The OIG takes on Payers but Trickle Down is Likely

Two key insurers were recently targeted for HHS OIG scrutiny.

I was all set to dive into the September audits of HumanaChoice and BlueCross Blue Shield (BCBS) of Tennessee conducted by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) when I listened to Dr. Ronald Hirsch during a recent edition of Monitor Mondays when he reported on Cigna Healthspring.

I was also struck by the low error rate. As I dug in, it became clear that all three talked about validating diagnoses, but Cigna was a Hierarchical Condition Category or HCC audit. The outcome remains important for three reasons:

• First, HCCs are a derivative measure so an errant diagnosis may not be fatal.
• Second, an error rate this low means that the HHS OIG is unlikely engage in large numbers of this type of audit.
• Finally, the OIG reiterated that “incorrect diagnosis codes are errors that lead to improper payments, even if the payment is less than it should be.”

The OIG recommended recovering less than $40,000. That means the OIG is recommending recovery of an amount that’s probably less than the OIGs cost of the audit. I’m not clear how that prevents waste.

Once I satisfied myself on Cigna, I headed back to HumanaChoice and BCBS of Tennessee. Each of these was an extrapolated audit purporting to validate high-risk diagnoses. The nine diagnoses included the following: acute stroke, acute heart attack, embolism, vascular claudication, major depressive disorder, lung cancer, breast cancer, colon cancer, and prostate cancer.

The OIG claimed there was an overall error rate of 75 percent for Humana and 78 percent for BCBS. But those numbers are deceiving.

The OIG claimed a 100-percent error rate for breast cancer for both payers. BCS also had a 100-percent error rate for acute heart attack and Humana had a 100-percent error rate for acute stroke. Only vascular claudication and major depressive disorder had error rates of less than 90 percent.

Both Medicare Advantage (MA) plans raised the usual issues challenging the reviewer’s knowledge and skill, the use of a physician tiebreaker, and the OIGs failure to adhere to the Centers for Medicare & Medicaid Services (CMS) Medicare Risk Adjustment Validation or (RADV) methodology. The OIG dismissed the payer’s entirely accurate observations with the usual canned response of essentially “we’re the OIG.”

Humana contested the findings for 10 claims in five diagnoses and BCBS contested 14 claims in seven diagnoses. Assuming Humana is correct on every contested claim it still would have an alleged 80 percent error rate. Similarly, if BCBS is correct it still has an alleged 73- percent error.

We should be concerned with the OIG’s audit for several reasons:

• The definitions of diagnoses described by the OIG may not correspond to typical coding criteria. When 2 coders differ in their reviews the OIG uses a non-standard way to “break the tie.”
• Next, the OIG ties the diagnosis, in some cases, to therapeutic requirements.
• Third, these error rates mean the OIG will continue these audits. We should expect them to expand to provider audits.  Coding audits may be less susceptible to the ambiguity of inpatient status audits.
• Fourth, payers rarely take reductions in revenue well. I expect payers will increase scrutiny of claims.

As payers see reductions in revenue associated with audits they will do one of two things: reduce services areas or work to reduce services.