A report by the U.S. Government Accountability Office (GAO) suggests the Medicare Trust Fund could save billions if the Centers for Medicare and Medicaid Services (CMS) would adjust payments for Medicare Advantage plans to more accurately reflect the health of those enrollees. The problem, according to the report, is Medicare pays Medicare Advantage plans a predetermined amount for each beneficiary based on risk scores, which are adjusted for health status. The methodology CMS uses to come up with the risk scores has led to overpayments to these plans.

CMS has been working to correct the problem, but not enough. By more accurately paying for beneficiaries, the Medicare program would have saved between $3.2 to $5.1 billion in Medicare Advantage plan payments from 2010 to 2012, according to the GOA report.

While Congress took action through the Affordable Care Act in 2010 to reduce excessive payments to private plans, CMS continues to use the risk score adjustment of 3.4 percent it used in 2010, ’11 and ’12. CMS officials have said they may revisit their methodology in the future.

Recently, Energy and Commerce Ranking Member Henry A. Waxman, along with Ways and Means Ranking Member, Sander Levin, released an update to the GAO report. Waxman and Levin point out interesting inconsistencies in what the plans report. They say documented evidence shows that Medicare Advantage plans tend to report higher patient severity than is supported by medical records. The evidence also shows reported patient severity increases faster than for comparable patients in traditional fee-for-service Medicare.

More information for Medicare fraud is located at the Nolan Auerbach & White website.