Risk-adjustment fraud can be led by the Medicare Advantage plan itself or by physicians, contractors or consultants that the Medicare Advantage or PACE plan hires to find diagnosis codes and improve the plan’s revenue.
There are a host of companies that offer to provide Medicare Advantage plans with retrospective chart review services, risk-adjustment data submission services (including claims filtering), and prospective risk-adjustment services, including home visits. Many contractors market their services by their high return on investment, not accuracy.
Furthermore, instead of being paid hourly, some contractors have contingency fee arrangements with the Medicare Advantage plans. This type of arrangement gives the contractors a perverse incentive to focus on finding and adding to the Medicare Advantage plan’s submission to CMS as many diagnosis codes as possible, whether or not the codes are valid, as opposed to ensuring the accuracy of the codes submitted.
Many physician groups have contracts with Medicare Advantage plans that pay them a share of the money the Medicare Advantage plans receive from risk adjustment. Such physician groups can “upcode” their patients with diagnoses for medical conditions so that CMS will overpay the Medicare Advantage plans for risk adjustment.
Ultimately, each Medicare Advantage plan is responsible for the diagnosis codes it submits, whether or not it hires a third party to do the work and submit the risk-adjustment processing (RAPS) files to CMS on its behalf. Under the False Claims Act, both the Medicare Advantage plan and the physician, contractor or consultant it hired can be held liable for risk-adjustment fraud.