Nav: Home

Study: Medicare could overpay medicare advantage plans by $200 billion over ten years

February 06, 2017

Research conducted at University of California San Diego School of Medicine found that current trends in diagnostic coding for patient risk scores will lead to Medicare overpaying Medicare Advantage (MA) plans substantially through 2026-likely to the tune of hundreds of billions of dollars. The study is published in the February issue of Health Affairs.

The Centers for Medicare and Medicaid Services (CMS) pays MA plans, defined as insurance plans offered by a private company that contracts with Medicare to provide benefits, more when they enroll a patient who is expected to use a large volume of medical services and less when plans enroll low risk patients. MA plans have strong incentives to find and report as many diagnoses as they can, called "coding intensity." These incentives are not present in fee-for-service (FFS) patients. The study found there is no evidence that MA enrollees have actually gotten any sicker relative to FFS beneficiaries, and if this payment method continues Medicare could overpay MA plans by $200 billion over the next decade.

"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 UC San Diego School of Medicine. "The projected $200 billion in overpayments 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."

CMS uses patient demographic and diagnostic information to calculate a risk score for each beneficiary, and these risk scores are used to determine payment to insurance plans. For example, spending is expected to be greater for an 85-year-old than for a 65-year-old and greater for a beneficiary with heart disease, diabetes and depression than for a beneficiary with none of these diagnoses. Over the past decade, the average risk score for MA enrollees relative to the average risk for FFS beneficiaries has risen steadily.

"More than 30 percent of Medicare beneficiaries are enrolled in Medicare Advantage. 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 has the authority to adjust payments to MA plans to account for coding intensity and has taken some actions to mitigate the effects of MA efforts at increasing risk scores.

"In the three decades that Medicare has been contracting with health organizations and plans, figuring out how to pay the plans accurately and fairly has posed a persistent challenge," said Kronick.

The study provides an insight that could help solve an expensive issue.

"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. Solving this problem is an important prerequisite to the establishment of a stable and equitable future for the current Medicare Advantage and could save the federal government approximately $200 billion," said Kronick.
-end-


University of California - San Diego

Related Public Health Articles:

Public health guidelines aim to lower health risks of cannabis use
Canada's Lower-Risk Cannabis Use Guidelines, released today with the endorsement of key medical and public health organizations, provide 10 science-based recommendations to enable cannabis users to reduce their health risks.
Study clusters health behavior groups to broaden public health interventions
A new study led by a University of Kansas researcher has used national health statistics and identified how to cluster seven health behavior groups based on smoking status, alcohol use, physical activity, physician visits and flu vaccination are associated with mortality.
Public health experts celebrate 30 years of CDC's prevention research solutions for communities with health disparities
It has been 30 years since CDC created the Prevention Research Centers (PRC) Program, currently a network of 26 academic institutions across the US dedicated to moving new discoveries into the communities that need them.
Public health experts support federally mandated smoke-free public housing
In response to a new federal rule mandating smoke-free policies in federally funded public housing authorities, three public health experts applaud the efforts of the US Department of Housing and Urban Development to protect nonsmoking residents from the harmful effects of tobacco exposure.
The Lancet Public Health: UK soft drinks industry levy estimated to have significant health benefits, especially among children
The UK soft drinks industry levy, due to be introduced in April 2018, is estimated to have significant health benefits, especially among children, according to the first study to estimate its health impact, published in The Lancet Public Health.
Social sciences & health innovations: Making health public
The international conference 'Social Sciences & Health Innovations: Making Health Public' is the third event organized as a collaborative endeavor between Maastricht University, the Netherlands, and Tomsk State University, the Russian Federation, with participation from Siberian State Medical University (the Russian Federation).
Columbia Mailman School Awards Public Health Prize to NYC Health Commissioner Dr. Mary T.
Dr. Mary T. Bassett, Commissioner of the New York City Department of Health and Mental Hygiene, was awarded the Frank A.
Poor health literacy a public health issue
America's poor record on health literacy is a public health issue, but one that can be fixed -- not by logging onto the internet but by increased interaction with your fellow human beings, a Michigan State University researcher argues.
Despite health law's bow to prevention, US public health funding is dropping: AJPH study
Although the language of the Affordable Care Act emphasizes disease prevention -- for example, mandating insurance coverage of clinical preventive services such as mammograms -- funding for public health programs to prevent disease have actually been declining in recent years.
'Chemsex' needs to become a public health priority
Chemsex -- sex under the influence of illegal drugs -- needs to become a public health priority, argue experts in The BMJ this week.

Related Public Health Reading:

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Climate Crisis
There's no greater threat to humanity than climate change. What can we do to stop the worst consequences? This hour, TED speakers explore how we can save our planet and whether we can do it in time. Guests include climate activist Greta Thunberg, chemical engineer Jennifer Wilcox, research scientist Sean Davis, food innovator Bruce Friedrich, and psychologist Per Espen Stoknes.
Now Playing: Science for the People

#527 Honey I CRISPR'd the Kids
This week we're coming to you from Awesome Con in Washington, D.C. There, host Bethany Brookshire led a panel of three amazing guests to talk about the promise and perils of CRISPR, and what happens now that CRISPR babies have (maybe?) been born. Featuring science writer Tina Saey, molecular biologist Anne Simon, and bioethicist Alan Regenberg. A Nobel Prize winner argues banning CRISPR babies won’t work Geneticists push for a 5-year global ban on gene-edited babies A CRISPR spin-off causes unintended typos in DNA News of the first gene-edited babies ignited a firestorm The researcher who created CRISPR twins defends...