A substantial Medicare Advantage audit initiative that once caused significant concern for major insurers like UnitedHealth and Humana is now showing signs of potential delays in implementation. In May, the Biden administration unveiled an ambitious plan to strengthen oversight of private insurers’ billing practices under the Medicare Advantage program, which serves more than half of all Medicare beneficiaries. Central to this initiative was a commitment to hire 2,000 medical coders by September 1 to monitor and audit the billing practices of these insurers.
This announcement, driven by the determination of CMS Administrator Mehmet Oz to combat fraud, initially raised alarms within the insurance sector. However, as September has approached, there appears to be scant evidence supporting the recruitment of the promised coding staff. The Centers for Medicare & Medicaid Services (CMS) has not publicly posted job listings nor confirmed any advancements toward meeting this hiring target. Insiders suggest that the federal government may struggle to attract skilled coders in a competitive job market dominated by the private sector.
The implications of this hiring initiative are significant, particularly as the Medicare Advantage program is projected to funnel over $500 billion to insurers in the current year. Additionally, the CMS has estimated potential clawbacks amounting to $4.7 billion over the next decade based on audit findings. The agency began its audits for the 2019 plan-year data in June, with hopes of addressing backlogs from 2018 through 2024 by early next year. Yet, the lack of adequate staffing may jeopardize these timelines. CMS has acknowledged that discussions regarding coder recruitment are still in progress, prompting concerns from industry experts, such as Avalere Health’s Mark Newsom, about the practicality of rapidly scaling up hiring.
For investors, the uncertainty surrounding enforcement actions could introduce volatility into a sector already facing intense political scrutiny. While private insurers maintain that Medicare Advantage provides superior benefits and aligns with legitimate risk-based pricing, there is a growing chorus of criticism—from entities like the nonpartisan Medicare Payment Advisory Commission—highlighting the urgent need for reform. They point to an alarming estimate of $84 billion in excess payments compared to traditional Medicare.
Until the CMS clarifies its plans and capabilities, insurers may find themselves with more time before facing potential audit penalties. However, the uncertainty surrounding the audit campaign suggests that the specter of regulatory oversight remains a looming concern for these companies.
