Audit: Feds overpaid Excellus more than $41M to administer Medicare Advantage health plans

Syracuse, N.Y. -- The federal government overpaidExcellus more than $41 million in 2007 to provide health insurance for customers enrolled in Medicare Advantage plans, according to an audit by the Office of Inspector General in the U.S. Department of Health and Human Services.

The audit report, posted on the Inspector General’swebsite, says the overpayment occurred because Excellus did not properly document patient diagnoses. The report recommends Excellus refund money to the federalCenters for Medicare & Medicaid Services.

Excellus disputes the audit’s findings.

Medicare Advantage plans are private health insurance plans that receive payments from the federal Medicare program to provide medical services and supplies to the elderly and to people with disabilities.

Excellus had several contracts with Medicare to administer Medicare Advantage plans.
Under the contract reviewed in the audit, Medicare paid Excellus about $488 million to administer health plans for about 48,000 people.

Medicare makes monthly payments to insurers offering Medicare Advantage for each person enrolled in the plan. Federal law requires these payments to be adjusted according to the health status of each enrollee. Insurers are supposed to collect information about enrollees’ diagnoses from hospitals, outpatient facilities and doctors, and submit that information to Medicare.

The diagnoses Excellus submitted did not comply with federal requirements, according to the audit.

Auditors reviewed information submitted for a sample of 98 people enrolled in Excellus Medicare Advantage plans.

For 45 of those enrollees, the audit found Excellus submitted documentation that did not support the associated diagnosis, failed to provide any documentation in some cases or did not confirm the diagnosis.

Excellus was overpaid $157,777 for those 98 enrollees and should refund that money to Medicare, the audit says.

Based on that sample, the audit projects Excellus was overpaid $41.6 million for all the people covered under the contract.

The audit recommends Excellus work with Medicare to determine how much of that money should be refunded.

In written comments included in the audit report, Excellus says the overpayment finding is inflated and based on flawed data, including a too small sample size.

Elizabeth Martin, an Excellus spokeswoman, said the Medicare Advantage payment model was established with good intentions, but doesn’t fully recognize industry-wide documentation challenges for health plans, doctors and other providers.

Providers are typically paid on the basis of the procedures performed, not on the basis of an enrollee’s condition or diagnosis. Medicare holds insurers responsible for the accuracy of diagnosis data submitted and insurers in turn rely on doctors and other providers to submit accurate diagnosis data, she said.

“We audit a portion of the claims and medical records for accuracy, completeness and consistency,” Martin said. “However, the medical delivery system would grind to a halt if we made every provider submit all of the documentation for each and every claim they file on behalf of members.”

New York prohibits insurers from asking for records before payment, she said.

The audit report is not a final action, but a recommendation, said Donald White, a spokesman for the Inspector General.

The Centers for Medicare & Medicaid Services will ultimately decide how to respond to the recommendation.