The Health and Human Services Office of Inspector General, which investigates Medicare and Medicaid waste, fraud and abuse, said it would conduct “various reviews” of Medicare Advantage billing practices with an eye toward curbing overcharges. Results are due next year.

The Inspector General also announced from five to ten new audits into Obamacare, ranging from the accuracy of “financial assistance” payments for new enrollees to controls to prevent fraudulent sign ups.

The Inspector General’s office did not say if individual Medicare Advantage plans would be audited, but indicated it would focus on concerns that— the subject of a recent Center investigation.

“Prior OIG reviews have shown that medical record documentation does not always support the diagnoses” (used to bill Medicare),” the Inspector General said. “Efforts for FY 2015 and beyond may include additional work examining the soundness of rates and risk and payment adjustments,” the Inspector General said.

The audits are among dozens of new projects spelled out in the Inspector General’s 2015 “work plan” posted on the agency’s late last week. While much of the plan focuses on managed care, the Inspector General also plans to audit spending on other programs, such as one paying billions of dollars to doctors and hospitals that purchased electronic health records.

The OIG work plan serves as a blueprint for enforcement actions during the upcoming year and calls attention to medical initiatives officials believe are vulnerable to fraud and abuse. The FY2015 fiscal year began October 1 and runs through Sept. 30, 2015.

Many of the audits are described only briefly in the work plan or are couched in bureaucratic language that makes it difficult to judge their potential impact.

The Inspector General is continuing to pursue allegations of billing fraud and abuse by doctors, hospitals and medical suppliers, such as ambulance companies and sellers of diagnostic gear. But it appears to be placing more emphasis on managed care than in the past.

The agency also said it planned to look into what it described as “emerging vulnerabilities” in a wide range of Obamacare programs; the work plan noted that Medicaid, the health plan for low income people, is growing explosively under the health reform law.

“Protecting an expanding Medicaid program from fraud, waste, and abuse takes on a heightened urgency as the program continues to grow in spending and in the number of people it serves,” the Inspector General wrote.

Keeping tabs on managed care spending presents a particular challenge for fraud fighters, who are accustomed to bringing cases against companies that bill for services never rendered.

The abuses suspected in Medicare Advantage are more subtle and complex. Unlike standard Medicare, in which doctors and hospitals bill for each service they provide, private Medicare Advantage plans and other managed care organizations are often paid a flat monthly rate for each patient using a formula called a “risk score” that estimates the health challenges facing individual patients. Basically, Medicare pays higher rates for sicker patients and less for people in good health.

But federal officials concede that billions of tax dollars are misspent every year because some Medicare health plans exaggerate how sick their patients are, a practice known as “upcoding.” At least six whistleblower lawsuits alleging that Medicare health plans inflated risk scores to overbill the government are in federal courts.

The Center for Public Integrity’s “” series, published in June, revealed that officials have struggled for years to prevent health plans from charging too much.

The series found that Medicare made to health plans — mostly inflated fees from — from 2008 through 2013 alone.

The Medicare Advantage program has grown rapidly under the risk-scoring formula, which Congress enacted in 2003. Officials expect Medicare Advantage to cost taxpayers as much as $160 billion this year, as enrollment nears 16 million, or about one in three elderly and disabled people on Medicare.

Federal officials have conducted audits of Medicare Advantage billing called Risk Adjustment Data Validation, or RADV, at least since 2008. But they have never imposed stiff financial penalties for overcharges, despite evidence that billing errors have been deeply rooted and waste billions of tax dollars.

OIG audits of six health plans completed in 2012 found that the companies couldn’t justify payments from the government for 40 percent or more of their patients. The resulting overpayments were pegged at nearly $650 million for 2007 alone — just for those six plans.

The Center for Public Integrity’s investigation confirmed that federal officials, after years of haggling with health plans, for pennies on the dollar. One New York state health plan that federal auditors said may have been overpaid by as much as $41 million in 2007, coughed up just $157,777 to settle the matter in December 2013, for instance.

Government officials aren’t sure how much of the suspected overpayments to Medicare Advantage plans are fraud and how much are due to health plans being thorough in documenting illness, according to Richard Kronick, director of the HHS Agency for Healthcare Research and Quality.

“I would not be surprised if there is some fraud involved, because this does occur in many areas of human behavior when a lot of money is at stake, but I suspect that much of the increase in risk scores is a result of health plan efforts to more fully document diagnoses that do exist,” he wrote in a blog post earlier this month.

Either way, however, Kronick said the Medicare Advantage is costing more than standard Medicare. He has advised CMS officials to consider cutting payments to health plans that report much higher-than-expected rates of patient illness.

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When Minnesota retiree Doug Morphew needed surgery last year, he expected his Humana Medicare Advantage plan to step up and pay the lion’s share of the bill.

Morphew said the health plan had told him over the phone he would owe just $450 for the two days he spent in a St. Paul hospital recovering from the operation to repair an .

Less than a month later, however, Humana hit him with a bill for $6,461.66, claiming the surgery was not covered because the hospital was “out of network,” according to an affidavit he filed with the Minnesota Attorney General’s Office last year.

“Considering that I was expecting a bill of $450, I was incredibly upset,” said Morphew, 68, who lives in Lonsdale, Minn., and works part time as a transportation industry consultant.

Morphew said that Humana paid the bill, but only after “several months of fighting” with him, and after he complained to state regulators.

In October 2013, Minnesota Attorney General Lori Swanson sent Morphew’s formal complaint, and about two dozen others, to Centers for Medicare and Medicaid Services (CMS) administrator Marilyn B. Tavenner. Swanson asked the federal official to “undertake an investigation of Humana’s practices and take appropriate remedial and punitive action.”

The letter sparkedÌýÌýin the state. But nearly a year later, Swanson is not satisfied with the response.

“As far as I’m aware, there has been no formal enforcement action taken,” said Minnesota attorney general’s office spokesman Benjamin Wogsland. “We have very serious concerns that continue.”

Citing patient confidentiality laws, Humana spokesman Tom Noland declined to comment on specific cases. But he said that Humana “has worked actively with CMS to resolve the matters outlined in the letter.” CMS said it is satisfied that Humana has largely fixed any problems.

Medicare pays the privately run health plans — an alternative to traditional Medicare — a set monthly rate for each patient. About 16 million Americans have signed up, about one third of the elderly and disabled people eligible for Medicare, at an annual cost to taxpayers of more than $160 billion. A Center for Public Integrity investigation published in June found as much asÌýÌýto Medicare Advantage plans from 2008 through last year.

Many health plans also collect monthly fees directly from patients and may charge co-payments for medical services, such as $10 for a doctor’s office visit. The plans also can limit care to doctors and hospitals in their networks, so long as patients are advised of these restrictions.

Humana has pitched its plans in Minnesota through radio and television ads, telemarketing and the mail, typically telling seniors it offers more benefits than standard Medicare and will cost them less out of pocket.

But Humana “sometimes denies claims for services that are covered under original Medicare,” overcharges for copayments, “misrepresents” which doctors and hospitals patients can go to and hides behind “red tape and delay” to avoid paying claims, according to Swanson’s letter.

Swanson turned to CMS because state regulators lack the legal authority to impose sanctions on Medicare Advantage carriers. When Congress created the Medicare Advantage option in 2003, it gave CMS that power, thus preempting state laws and oversight.

Minnesota officials don’t believe CMS should have a “monopoly” on oversight. “We think states should have authority over improper determinations by Medicare Advantage plans,” Wogsland said. “If they (CMS officials) don’t take action, there’s no other remedy.”

Other state officials also have been frustrated by the limits on their authority. In October, Connecticut Attorney General George Jepsen called for federal officials to “aggressively scrutinize” UnitedHealthcare’s decision to drop a large number of doctors from its Medicare Advantage plans, a move that had caused an uproar from patients and medical groups.

Medicare has also reported its own difficulties keeping tabs on the fast-growing program.

In a little noticed proposal in March, CMS officials said they were “constrained in the number of program audits we can conduct each year, due to limited resources.” The agency is only able to audit about 30 Medicare Advantage companies a year — about one in ten — of the 300 operating.

CMS proposed that health plans conduct and pay for self-audits with the goal that each organization would be looked over at least every three years. But in May CMS backed off in the face of industry protests.

“Ensuring that Medicare beneficiaries receive high quality care and timely services while enrolled in a Medicare Advantage plan is a top priority for CMS, an agency spokesman wrote in an email.Ìý He said the agency “may finalize this proposal at a future date.”

“We were disappointed to see it rolled back,” said David Lipschutz, a senior policy attorney with the Center for Medicare Advocacy. He said the proposal “begged the question” of how often plans are audited.

“We have concerns across the board,” Lipschutz said. “It’s unfortunate that we have public dollars going toward a privatized program with relatively little oversight.”

CMS officials point out that they have taken enforcement action against health plans that fail to pay bills or provide necessary care for their patients.

The agency posts theseÌýÌýon its website, though patients aren’t likely to spot them without considerable hunting around. Even if they do, the sanctions often are written in language that gives little clue to the actual infractions other than they pose a “serious threat to the health and safety” of patients.

From November of 2009 to this August, the agency levied 68 fines against Medicare Advantage plans for a total of about $9.8 million, a review of the CMS website shows.

In that time, CMS terminated four health plans, two of them because they had become insolvent. On 21 occasions, CMS suspended enrollment in health plans, usually after discovering that sales agents misrepresented the benefits to potential customers.

In the case of Humana’s performance in Minnesota, CMS officials said they had “not seen increases in complaints or other concerns” since receiving Swanson’s letter.

They said Humana “appears to have made significant progress addressing these issues, and we have been satisfied with Humana’s responses to date.”

But Minnesota official Wogsland called it “disappointing” that CMS had taken no formal action. His office continues to get complaints from patients, hospitals and other health care providers about unpaid bills. “That’s a problem,” he said.

Darlene Tucker, 75, of Bloomington, who said she got by on monthly Social security income of $1,271, is one.

In an affidavit, she said the Humana agent sold her a plan that was supposed pay the full cost of radiation therapy for breast cancer. But she said she was stuck with co-payments of $994.22, which she couldn’t afford.

The health plan never did pay, according to her affidavit. The center that performed the radiation treatments eventually wrote off the bill.

“My fight with cancer was enough for me to deal with at the time. I do not think I should have had to fight Humana for insurance coverage it promised to provide,” she said.

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Many Medicare Advantage health plans routinely overbill the government for treating elderly patients — and have done it for years, a federal study shows.

Department of Health and Human Services researchers found that many plans exaggerate how sick their patients are and how much they cost to treat. Medicare expects to pay the privately run plans — an alternative to traditional Medicare —$160 billion this year.

The HHSÌýÌýdoes not accuse any specific insurers of wrongdoing or nameÌý the plans that were scrutinized. But the researchers offer the most comprehensive evidence to date that suspect billing practices have been common across much of the Medicare Advantage industry and are likely to get worse unless officials crack down.

“Further policy changes will likely be necessary,” the study concludes.

Congress created Medicare Advantage in 2003 to encourage private insurance companies to venture into the senior care market. The plans now insure 16 million elderly and disabled people, nearly a third of those eligible for Medicare. They are popular with seniors because they often provide extra benefits, such as eyeglasses and dental care, and can cost less out-of-pocket than standard Medicare.

Medicare pays the Advantage health plans higher rates for sicker patients and less for healthy people using a complex formula called a “.” But the HHS study spells out several ways health plans have inflated those scores, from reporting surprisingly high levels of medical conditions such as alcohol or drug dependence to billing for an inordinately high number of patients with complications of diabetes.

Despite its broad implications for Medicare spending, the study by HHS researchers Richard Kronick and W. Pete Welch has attracted scant notice in Washington. It was quietly posted late last month on an online research site run by the Centers for Medicare & Medicaid Services, part of HHS.

Kronick directs the HHS Agency for Healthcare Research and Quality, whose mission is to improve health care delivery. Welch works for the HHS Office of the Assistant Secretary for Planning and Evaluation. The authors note that the study does not necessarily reflect HHS views, but both offices are influential in advising the government on policy matters.

CMS officials declined comment.

“This is clearly impacting what taxpayers are paying for Medicare Advantage, I think, not in a good way,” saidÌý, a researcher at the Dartmouth Institute for Health Policy and Clinical Practice who has studied Medicare billing trends.

Health care fraud expert Malcolm Sparrow, a professor at Harvard’s Kennedy School of Government, said the problems with billings based on risk scores reveal how “financial incentives” can improperly influence how medicine is practiced.

“The problem seems significant,” he said.

The new study amplifies the findings of aÌýÌý published in June. The investigation found that Medicare madeÌýÌý— mostly overcharges fromÌýÌý— to Medicare Advantage plans from 2008 through 2013. The center’s investigation also found that risk scoresÌýÌýin some health plans than others and that federal officials repeatedly yielded to industry pressure to minimize efforts to recoup overpayments.

Medicare Advantage plans are paid a set monthly fee for each patient based on the risk scores, and the government largely trusts the health plans to report the health status of people they enroll. About 70 medical conditions can boost payment rates.

Clare Krusing, a spokeswoman for America’s Health Insurance Plans, the industry’s trade group, said the higher billing resulted from health plans working with patients “to understand their specific health conditions, and consequently make sure they get the care they need.”

“What was not highlighted (in the study) is the fact that these programs have demonstrated improved quality in patients’ health,” she wrote in an email.

However, the study concludes that people who join Medicare Advantage plans are healthier than those who remain on standard Medicare, which pays doctors and hospitals for each service they provide. The study also says it’s “unlikely” the higher payments health plans derive from diagnosing more medical conditions “are related to substantial health benefits.”

In short, the numbers of patients diagnosed with diseases which result in higher payments increased far faster at many Medicare Advantage health plans than among people on standard Medicare. Exaggerating the severity of a medical condition to raise fees is known in medical circles as “upcoding.”

For instance, “drug and alcohol dependence” is as much as eight times more common in the highest coding Medicare Advantage plans than among patients in standard Medicare.

Even more striking, according to the study, is how much higher reported diabetes rates have been in certain health plans than others. The study tracked rapid rises in many medical conditions from 2004, when risk scoring began, through last year, and made them public for the first time.

Overall, diabetes with serious complications, which pays higher rates, was reported up to five times more often among enrollees in some Medicare Advantage plans than among people on standard Medicare. Conditions such as major depression also were far more common in some plans than others.

Holly J. Cassano, a medical coding consultant in Florida, said the government’s decision to make the billing data public was “an enormous leap … in the right direction for continued transparency in all areas of health care.”

“The main issue, now that it has been revealed, is ‘upcoding’, which no one likes to discuss, but the data is in black and white and speaks volumes,” Cassano, CEO of Accucode Consulting, wrote in an email.

Medicare Advantage enjoys solid political backing onÌýand has successfully Ìýefforts by the Obama administration to make substantial cuts to its payment rates. Lobbying by the insurance industry and the fear of angering seniors also has largely quieted concerns in Congress that Medicare Advantage plans can be a poor value for taxpayers.

Congress recognized problems with Medicare Advantage coding as far back as 2005, when lawmakers directed CMS to find ways to cut back on rising, and presumably unjustified, risk scores. But CMS didn’t act until 2010, when it adjusted risk scores downward. The Affordable Care Act theoretically requires further reductions, but the political storm over the planned cuts has made their fate uncertain.

CMS has cut back payment levels for several diseases that appear to have prompted upcoding by Medicare Advantage plans. But the study’s authors noted that health plans are likely to find new conditions to replace lost revenue.

Even though the study does not name plans, it says all those examined had at least 10,000 members and that one plan among the highest billers had more than 200,000 members. The study indicates that the longer patients stay in Medicare Advantage, the more their risk scores rose, suggesting that government’s failure to reel in coding has been costly.

The Center for Public IntegrityÌýhas sought similar billing data from CMS for the past year as well as the names of Medicare Advantage plans that have been suspected of overbilling the government — and by how much. In late May, the CenterÌýÌýthe Department of Health and Human Services to make its Medicare Advantage audits and other related records public. The lawsuit is pending.

Last month, CMS published aÌýÌýthat would allow for “a formal process to recoup overpayments” made to the health plans. A final decision on the proposal is due by Nov. 1.

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