Under the Medicare Advantage (MA) program, monthly payments are disbursed by the Centers for Medicare & Medicaid Services (CMS) to MA organizations. This payment system utilizes risk adjustment, heavily reliant on the health status of each enrollee. Consequently, MA organizations receive increased funding for enrollees diagnosed with conditions necessitating extensive healthcare services, compared to healthier enrollees expected to require fewer resources.
To accurately assess enrollee health status, CMS depends on MA organizations to gather diagnosis codes from healthcare providers and subsequently submit these codes to CMS. Certain diagnoses carry a heightened risk of miscoding, potentially leading to inflated payments from CMS.
This audit focused on Blue Cross Blue Shield of Michigan (BCBSM), examining seven specific groups of high-risk diagnosis codes. The primary objective was to ascertain whether selected diagnosis codes submitted by BCBSM to CMS for use in the risk adjustment program adhered to Federal requirements.
Audit Methodology Explained
Our audit involved a sample of 248 unique enrollee-years, each associated with high-risk diagnosis codes for which BCBSM received elevated payments during 2015 and 2016. Our review was specifically limited to the payment portions directly linked to these high-risk diagnosis codes, totaling $963,544. This focused approach allowed us to efficiently assess the compliance of Bcbsm Diagnosis Codes.
Key Findings: Non-Compliant Diagnosis Codes and Overpayments
The audit revealed that a significant portion of the selected diagnosis codes submitted by BCBSM to CMS for risk adjustment purposes did not meet Federal requirements. Specifically, for 188 out of the 248 enrollee-years reviewed, the submitted BCBSM diagnosis codes lacked adequate support in the corresponding medical records. This discrepancy resulted in a net overpayment of $668,264.
These inaccuracies were attributed to the ineffectiveness of BCBSM’s policies and procedures designed to detect and rectify noncompliance with CMS program requirements, as mandated by Federal regulations. Based on the findings within our sample, we estimate that BCBSM received at least $14.5 million in net overpayments related to these high-risk diagnosis codes during 2015 and 2016. The issue of bcbsm diagnosis codes accuracy is therefore significant.
Recommendations and BCBSM’s Response
Our recommendations to BCBSM include: (1) refunding the identified $14.5 million in net overpayments to the Federal Government; (2) identifying and rectifying similar instances of noncompliance related to the high-risk diagnoses highlighted in this report that occurred both before and after our audit period, and subsequently refunding any resulting overpayments; and (3) thoroughly reviewing existing compliance procedures to pinpoint areas for improvement. The aim is to ensure that high-risk diagnosis codes, prone to miscoding, fully comply with Federal requirements. Furthermore, BCBSM should implement necessary enhancements to these procedures.
In their official written response to our draft report, BCBSM concurred with our recommendations and outlined actions already taken and planned to address these issues. BCBSM confirmed their commitment to refunding the $14.5 million to the Federal Government, while also noting that “delete files” totaling $406,237 had already been submitted to CMS for our audit period. BCBSM will collaborate with CMS to ensure timely repayment of the remaining balance. Additionally, BCBSM committed to reviewing high-risk diagnoses from periods preceding and following our audit and addressing any resulting overpayments. Finally, BCBSM detailed improvements made and planned to strengthen compliance with Federal requirements concerning high-risk diagnosis codes. We acknowledge and commend BCBSM for their proactive approach in addressing our recommendations.
