After uncovering hundreds of millions — potentially billions — in payments to Medicare Advantage health plans for inflated "risk scores," the Inspector General (IG) for the Department of Health and Human Services (HHS) scrapped the audits as too costly this past year, according to a yearlong investigation by the Center for Public Integrity.

In 2007 alone, the IG audits found that $650 million had been paid out to just six Medicare Advantage Health Plans for supposedly seriously ill individuals. One example: an Arizona health plan collected thousands of dollars from Medicare to treat a patient for congestive heart failure when all he really has was knee pain. In Texas, a man with an enlarged prostate was listed as having brain cancer.

Medicare expects to pay more for seriously ill individuals, and that's where "risk scores" come in. They're part of a complex payment system, and they're evidently easy to manipulate. Overpayments can be spotted only by examining and decoding individual health records, as illustrated in the above two examples.

Though insurers can be fined and face civil or criminal penalties for inflating risk scores, so far they've gotten away with nary a slap on the wrist.

The Centers for Medicare and Medicaid Services (CMS), which manages all Medicare programs, also audits health plans for risk scores and estimates that nearly $70 billion in "improper" payments were made to Advantage plans from 2008 to 2013.

Since Medicare Advantage insurers are paid a set fee by Medicare for each individual they sign up — originally designed as a cost-cutting move by Congress — risk scores allow the insurers to get more money per person if it appears that many of them have serious problems. The higher the risk for a plan's pool of enrollees, the higher the fee goes.

In 2012, CMS officially forgave what it estimated to be $32 billion in overpayments from 2008 to 2010. This year, however, CMS officials have said they expect to recover $370 million in overpayments as a result of new audits.