Fwd: qotd: GAO finds CMS negligent in risk adjustment for Medicare Advantage plans

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-------- Original Message --------
Subject: qotd: GAO finds CMS negligent in risk adjustment for Medicare
Advantage plans
Date: Mon, 4 Mar 2013 11:19:36 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



United States Government Accountability Office (GAO)
Report to Congressional Requesters
January 31, 2013
Medicare Advantage
Substantial Excess Payments Underscore Need for CMS to Improve Accuracy
of Risk Score Adjustments

What GAO Found

GAO found that the cumulative impact of coding differences on risk
scores increased from 2010 through 2012 and was greater than the Centers
for Medicare & Medicaid Services' (CMS) risk score adjustment of 3.4
percent for each of the 3 years. In updating the analysis from its
January 2012 report, GAO estimated that cumulative Medicare Advantage
(MA) risk scores in 2010 were 4.2 percent higher than they likely would
have been if the same beneficiaries had been enrolled continuously in
Medicare fee-for-service (FFS). For 2011, GAO estimated that differences
in diagnostic coding resulted in risk scores that were 4.6 to 5.3
percent higher than they likely would have been if the same
beneficiaries had been continuously enrolled in FFS. This upward trend
continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.

CMS's adjustment to risk scores for 2010 through 2012 to account for
diagnostic coding differences was too low, resulting in estimated excess
payments to MA plans of at least $3.2 billion. CMS's annual 3.4 percent
reduction in risk scores is equivalent to $2.8 billion in 2010, $3.0
billion in 2011 and $3.2 billion in 2012. According to GAO's estimates,
the amount of the excess payments to MA plans after accounting for CMS's
adjustments was $0.6 billion in 2010, between $1.1 billion and $1.6
billion in 2011, and between $1.5 billion and $2.9 billion in 2012.
Cumulatively across the 3 years, this equals excess payments of between
$3.2 billion and $5.1 billion.

For 2013, CMS continues to use the risk score adjustment of 3.4 percent
it used in 2010, 2011, and 2012. To conduct its data-based analysis, CMS
officials reported that they used the same methodology used in 2010, but
they incorporated more recent data.

CMS officials stated that they believed there was policy discretion with
respect to the most appropriate adjustment factor but did not identify
the specific source of their authority to consider factors other than
the required data analysis when determining the adjustment amount. While
CMS did not change its risk score adjustment methodology for 2013,
agency officials said they may revisit their methodology for future years.

Concluding Observations

Risk adjustment is important to ensure that payments to MA plans
adequately account for differences in beneficiaries' health status and
to maintain plans' financial incentive to enroll and care for
beneficiaries regardless of their health status. Our work confirms that
differences in diagnostic coding caused risk scores for MA beneficiaries
to be higher than those for comparable beneficiaries in Medicare FFS in
2010, 2011, and 2012. CMS's decision to use a 3.4 percent adjustment to
risk scores for 2010 through 2012 instead of the higher adjustments
called for by our analysis resulted in excess payments to MA plans. The
existence of such excess payments indicates that CMS's adjustment does
not accurately account for differences in treatment and diagnostic
coding between MA plans and Medicare FFS—the stated goal of the statute
that required CMS to develop a diagnostic coding adjustment. In our
January 2012 report, we recommended that CMS take steps to improve the
accuracy of the adjustment to account for excess payments due to
differences in diagnostic coding. We noted that CMS could, for example,
account for additional beneficiary characteristics, include the most
recent data available, identify and account for all the years of coding
differences that could affect the payment year for which an adjustment
is made, and incorporate the trend of the impact of coding differences
on risk scores. CMS's adjustment for 2013 is the same as it used in
2010, 2011, and 2012. However, given our finding that this adjustment
was too low and resulted in estimated excess payments to MA plans of at
least $3.2 billion, we continue to believe that it is important for CMS
to implement our recommendation that it update its methodology to more
accurately account for differences in diagnostic coding.

http://www.gao.gov/assets/660/651712.pdf

And...

U. S. Department of Health & Human Services (HHS)
News Release
September 19, 2012
Medicare Advantage remains strong

"Thanks to the Affordable Care Act, the Medicare Advantage and
Prescription Drug programs have been strengthened and continue to
improve for beneficiaries," said (HHS Secretary Kathleen) Sebelius.

For the third year in a row, the Centers for Medicare & Medicaid
Services (CMS) used authority provided by the Affordable Care Act to
protect beneficiaries from significant increases in costs or cuts in
benefits.

http://www.hhs.gov/news/press/2012pres/09/20120919a.html


Comment: The private Medicare Advantage plans, offered as an option to
traditional Medicare, have been cheating taxpayers by selectively
enrolling healthier, lower-cost patients, though being paid at full
rates, and more recently by coding patients as having more complicated
conditions in order to qualify for higher, risk-adjusted payments. The
GAO now provides us with further evidence that Secretary Sebelius and
HHS/CMS have been complicit in this fraud.

The Affordable Care Act included provisions to reduce the overpayments
to the private Medicare Advantage plans. This GAO report shows that
HHS/CMS ignored GAO's recommendations to improve their risk adjustment
methodology, recommendations that should have reduced overpayments due
to the embellished diagnostic codes being submitted by the Medicare
Advantage plans. HHS/CMS refused to improve the accuracy of their
adjustments, which has already resulted in overpayments to these private
plans of between $3.2 billion and $5.1 billion.

Why would they do this? Secretary Sebelius has repeatedly touted the
Medicare Advantage plans, and has made efforts to expand enrollment in
them, even though they cost the taxpayers more money. Overpaying them
allows the plans to offer greater benefits in order to entice
individuals to enroll. This is leading to further privatization of
Medicare, opening up opportunities for Paul Ryan and other members of
Congress to push future Medicare beneficiaries into his "premium
support" proposal - a voucher plan to privatize Medicare.

Although the Medicare Advantage programs are more expensive, the intent
is to expand enrollment and then make a simple change - convert the
financing to a defined contribution (premium support), shifting more of
the costs to Medicare beneficiaries through higher premiums and then
through greater cost sharing (higher deductibles, etc.) to keep the
premiums from skyrocketing beyond the means of most seniors.

President Obama has said that he is quite willing to put Medicare on the
table as part of the austerity program being advanced by the budget
hawks. Secretary Sebelius is advising him on "strengthening" Medicare.
Be afraid. Be very afraid.