MA Health Assessments Contribute To Inflated Coding Intensity: Study

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Dive Brief:

• Restricting the risk-score impact of health risk assessments, or surveys of beneficiaries’ health status, in Medicare Advantage could reduce spending up to $12.3 billion per year, according to a study published this week in Health Affairs. 
• Experts and policymakers have raised red flags about aggressive coding practices in MA that make beneficiaries look sicker in an attempt to receive higher payments from the federal government. The assessments could be used to boost code intensity, and some limits on their use may be justified, according to the study.
• Among enrollees with at least one assessment, risk scores increased by 12.8% on average as a result, according to the research. More than 1 in 5 beneficiaries has at least one additional diagnosis captured by the health assessments, which raised their scores.

Dive Insight: 

Under MA, insurers contract with the government to manage the care of Medicare beneficiaries. The plans receive monthly payments that aim to approximate their costs, adjusted for enrollees’ health risks. 

But some policymakers and experts are concerned about swelling costs in the program. The federal government could pay MA plans $88 billion more this year than it would spend if those beneficiaries were enrolled in traditional Medicare, in part due to exaggerated coding, according to a report from congressional advisory group MedPAC.

Inflated coding is a growing concern as more beneficiaries choose the private plans, according to the study. More than half the eligible Medicare population enrolled in an MA plan last year.

The latest research, which included 2019 data on more than 4 million beneficiaries in nearly 480 plans, aims to determine health risk assessments’ impact on coding intensity in MA. Risk assessments are fairly common: More than 44% of MA enrollees living in the community had at least one reported assessment during the year, according to the study.

The assessments were linked to higher spending. Different scenarios that restricted the risk-score impact of the health risk assessments were associated with $4.5 billion to $12.3 billion in reduced Medicare spending in 2020.

But the study also found “considerable variation” in the assessments’ impact on risk scores. Enrollees in contracts where the surveys had a higher effect on scores were less likely to be in a zero-premium plan and more likely to be in a lower-rated contract. 

On average, those plans also had lower medical loss ratios — a measure of how much premium revenue is spent on beneficiaries’ care — potentially suggesting profit-seeking behavior through coding, according to the study.

“Although not all HRAs may be used solely for the purpose of coding intensity, our study suggests that some limits on their use for capturing diagnosis codes may be warranted to ensure a level playing field and appropriate stewardship of taxpayer dollars as the MA program continues to expand,” the study said.