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MedPAC measures Medicare Advantage risk score inflation

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The Medicare Payment Advisory Commission says the federal government looks as if it’s close to equalizing support for the traditional Medicare program and the Medicare Advantage program — but that problems with Medicare Advantage plan “risk scoring” may be throwing off comparisons.

The fate of efforts to address MedPAC’s concerns about Medicare Advantage plan issuer risk scoring could affect many other U.S. health insurance reform efforts, because the backers of those efforts are counting on risk scoring to help issuers even out the amount of claim risk each issuer has to bear without making the high-risk people themselves pay higher rates.

Related: 3 things MedPAC officials are saying about Medicare Part D

MedPAC is a congressional agency that’s supposed to provide independent advice on issues affecting Medicare, a giant federal health insurance program that serves people ages 65 and older, people who have disabilities, and people who are getting kidney dialysis.

In MedPAC’s latest annual report to Congress, the group is recommending modest increases in the traditional Medicare program reimbursement rates for physicians and hospitals; flat reimbursement rates for long-term care hospitals and hospice providers; and a 5 percent reimbursement cut for home health agencies and rehabilitation agencies.

MedPAC says Medicare managers look as if they have eliminated most of the gap between what Medicare spends on enrollees in traditional Medicare and what private carriers get to run Medicare Advantage plans.

After adjusting for quality bonuses and enrollee health risk scores, Medicare Advantage payments per enrollee are about the same as what Medicare spends on each traditional Medicare enrollee, MedPAC says.

But MedPAC and others have suggested in the past that some Medicare Advantage plan issuers use ”intensive coding practices” to increase the Medicare Advantage plan enrollees’ risk scores.

Medicare managers use the Medicare Advantage plan enrollee risk scores to increase payments on behalf of enrollees with high health risk scores, to compensate for the fact that Medicare Advantage program rules require issuers to ignore personal health status when setting rates.

Managers of some other insurance risk-adjustment programs, such as the Affordable Care Act risk-adjustment program, use risk scores to collect cash from plans with low risk scores and send the cash to plans with high risk scores. Developers of some proposed ACA alternatives and ACA fixer programs assume that health insurers will continue to use some kind of risk-score-based risk-adjustment program

One question facing risk-score-based programs is how to run a fair risk-scoring program. A second question is how to get the issuers that earn less because of risk-scoring, or that have to make payments because of risk-scoring, to continue to participate in the risk-scoring system.

MedPAC analysts say many of the Medicare Advantage plan issuers with unusually high enrollee risk scores may be following Medicare condition coding rules, but putting a great deal of effort into identifying and assigning the most severe possible condition codes that comply with the rules.

The analysts tried to get a grip on issuers’ fervor for making enrollees look as if they already have one fit in the grave by comparing Medicare Advantage plans’ 2015 risk score growth with risk score trends for traditional Medicare plan enrollees.

The analysts looked only at Medicare Advantage contracts with at least 2,500 enrollees, to filter out plans that might be facing big random fluctuations in actual risk.

The analysts found that almost all Medicare Advantage plans studied had 2015 risk score growth over the traditional Medicare plan average, and that about quarter had risk score growth than was at least 10 percent over the traditional Medicare plan average. About 3 percent had 2015 risk score growth that was more than 30 percent over the Medicare plan average.

MedPAC is sticking with risk-scoring improvement recommendations it made last year.

One good way to fight issuer upcoding would be to use two years of diagnostic data, rather than just one, and another would be to exclude diagnoses that show up only on general health risk assessments, not in patients’ other health records, MedPAC says.


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