Radar on Medicare Advantage

In what the plaintiff’s attorneys are calling the first False Claims Act settlement arising from a Medicare Advantage organization accepting a kickback from a pharmaceutical company, Humana Inc., Roche Diagnostics Corp. and related entities this month agreed to pay $12.5 million to resolve allegations that they engaged in a debt forgiveness scheme to keep Roche’s products on Humana’s formularies. Although the settlement amount is relatively small and the government did not intervene in the relator’s case, experts say the suit has some important takeaways for MA organizations.

The case (U.S. ex rel. Crystal Derrick v. Hoffman-La Roche Ltd. et al. 1:14-cv-04601), originally filed in 2014 in the Illinois Northern District Court, was brought by a former Roche employee who claimed she was privy to internal discussions that resulted in Roche forgiving millions of dollars owed by Humana in exchange for continued access to its formularies. These included formularies for Humana’s MA plans and the Right Source mail-order formulary, which covered diabetes products such as glucose strips, meters and lancets made by Roche.

In the ever-evolving world of star ratings, Medicare Advantage plans are at a unique crossroads where they must balance a bevy of changes to the measures used to determine their overall rating with managing members’ health and needs during the ongoing COVID-19 pandemic. And with CMS placing more emphasis on member experience in the star ratings, plans are encouraged to apply lessons learned from the pandemic about how to communicate and maintain good relationships with members, several experts advised during the Fourth Annual Medicare Advantage Leadership Innovations conference, which was held virtually on Jan. 26-28 by Strategic Solutions Network.

According to Melissa Newton Smith, executive vice president of consulting and professional services with HealthMine, Inc., more than half of a plan’s overall star rating is subject to changes that have just taken effect or are taking effect in 2021 or 2022, thereby impacting the 2023 and 2024 star ratings. Those include “additions, removals, weighting changes or significant specification changes to 23 of our 44 star measures,” Smith told attendees. “That should be causing us to innovate with changes to our processes, to our technology and tools, to our budgets no doubt, and possibly to the type of work our people are doing at our core in order to keep up with these program changes.”

Notably missing from the Trump administration’s late-term rulemaking blitz was a longstanding proposal regarding Risk Adjustment Data Validation (RADV) audits, but industry observers say it will likely be revisited by the Biden administration.

CMS has for the last decade been conducting contract-level RADV audits to verify the accuracy of payments made to MA organizations and recover improper payments, and in 2012 said it planned to adopt a “fee-for-service adjuster” to account for any impact from inaccurate diagnosis codes in FFS data that are used to calibrate the MA risk adjustment model. But the agency in a November 2018 proposed rule (83 Fed. Reg. 54982, Nov. 1, 2018) said its plans to recoup improper payments starting with payment year 2020 would not involve an FFS adjuster and that it may apply this extrapolation methodology when finalizing audits dating back to payment year 2011 (RMA 11/1/18, p. 1).

The Trump years were noticeably light on Medicare Parts C and D program enforcement — and 2020 in general was a departure from normal operations — but as CMS resumes program audits and other oversight activities this year, Medicare compliance experts are advising plans to review key business functions. At the same time, industry observers say plans can expect increased enforcement and more aggressive use of civil monetary penalties (CMPs) in Parts C and D under the new Biden administration.

CMS last March suspended scheduled program audits of Medicare Advantage organizations, Part D sponsors, Medicare-Medicaid Plans and Programs of All-Inclusive Care for the Elderly to shift its oversight focus more directly on assuring the delivery of care during the COVID-19 pandemic (RMA 4/2/20, p. 1). The agency in July restarted program audits on a condensed basis and in a Dec. 23, 2020, memo said it expects to “conduct routine audit activities” for Parts C and D sponsors in 2021, sending audit engagement letters to selected organizations no earlier than mid-March and continuing to send them on a rolling basis through September.