In late February of this year, CMS officials said in a draft regulation that they had seen “little evidence” that medical care “is substantially changed or improved as a result” of the home visits.

Officials wrote “we are concerned that the apparent significant increase in the prevalence of these assessments … contributes to increased risk scores.”

The proposal to restrict home visits didn’t sit well with health plans.

Karen Ignagni, president of the industry’s powerful trade group, America’s Health Insurance Plans, in a March 7, 2014 letter to CMS argued that the agency had shown no evidence that diagnoses made at home visits were “inappropriate.” “We strongly believe the proposal is misguided and should be withdrawn,” she wrote.

CMS changed its mind with a final order issued in early April that said simply that the agency was not “finalizing this policy.” Officials said they would continue to “analyze data” and “may reconsider” their decision in the future.

CMS officials have been trying to arrest the rise in risk scores for years.

Read More Meet the doctor who got $21 million from Medicare

Agency data analyzed by The Center for Public Integrity show that scores spiraled upward from 2007 through 2009, yielding Medicare Advantage costs that totaled $12 billion more over those three years than traditional Medicare would have likely paid for the same patient population. In 2010, CMS stepped in and trimmed back the scores using a multiplier to adjust them downward, but the impact didn’t last. By 2011, these scores were up another 2 percent, which raised costs over traditional Medicare by more than $11 billion in just one year.

A note on the Center’s methodology

How much home visits contributed to that growth is not clear because the government limits public access to billing data.But risk scores at one plan, XLHealth Corp., based in Maryland, jumped by at least 20 percent between 2007 and the end of 2011, a time when its house calls program mushroomed, according to the Center’s analysis of CMS data.

Suresh Ramakrishnan, who led the home visit expansion for three years as a senior vice president at XLHealth, said it helped bring in more than $600 million in revenue in 2013. He has since left the company.

“It did raise revenues, but that was not the purpose,” Ramakrishnan said in an interview. “It was to take care of the members who were frail and ill and identify conditions that remain undiagnosed.”

Terence Ohara, a spokesman for UnitedHealth Group, which owns the company, declined to address the financial impact of the visits. In an email, he said the house calls improve the “continuity and management of care and, in many cases, saves lives. In 2013 alone, our HouseCalls program made thousands of ‘urgent’ referrals so our members could receive immediate care from a physician or hospital.”

The debate over home visits has gotten little attention in Congress. But some members, mainly Democrats, have argued for years that CMS needs to make steeper cuts in risk scores to keep Medicare costs in check. Their views are buttressed by a range of government audits and studies, which have concluded that Medicare health plans can boost profits by coding higher and higher risk scores.

With nearly 16 million patients to track, CMS largely trusts health plans to make sure risk scores are accurate. But when the agency has checked, it has exposed errors — mostly scores that were too high — in nearly a third of patient files examined. Given the magnitude of program spending, even a small error rate can bleed millions of dollars from the federal treasury. Medicare expects to pay the health plans more than $150 billion this year.

Read why Medicare Advantage matters to you

As a result, CMS officials are stepping up audits called Risk Adjustment Data Validation, or RADV, this year. They expect to recoup about $370 million in overpayments tied to inflated risk scores from prior years.

Thomas E. Hutchinson, a former CMS official who was involved in setting up the RADV audit process, said plans have relied on home visits at least partly to detail a patient’s health history should they be audited. “That’s how it got started,” he said.

The CMS decision to allow home visits to continue has played only a bit part in a howling political debate in Washington over cutting Medicare Advantage rates. Yet it could cost taxpayers billions of dollars.

A report commissioned by America’s Health Insurance Plans predicted in February that limiting home visits would shave payments to Medicare Advantage plans by two percent over a year — nearly $3 billion. The report defended the visits as a means to “address conditions that could otherwise be untreated or undiagnosed.”

Humana, Inc., which has enrolled more than 2 million people in Medicare Advantage, alerted investors the CMS proposal to restrict home visits could “potentially result in additional significant funding declines,” according to a Feb. 24 Securities and Exchange Commission filing. The company heralded home visits as a “critical program.”

Spokesman Tom Noland said Humana conducted health assessments for about 531,000 members in the first three months of this year. He said that federal officials “should be encouraging Medicare Advantage plans to do more of this type of work,” because in-home visits help create a “trusting and engaging relationship” with patients.

UnitedHealth Group, which counts more than 3 million seniors in its Medicare Advantage plans, made more than 700,000 house calls last year. The giant insurer makes its pitch in this video.

Proponents of home visits don’t deny that they generate new revenue by raising risk scores. But they point to concrete benefits for patients.

Dr. Jack McCallum, a pioneer in the home health assessment field, said insurers typically can count on getting $2,000 to $4,000 more per person from Medicare in a year as a result. The plans pay about $300 for a physician or nurse practitioner to conduct the home exam, so it more than pays for itself, according to McCallum, a co-founder of CenseoHealth, who retired from the Dallas-based home visit company last year.

McCallum stressed that home visits should be structured to help patients and not “just to attract revenue.” While the doctors and other health professionals who visit don’t render any treatment, their observations and other exam findings are sent to the patient’s primary care physicians for possible follow-up care, he said.

Most home exams take about an hour or more and can range from recording a patient’s blood pressure and full medical history to sorting through medicine chests. They also may help spot hazards in the home, such as a mislaid rug that might cause a fall, the industry says.

As a result, proponents say, health professionals can remedy dangerous conditions before they result in a trip to the emergency room, or days in the hospital.

Some examples: dangerously high blood pressure, medical complications caused by improper mixing of prescription drugs, or home safety concerns related to dementia, said Brian Wise, chief executive officer of Advance Health in Chantilly, Virginia.

“I know there is a lot of good happening. People who are in danger are getting medical or social services that can help save their lives,” said Wise, whose firm expects to do as many as 200,000 home visits this year.

But Wise acknowledged that only about four out of every thousand home visits uncovers maladies serious enough to require an immediate phone call to the patient’s primary care doctor, urgent care or emergency medical services.

Click here to read the first part of the Center’s Medicare Advantage investigation

Other experts are skeptical of the importance of home visits.

Dr. Reid Blackwelder, president of the American Academy of Family Physicians, said that in his experience the home visits often aren’t well coordinated with the patient’s doctor, and as a result, haven’t been of much help.

“Unfortunately, they’re reporting back on things I already know. I don’t remember anything … that necessarily improved the care of my patient other than what I had already documented,” he said.

Early, the independent insurance agent in Tucson who blogs on Arizona Medicare issues, said from her vantage point, the verdict among seniors is mixed. She said some of her clients enjoy the attention. Others wonder, “Is this legitimate?” Some say they aren’t sick, and even though they don’t pay a dime, they’re annoyed and tell the health plan to “leave me alone.”

Making more money off Medicare “is the reason for the house calls,” she said. The visits also may discourage some patients from switching to competitors. “If you’re able to show you care about members, it’s less likely they will jump ship,” Zahedi of MedXM said.

Bright Future

Some home assessment firms have turned to former government health officials and venture capitalists for support. And Wall Street investors see a bright future for the home assessment industry — and other initiatives that help Medicare Advantage plans maximize billing.

Matrix Medical Network, of Scottsdale, Arizona, forecasts revenues topping $1 billion in the next few years from home visits. The firm, which is backed by venture capital powerhouse Welsh, Carson, Anderson & Stowe, says it completed more than 348,000 Medicare Advantage in-home health assessments in 2013.

Matrix and some other firms use telemarketers who set up home appointments reading from a script that stresses the health benefits.

A Matrix news release says that home visits “can be transformed into information that benefits” patients. Matrix also audits medical charts to confirm a disease the health plan may have failed to report to Medicare for reimbursement. In a video it touts home visits as a way for seniors to lead a better life. Company officials declined to be interviewed.

Thomas A. Scully, who led CMS under President George W. Bush, serves on Matrix’s board and is a general partner in the investment firm backing it. He said the government’s concerns about billing are “somewhat legitimate.” But he said that Matrix “does a terrific job” making sure that findings from a home visit are “passed on to doctors and used to get better care” for patients.

Health Evolution Partners, an investment firm whose managing partner and CEO is former Bush health information technology czar Dr. David Brailer, has a stake in CenseoHealth, which does more than 100,000 annual home assessments. Brailer declined to discuss CenseoHealth’s operations for the record. Censeo also declined comment.

Many firms that conduct home visits or analyze medical records aren’t shy about tossing out buzzwords such as “ROI,” short for return on investment, or touting other financial benefits in sales pitches to Medicare Advantage plans. Others plug their services as “revenue optimization.”

Predilytics, a Burlington, Massachusetts, health information analytics firm, markets software to Medicare Advantage plans that helps identify the “highest opportunity” elderly people to visit at home. Doing so can boost Medicare payment rates by 25 percent, it says. On average that comes to $600 per member, per month, which would add up to $36 million in new Medicare payments for a health plan with 5,000 members. The company, which also markets software to help improve the quality of medical care, did not respond to requests for comment.

One investor in the firm is Google Ventures, which was described in a Wall Street Journal article as “targeting” medical software companies for investment. Google did not respond to requests for comment.

Maria Gonzalez-Knavel, a Milwaukee health care attorney, said the rapid spread of electronic health records and billing software are also driving the industry.

“It’s easier to data mine than in the past when everything was on paper. An increasing amount of records are electronic and more easily searchable,” she said.

Upcoding

By all accounts, Medicare Advantage billing is highly complex and subject to interpretation — and that uncertainty supports many of the companies whose mission is to capture unseen Medicare dollars.

Read More Sliver of Medicare doctors get big share of payouts

Something similar happened nearly two decades ago after Medicare created a coding system that paid doctors escalating fees based upon the amount of time they spent with a patient and the complexity of medical decisions they made.

Soon, waves of billing consultants were teaching doctors how to work the new system. Most did so honestly, but others devised ways to overstate the complexity of medical services to gain higher fees, a scheme known as “upcoding.” Congress held a well-publicized hearing hoping to crack down on offenders.

But upcoding by doctors and hospitals remains a serious drain on Medicare in the era of electronic health recordsand billing software. Top federal officials in late 2012 warned doctors and hospitals to avoid using software programs to overbill.

Medicare Advantage plans don’t bill for each service the way that doctors do. But officials have yet to determine if electronic health records and billing software can be used to inflate risk scores.

Click here to see how risk scores can easily be inflated

The industry denies that it overcharges. The plans argue they are often underpaid and turn to data miners to make sure they don’t leave money on the table through missed diagnoses.