Moreover, for-profit nursing facility chains were far more likely to recommend more extensive services. Thirty-two percent of patients at the for-profit facilities were given “ultra high therapy,” compared to 18 percent at non-profits and 13 percent at government-owned skilled nursing facilities, according to the HHS report.
There is also evidence to suggest there was substantial upcoding after Medicare began its experiment with managed care privatization, which Mitt Romney and Paul Ryan would like to expand under a voucher program – or premium support, as they call it. When President George W. Bush in 2003 announced that payments for beneficiaries in Medicare Advantage plans would be adjusted to reflect their medical conditions, the reported health status of those in the plans declined sharply over the next 12 months.
Moreover, the “risk scores” for seniors in the Medicare Advantage plans rose much more quickly over the next two years than those in traditional Medicare, according to an analysis by HHS. “Upcoding is rendering an already imperfect risk adjustment system even less able to adjust for differences in health status between enrollees in private plans and those in traditional Medicare,” the Center for Budget and Policy Priorities said in its analysis of the report. The Affordable Care Act, better known as Obamacare, eliminated the extra payments that went to Medicare Advantage plans because of the upcoding.
The joint HHS and Department of Justice task force on Medicare fraud has targeted upcoding in its efforts to eliminate unnecessary waste in the system. Last March, Illinois-based LifeWatch Services agreed to reimburse the government $18.5 million after two former salesmen accused the firm of charging Medicare for automated cardiac rhythm monitoring systems for patients who only had mild arrhythmias and would not normally be eligible for the expensive cell phone-based service. The difference in cost to Medicare was $500 to $1,000 per patient compared to manual monitoring.
The government also accused Baltimore’s Good Samaritan Hospital, part of the Medstar Health System, of diagnosing hundreds of patients over a four-year period with malnutrition without justification. “GSH employees used leading questions so that the physician would answer that the patient was malnourished, which was the result GSH wanted to achieve,” the complaint alleged. Though the hospital denied the charge, earlier this year it paid nearly $1 million to settle the suit.
The Center for Medicare and Medicaid Services and the private insurance industry are experimenting with a number of payment reforms that they hope will reduce incentives for upcoding. These include bundled payments for episodes of care administered by provider groups and pay-for-performance for physicians.
But, like DRGs, even these changes can be gamed, experts warned.
“Bundled payment is also subject to coding,” said Ginsburg. “There isn’t a silver bullet for addressing that.”