The war over Medicare Advantage audits heats up

The health insurance industry again is attacking federal proposals that would more aggressively audit Medicare Advantage claims for improper coding — audits that would save taxpayers upwards of $4.5 billion over the next decade.

The big picture: Medicare Advantage is the growth engine of the insurance industry, which has successfully delayed changes and neutered audits.

Between the lines: The audits, called "risk adjustment data validation," have created paranoia among insurers for years. The federal government created the audits as a way to make sure insurers' records of patients' diagnoses matched up to their medical records.

• Medicare Advantage insurers have exaggerated diagnoses as a way to get higher payments from the federal government, costing taxpayers billions of dollars over the past decade.

Driving the news: The Centers for Medicare & Medicaid Services gave the industry until the end of August to send in more comments on a beefed-up auditing process. Insurers still hate everything about it.

• America's Health Insurance Plans, the industry's primary lobbying group, told CMS 8 times in its comment letter to withdraw the entire rule.
• The Blue Cross Blue Shield Association and several regional insurers criticized the idea of removing a formula that adjusted Medicare Advantage overpayments based on errors in the regular Medicare program.
• Centene warned the audits could lead to more "market consolidation."

The Medicare Payment Advisory Commission again stood alone as a supporter of the government's auditing process.

What's next: Federal officials will make a final call on the auditing changes later this year, with the entire industry pressuring them to kill or substantially scale back their changes. It's possible insurers would take this to court if the changes go through.