WASHINGTON - Ways and Means Ranking Member Rep. Sander Levin (D-MI), Rep. Pete Stark (D-CA), Ranking Member on the Ways and Means Health Subcommittee, Rep. Henry A. Waxman (D-CA), Ranking Member on the Committee on Energy and Commerce, and Rep. Frank Pallone (D-NJ), Ranking Member on the Committee on Energy and Commerce Subcommittee on Health, today released a Government Accountability Office (GAO) report revealing that billions of dollars that could be saved if the Centers for Medicare and Medicaid Services(CMS) adjusts payments for Medicare Advantage (MA) plans to more accurately reflect the health of MA enrollees. Rep. John Dingell (D-MI) and Rep. Charlie Rangel (D-NY) were also requesters on the report.
The GAO report, Medicare Advantage: CMS Should Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding Practices, found the Medicare program continues to overpay MA plans despite the CMS' efforts to adjust payments to more accurately reflect the health status of a beneficiary. The report evaluates the methodology used by CMS to adjust MA risk scores and recommends that the Agency take additional steps to improve the accuracy of these scores. While a more accurate adjustment would increase payments for some beneficiaries, it would decrease payments for others. On net, GAO estimates that the recommended methodological improvements would have saved the Medicare program $1.2 to $3.1 billion in MA plan payments in 2010 alone.
Rep. Levin: "As we continue to look for opportunities to eliminate waste, fraud and abuse in Medicare this should be part of the larger solution to lower the cost curve. Making this fix would improve payment accuracy for Medicare Advantage and make the program more sustainable."
Rep. Stark: "With new data showing the health insurance industry was more profitable in 2010 than ever before, it makes no sense for Medicare beneficiaries and American taxpayers to continue to subsidize them."
Rep. Waxman: “We cannot afford to overpay health plans in Medicare any more than working families and businesses can. The ACA will eliminate many of the overpayments in Medicare Advantage plans over time, but as this report shows, there is more to be done."
Rep. Pallone: "As Congress continues to look to strengthen Medicare’s future and integrity, this critical study demonstrates an important tool that CMS has to rein in unnecessary overpayments, which will result in billions of dollars in savings to the U.S. taxpayers."
Background:
The Medicare Advantage (MA) program has grown substantially in recent years, increasing from $65.2 billion in 2006 to $116.1 billion in 2010. While Congress took action through the Affordable Care Act (ACA) in 2010 to reduce excessive base rate payment rates to these private plans, those payments continue to be adjusted to reflect the relative health and risk associated with each beneficiary. These adjustments depend on the plans’ own reporting of patient severity.
Documented evidence shows that MA plans tend to report higher patient severity than is actually supported by medical records. It also shows that the reported patient severity increased faster than for comparable patients in traditional fee-for-service Medicare (FFS). In 2005, the Deficit Reduction Act required CMS to reflect differences in coding patterns between MA plans and FFS in its risk score calculations for three years beginning in 2008, to the extent that the impact of such differences on risk scores could be identified. CMS did not adjust risk scores in 2008 or 2009; however, it did estimate and implement a 3.41 percent reduction in risk scores in 2010.
The ACA required CMS to continue adjusting risk scores for coding differences until CMS implements risk adjustment using encounter data from MA plans. In response, CMS reduced 2011 MA beneficiary risk scores by 3.41 percent, the same amount that the agency used for 2010; CMS will apply the same reduction for 2012. In addition, the ACA required CMS to reduce MA risk scores by at least 1.3 percent more than the 2010 adjustment (a total of 4.71 percent) in 2014 and specifies that the annual minimum percentage risk score reduction gradually increase to not less than 5.70 percent in 2019 and subsequent years. GAO’s findings indicate that an adjustment of up to 7.1 percent is warranted now and would yield billions in future savings.
