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Taxpayers covered $14 billion in erroneous charges by private health plans paying for seniors’ care, report says

(AP Photo/Jacquelyn Martin)

Medicare paid out $14.1 billion in improper claims in one year to private health insurance companies that bill the government for care to the elderly, but the plans have not had to pay back the money, a new report finds.

The private plans, called Medicare Advantage, have weak defenses against fraud, and even when they are audited, the investigations take years, the Government Accountability Office found.

“As the [Medicare Advantage] program continues to grow, safeguarding the program from loss is critical,” said the report released this week.

The problems are part of the growth across government of what are known as “improper” payments. Many programs, including Social Security and those that provide benefits to veterans, are struggling to check billions of dollars a year that should not have been paid out, whether because of fraud or unintentional mistakes.

GAO concluded that while Medicare knows the importance of monitoring the private plans for billing irregularities, auditing is stuck in red tape at a massive loss to taxpayers.

[A Medicare scam that just keeps rolling ]

The network of Medicare Advantage plans are an alternative to traditional fee-for service coverage offered by Medicare, and their popularity is growing fast, with almost 16 million participants in 2014, GAO said. In 2014 the federal government paid about $160 billion to a total of 570  Medicare Advantage plans.

The overcharges come from a poorly run anti-fraud system administered by the Centers for Medicaid and Medicare Services, which pay out reimbursements to the private plans, GAO found. The agency has spent about $117 million on audits using a complex formula to pinpoint where the system is at risk of fraud. But so far it’s recovered only $14 million.

In many cases, the private plans provide the government with “unsupported information” about a patient’s health condition, conveying that it is worse than it really is, the report says.

Almost three-quarters of the bogus payments the government made to private plans in 2013, the year GAO studied, “resulted from [Medicare Advantage] organizations submitting insufficient medical record documentation… that did not support the diagnoses those organizations had previously submitted to [the government] to determine risk adjustment payments,” the report found.

[Doctors cut from Medicare Advantage plans struggle with what to tell patients]

GAO started looking into overbilling by private health plans following a series of articles by the Center for Public Integrity, called “Medicare Advantage Money Grab,” which documented nearly $70 billion in “improper” payments to health plans from 2008 through 2013. Most of the payments stemmed from  inflated fees from overstating patients’ health risks, the series found.

The Department of Health and Human Services, Medicare’s parent agency, agreed with GAO’s conclusions and recommendations and reaffirmed its commitment to reducing improper payments.

“HHS is strongly committed to program integrity in the Medicare Advantage  program and takes seriously our responsibility to protect taxpayer dollars by identifying and correcting improper payments,” the agency told auditors. In fiscal 2015, Medicare Advantage plans identified and returned to the government $650 million in overpayments.