Nonprofit site slams Medicare program risk adjustment

A reporter at a nonprofit news site has tossed another bottle of kerosene into the firestorm of controversy over whether U.S. taxpayers get their money’s worth from the Medicare Advantage program.

The insurers that sell the private Medicare plans and many plan members say the program offers enrollees better preventive health benefits and much better protection against out-of-pocket costs than the traditional Medicare program, helping enrollees living on fixed incomes do a better job of protecting their quality of life.

Critics have traditionally attacked the program by pointing out that the Centers for Medicare & Medicaid Services (CMS) pays more for each Medicare Advantage program enrollee than it does for each traditional Medicare program enrollee.

Fred Schulte presents a more focused critique in an article published by the Center for Public Integrity: He contends that the commercial insurers selling coverage to Medicare enrollees through the program have pumped up profits by fudging the patient information used to compute “Hierarchical Condition Category” (HCC) risk scores.

A Medicare Advantage risk-adjustment program is supposed to use the scores to ensure that Medicare managers make higher “capitation” payments — payments for each enrollee served — to the Medicare plans that serve higher risk enrollees.

Drafters of the Patient Protection and Affordable Care Act (PPACA) included a similar risk-adjustment program in the package of “three R’s” programs that’s supposed to protect health insurers against any underwriting problems caused by PPACA health insurance market changes.