A report issued by GAO the week of March 7, indicates that CMS overpaid the MA program run by private companies by between $3.2 and $5.1 billion for the years 2010-2012. The overpayments were the results of CMS inadequately adjusting for health status of members enrolled in Medicare. The GAO discovered that coding differences between MA enrollees and those enrolled in traditional fee for service Medicare lead to inappropriately high risk scores and reimbursements.
CMS adjustments to risk scores to account for diagnostic coding differences were too low, resulting in the overpayment. This report comes in the midst of CMS’ announcement of a proposed decrease in MA payments of 2.3% for 2014. America’s Health Insurance Plans (AHIP) is opposed to this proposed cut, saying that it will negatively affect Medicare enrollees. But the cut has a lot of support from congress, which insists it is a necessary cut to ensure that the program is not overspending for care and services.