Study Finds Medicare May Overpay Medicare Advantage Plans by $200B | NBC 7 San Diego

Study Finds Medicare May Overpay Medicare Advantage Plans by $200B

By offering more benefits to high-risk patients, Medicare has created an incentive to report as many diagnoses as possible, according to a study.

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    Study Finds Medicare May Overpay Medicare Advantage Plans by $200B
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    A study at UCSD's School of Medicine found that an incentive to increase patient risk scores could lead Medicare to overpay Medicare Advantage (MA) plans by roughly $200 billion over the next ten years.

    MA plans, paid by the Centers for Medicare and Medicaid Services (CMS), are insurance plans offered by a private company contracting with Medicare to provide benefits, said university officials.

    The problem is they provide more benefits when they enroll a patient expected to use a large volume of medical services and less when plans enroll low risk patients.

    For example, spending is expected to be greater for an 85-year-old than for a 65-year-old, and greater for a patient with heart disease or diabetes, said university officials.

    Because of the way patient risk scores are diagnosed, MA plans offer strong incentives to find and report as many diagnoses as possible, according to the study. This incentive that pushes for more diagnoses is called "coding intensity."

    "Congress and CMS have the opportunity to establish a payment system that will protect taxpayers from the strategies used by MA plans to increase the payments they receive," said Richard Kronick, PhD, principal investigator and professor in the Department of Family Medicine and Public Health at UCSD School of Medicine, in a statement.

    Researchers said these incentives are not present in fee-for-service (FFS) patients. At present there is no evidence that MA enrollees have gotten sicker in regards to FFS beneficiaries, said university officials.

    However, if this payment method continues Medicare could overpay the MA plans by $200 billion, emphasized the study.

    "The projected $200 billion in over payments over the next ten years is stunningly large in absolute dollar terms. To provide some perspective, federal support for community health centers is approximately $5 billion per year," said Kronick.

    “The problem could be largely solved if CMS adjusted for coding intensity using the principle that Medicare Advantage beneficiaries are no healthier and no sicker than demographically similar fee-for-service Medicare beneficiaries,” said Kronick.

    CMS can adjust payments to MA plans to combat "coding intensity" and other efforts at increasing risk scores, said university officials.

    "I hope these findings foster a discussion of how to best measure and adjust for differential coding between Medicare Advantage and fee-for-service Medicare," said Kronick.

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