As providers strive to reduce readmission and value based payment penalties, new attention may be drawn to the accuracy of the calculations that determined the penalties. According to a recent article by ProPublica, the long-awaited release of “Analysis of 2014 Medicare Advantage Encounter Data” was unexpectedly cancelled with the explanation being “to determine if it is robust enough to support research use.” The delay of this data, which has been used by CMS to calculate payments since last year, raises additional concerns of Medicare Advantage organizations (MAO), that run the Medicare Advantage plans.
Medicare pays MAOs a predetermined, fixed monthly amount per enrollee. CMS adjusts payments for the health status of an enrollee using a risk score, which indicates the expected cost per enrollee relative to the national average beneficiary. CMS calculates the risk score on the basis of an enrollee’s demographic characteristics (such as age and sex) and health status (diagnoses). The purpose of risk adjustment is to pay MAOs fairly and accurately, thereby decreasing incentives for MAOs to avoid enrolling sicker beneficiaries.
However, according to a recent GAO report, these MAOs already had concerns about potential errors in identifying diagnoses used to determine risk adjustment. Specially, concerns exist in two areas:
- 1. CMS’s process for identifying diagnoses that are relevant for risk adjustment. MAOs question the integrity of CMS’s data processing based on questionable data on the automated reports from CMS. The MAOs, for example, noted that the automated reports had missing procedure codes for some encounters where the original data submissions had included them. CMS, which acknowledged the errors, indicated that they are working with MAOs to make needed corrections to these reports.
2. Inability to replicate CMS’s analyses. MAOs said they are unable to replicate the same risk adjustment results because CMS has made changes to how it identifies diagnoses eligible for risk adjustment using encounter data. As a result, MAOs are questioning whether CMS is properly distinguishing diagnoses that are used for risk adjustment from those that are not used.
In 2015, Medicare paid approximately $170 billion to MAOs to provide coverage for nearly 17 million beneficiaries, almost one-third of all Medicare beneficiaries. The latest delay in data raises new concerns regarding CMS’ ability to conduct the statistical analysis required to accurately calculate the risk adjustment scores for value-based programs.