Officials at the U.S. Government Accountability Office (GAO) say Medicare Advantage plans are pretending that their enrollees are sicker than they probably are.
The health insurers that offer Medicare Advantage plans tell the Centers for Medicare & Medicaid Services (CMS) how sick enrollees are to participate in a program that provides extra risk adjustment payments for plans with enrollees who are sicker than average.
GAO investigators compared diagnostic coding levels for Medicare Advantage plan enrollees and traditional Medicare enrollees and found that the average scores for Medicare Advantage enrollees are 4.8% to 7.1% higher than the scores for traditional Medicare enrollees.
If the coding level difference is real, it translates into the Medicare Advantage plans getting $3.9 billion to $5.8 billion in extra risk adjustment payments, James Cosgrove, a GAO director, writes in a letter summarizing the GAO's findings.
The GAO is recommending that CMS take steps to improve the accuracy of diagnostic coding by, for example, accounting for more enrollee characteristics and incorporating the trend of the impact of coding differences on risk scores.
Dr. Don McCanne writes in a commentary for Physicians for a National Health Program, Chicago, that, in his experience, as CMS has refined risk-adjustment tools, "the private Medicare Advantage plans have found new ways to game the system which have resulted in even greater overpayments for their patients who are healthier than the data submitted by the insurers would indicate."
Analysts at the Deloitte Center for Health Solutions, Washington, note that CMS itself has found a scoring gap of just 3.4%.
The GAO did not account for enrollee characteristics such as whether the enrollee entered Medicare as a result of retirement or as a result of becoming disabled, the Deloitte analysts say.
THE COURT'S FRIENDS
The American Academy of Actuaries, Washington, and the American Benefits Council, Washington, have submitted amicus curiae briefs on the Patient Protection and Affordable Care Act of 2010 (PPACA) to the U.S. Supreme Court.
The groups focus on whether the individual coverage mandate provision in PPACA, which will require most individuals to own a minimum level of health coverage or pay a penalty, can be split from the rest of PPACA when the court is deciding whether just the mandate is consistutional, whether the PPACA provisions affecting individual health coverage is constitutional, or whether all of PPACA is constitutional.
The AAA goes over arguments that cutting the individual mandate out of PPACA while continuing to require health insurers to sell coverage on a guaranteed-issue, mostly community-rated basis starting in 2014 would lead to sharp increases in coverage costs.
The American Benefits Council contends that eliminating the individual mandate and other individual market changes without eliminating provisions that affect employers could lead to sharp increases in employers' benefits costs.
PPACA is set to require employers over a certain size to offer employees coverage they can afford or else pay a penalty of about $3,000 per year per uncovered employee.
If the Supreme Court kills all PPACA individual market provisions, not just the individual coverage ownership mandate, and it keeps the employer mandate, employers would have to pay "shared responsibility" penalty payments to help fund the exchange-based individual market, even though
some employees would simply choose not to own coverage and others would be shut out of the individual market by high prices, the council says.
"The point of the penalty is to require the employer to offset costs to the federal government for premium subsidies it provides to qualified individuals who obtain coverage in a health insurance exchange rather than through an employer-sponsored health plan," the council says. "It was not part of Congress's intention to direct employers to pay a 'shared responsibility' payment and, thus, reimburse the federal government with respect to individuals who cannot receive the intended federal subsidy that was an integral part of the intended arrangement."
Early cases have shown that, for a provision of an act to be severable from the act, the remaining provisions of the act must function about as Congress had expected, the council says.
If the remaining provisions in an act would continue to function in some fashion, but not as Congress had intended, the controversial provision at the heart of a court challenge is not severable, the council says.
EXCUSES, EXCUSES
So, balancing the federal budget — including controlling federal health care spending — is impossible, because the masses will react to fiscal discipline by rioting, looting and pretty much ending civilization as we know it. Or, at least, by throwing the tight-fisted bums out and electing sugar daddies in their place.
Right?
Alberto Alesina, an economist at Harvard University, and two colleagues suggest in a budget deficit working paper released by the National Bureau of Economic Research that the masses may react more randomly to government spending cuts than their leaders expect.
Alesina and his colleagues analyzed examples of governments implementing large, rapid budget cuts in 19 wealthy countries from 1975 to 2008.
The researchers say they found no evidence that the budget-cutting administrations were any more likely to be voted out of office than other administrations, or that the size of the cuts had much effect on re-electability.
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