on billing issues, said problems arise when health plans fail to order necessary medical tests to confirm a diagnosis made during a home visit — and treat it.

Skeldon noted that The Cigna Group in 2023 paid $172 million to settle a whistleblower lawsuit that alleged its Medicare Advantage plan illegally collected payments for medical diagnoses that were based solely on in-home assessments.

The OIG audit comes as the Justice Department presses a civil fraud case that accuses UnitedHealth Group of cheating Medicare out of more than $2 billion by mining patient records to churn up diagnoses that boosted revenue, while ignoring evidence of overpayments. The company denies the allegations.

Court filings from the case show CMS officials were concerned years ago that home visits and chart reviews could needlessly drive up costs.

In April 2014, CMS backed off a proposal to restrict their use amid complaints from the industry that it would lose billions of dollars as a result. Similarly, CMS officials scrapped a proposal to tighten scrutiny on the chart reviews after what one official called an “uproar” from the industry.

CMS officials also had concerns that unchecked home visits might affect efforts to recover overpayments through billing reviews known as “RADV” audits.

Former CMS official Thomas Hutchinson, who ran the agency’s Medicare Plan Payment Group from September 2006 to June 2010, testified in a deposition that officials had “heard about various folks that figured out how they could RADV-proof things by doing in-home visits.”

In a confidential April 2015 slide presentation, CMS officials observed that health plans were “now conducting health risk assessments in beneficiaries’ homes. One purpose of the assessments is to identify conditions and create medical records documentation that substantiates diagnoses.”

And an October 2015 CMS memo circulated among senior agency staffers cites “limitations around home visits” among the possible ways to “strengthen” the RADV audits.

In its statement to KFF Health News, CMS said it was “committed” to ensuring that diagnoses health plans submitted for payment were accurate. But the agency declined to answer written questions about the impact of home visits on its audit program, which has yet to complete reviews of payments dating back as far as 2011.

UnitedHealthcare had the lowest rates of unconfirmed diagnoses among five large Medicare Advantage organizations audited in 2011, according to court records.

Overall, the company ended up with underpayments of more than $261 million for 15 of its plans audited for 2011-2013, court records show. The audit findings for other Medicare Advantage firms are blacked out in court filings.

CMS audits payments to just 30 out of more than 700 contracts a year. That’s not enough to protect tax dollars, said Matthew Fiedler, a health policy researcher at The Brookings Institution.

“They should be auditing 10 times as many contracts,” he said. “Where we are now, you are not likely to get caught.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism.