MA insurers are auditing patient’s medical charts to find more diagnosis codes in effort to get larger reimbursements from the Medicare program. The business of insurance encourages the documentation of all possible diagnoses to generate billions in profits. Modern Healthcare cites an Anthem lawsuit as an example of the returns insurers are receiving from addition MA risk-adjustment payments, Anthem alone pocketed over $112 million in extra payments in 2015.
Earlier this summer, the Centers for Medicare and Medicaid Services (CMS) suspended billions of dollars in payments to payers on account of a ruling in the U.S. District Court of New Mexico that invalidated the algorithm use to calculate the risk-adjustment payments. Read more about risk-adjustment payment news from this Hertel Report story.
The current risk-adjustment payment model is based upon demographic and medical conditions of the individual in efforts to match resources to need and discourage plans from only enrolling healthy, young, low-risk patients. Each patient is assigned a risk score; sicker patients that require more resources receive a higher risk score, which in-turn results in more substantial reimbursements from the government to insurers.
This system has incentivized higher risk scores to achieve higher payments from CMS. Reporting as many diagnoses codes as possible can also result in a higher patient risk score. It is no secret that the Medicare Advantage market is a tempting and lucrative sector, especially for established providers that can dominate mature markets. Insurers are finding more ways to profit off their enrollees but the program is not bottomless with cash.
Richard Kronick, professor at the University of California at San Diego said:
“Medicare will pay Medicare Advantage plans $200 billion more over the next 10 years than those plans should receive.”
That’s unless CMS opts to tweak the payment system so MA plans are not paid more than traditional Medicare fee-for-service providers when they submit additional diagnostic codes.
According to Modern Healthcare, there is a condition to that statement; CMS can alter the payment system so MA plans are not receiving significantly larger payments than Medicare fee-for-service providers receive when submitting diagnosis codes.
During a five-year period, giants like UnitedHealth raked in extra revenue by combing patient medical charts, earning over $3 billion in additional payments from 2010 to 2015 .
For more information on the profits of Medicare Advantage’s payers, read Modern Healthcare’s article.