Dear Acting Administrator Frizzera:
I am writing regarding the “Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies," published by the Centers for Medicare & Medicaid Services (CMS) on Feb. 20, 2009.
In accordance with Section 1853(k)(2)(B)(iv)(III) of the Social Security Act, the Advance Notice proposes to adjust payments to Medicare Advantage plans (MA) in order to account for the differences in patterns of coding health risk between the MA and fee-for-service (FFS) programs. This proposal will improve the accuracy of MA payments in 2010. It signals a long overdue commitment to follow the Medicare statute and manage the MA program as Congress intended.
The statutory requirement to make accurate payments to private plans in Medicare is not new. The Balanced Budget Act of 1997 instructed CMS to develop a risk adjustment system for Medicare Choice, as it was then known, in order to ensure that payments accurately take into account the health status of plan enrollees. In 2000, CMS began a lengthy phase-in of the new risk adjustment system that is still underway. In addition, CMS first implemented these risk adjusted payments in a budget neutral manner, which increased overall payments to the plans and was contrary to Congressional intent.
The Deficit Reduction Act of 2005 (DRA) required CMS to make risk adjusted payments on a non-budget neutral basis. The DRA also required CMS to study differences in coding health status between the fee-for-service program and MA and established the requirement to adjust those coding differences in the 2007 through 2010 payment years. However, CMS made no adjustments for coding differences from 2007 to 2009, even though their own studies showed that differences existed.
Differences in health risk coding can arise because MA plans are highly motivated to identify and code diseases in their enrolled populations. With each new disease identified, whether it is treated or not, the Medicare payment to a plan can increase. Physicians in FFS are not encouraged to code as intensely, so MA plan risk scores can increase at a greater rate than FFS risk scores, making MA enrollees look less healthy and more costly without any change in their actual health status. Hence, upcoding has no bearing on the clinical outcomes or cost of care for MA enrollees. It is a mechanism by which MA plans can maximize reimbursement from the government beyond what they would otherwise receive under the law.
CMS’ proposal to adjust for coding differences across MA plans is also consistent with payment policy in FFS Medicare, as those providers in have been subject to adjustments due to changes in coding patterns for many years. CMS has proposed or implemented across-the-board adjustments for hospitals, home health agencies, skilled nursing facilities, and others in past years to account for historical or projected coding changes that are not attributable to a change in actual case mix. Medicare Advantage plans should not be exempt from such statutory adjustments.
Finally, I strongly encourage CMS to release through the Advance Notice all relevant information concerning proposed MA payment adjustments, such as the coding intensity adjustment for 2010. Proposed changes should be fully explained and transparent to the public to the same extent that they are for the FFS program through regulation.
I commend CMS for its effort to more thoroughly follow the law in making MA payments more accurate. Medicare beneficiaries and American taxpayers deserve no less. I look forward to working with you to continue improving the Medicare program.
Sincerely,
Max Baucus
Cc: Jonathan Blum, HHS
Source: Ranking Member’s News
