California insurance firm over billed Medicare $424 million

December 17, 2012

A California health insurance company over billed Medicare $424 million, according a report issued by the U.S. Health and Human Services Inspector General. [California Watch]

PacificCare, now owned by United Health Group, claimed that patients on its Medicare Advantage plan had serious ailments that medical records did not confirm. The inspector general reviewed 100 cases from a 2007 contract between PacifiCare and Medicare and determined that in 45 of the cases diagnostic codes used for billing purposes did not match the corresponding medical records.

In one such case, PacifiCare submitted a diagnostic code for a genetic disorder involving abnormal brain function when records only mentioned a fever and a cough. PacifiCare reported that another patient had prostate cancer when medical records only discussed a shoulder suture removal. And in a third case, PacifiCare reported septicemia, a lethal infection of the bloodstream, despite the patient having knee surgery and no condition relating to a bloodstream infection.

The inspector general determined that Medicare overpaid PacifiCare $224,388 as a result of the 45 cases with incorrect or exaggerated diagnoses and ordered the firm to repay the amount.

PacifiCare billed Medicare for the treatment of 188,000 patients under the same 2007 contract. At the same rate of over payments, the inspector general estimated that PacifiCare over billed Medicare about $424 million.

The insurance firm continues to operate under the same name under the ownership of United Health Group, which objects to the findings in the inspector general’s report. United Health Group issued a statement saying the 100 cases reviewed should not be used to generalize hundreds of other claims.

“The audit does not follow Medicare’s own guidelines, standards or accepted methodology for validating risk-adjustment payments,” the United Health Group statement says.

The inspector general reviewed the UnitedHealth’s response before issuing the report Thursday.

A month prior, the inspector general found that Medicare overpaid nursing homes by about $1.5 billion in 2009 due to claims that patients needed “ultra high” levels of therapy.