CMS Failed To Address MA Provider Reimbursement Calculations

The Obama administration was informed several years ago that a method for calculating physician reimbursement for treating Medicare Advantage patients was resulting in unusually high costs, but it failed to address the issue, according to federal documents obtained by the Center for Public Integrity, The Hill reports (Ferris, The Hill, 3/13).

Background

About 16 million U.S. residents are enrolled in private MA plans, representing about one-third of individuals who are eligible for Medicare. MA plans receive a monthly flat payment per patient based on a risk score formula, which is intended to reimburse the plans at higher rates for sicker beneficiaries and lower rates for relatively healthy beneficiaries.

CPI has previously released several articles as part of an investigative series on MA plan payments and how providers have used risk scores to charge the government more for sicker patients (Schulte, Center for Public Integrity, 3/13). The new report comes as MA plans are carrying out a lobbying campaign against proposed new MA rate cuts.

CPI Document Findings

CPI acquired the documents -- including an unpublished CMS study dated Sept. 29, 2009 -- under a Freedom of Information Act request.

The unpublished study analyzed risk scores for MA beneficiaries between 2004 -- the year after Congress creating the risk score payment tool -- and 2008.

According to the study, risk scores for MA beneficiaries increased at twice the rate over the study period as they would have if MA beneficiaries had been enrolled in the traditional Medicare program. Researchers said it was "extremely unlikely" that beneficiaries enrolled in MA plans became sicker at the reported rates.

For example, the study found that MA plans reported that beneficiaries had diabetes with medical complications at more than double the rate of beneficiaries in traditional Medicare. The researchers wrote, "It seems extremely unlikely that the actual distribution of diabetics changed substantially in MA plans" and "almost surely reflects MA efforts to more fully document members' diagnoses."

Overall, the researchers noted that the risk score increases "resul[t] in inappropriate payment levels." They also wrote that "a number of companies have successfully marketed services to help MA plans increase their risk scores" and that the risk score inflation issue was getting worse over time. According to the study, some large MA plans -- which were not identified -- increased risk scores at rates well above other MA plans.

However, CPI found that CMS did not take specific disciplinary action against plans based on increasing risk scores. Instead, the agency in 2010 cut MA plan rates across the board by 3.41% to help offset the costs of the risk score increases.

Reaction

A CMS spokesperson told CPI that the agency sought to make the study results public on a government-run research website but that officials were told it would need to be "substantially shortened" in order to be published (Center for Public Integrity, 3/13). The spokesperson said that "given competing workload demands, we were not able to revise and resubmit the article" (The Hill, 3/13).