Plans overseen by insurers through Medicare Advantage, theprivate sector alternative to Medicare, the enormous public healthprogram for the nation’s elderly, are coming under criticism for apattern of “pervasive overcharging.”

Audits by the Centers for Medicare & MedicaidServices of 37 Medicare Advantage plans in 2007 foundthat many of them overbilled the federal government, often byexaggerating the severity of a patient’s condition.

The audits from nearly a decade ago were only recently madepublic because of an open records request from the Center for Public Integrity, an investigativereporting organization.

When trying to rein in the cost of traditional Medicare, thefocus has been on providers that have been orderingtoo many tests or recommendingunnecessary expensive procedures or medications.

The issue with Medicare Advantage, according to a number ofaudits, are the insurers overseeing the plans.

The overbilling is tied to the way that MedicareAdvantage plans are reimbursed for their services. Unlike thetraditional fee-for-service model, the amount MedicareAdvantage plans are paid is based on the patient’s “riskscore.” The sicker the patient, the higher thereimbursement.

Overstating a patient’s sickness may be an even easier (and lesscostly) way for insurers or providers to bilk the federalgovernment for money than ordering up unnecessary tests, since thelatter does in fact cost the provider.

Insurers overbilled by at least $2,000 for at least 3,500patients in 2007, when Medicare Advantage was still relativelynew. For 150 patients, the overbilling was over $10,000.

Nine years later, however, some of the insurers are still in themidst of disputing the findings of that audit. Some have refundedthe feds for their alleged overcharges.

The two health plans that were not identified as culprits —Group Health Plan Cooperative and Kaiser Foundation Health Plan ofCalifornia — are both nonprofits in the Golden State.

While there is not much publicly-available data on the issue ofoverbilling or “upcoding” more recently, a report by the GovernmentAccountability Office earlier this year warned that it remained aserious issue.

"We think that CMS has a lot of work to do," James Cosgrove, the head of the GAO's health caredivision, told NPR.