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GAO on Medicare Advantage Payments

By March 14, 2013Commentary

As we noted a few posts ago, there continues to be research around the burden of illness adjustments for Medicare Advantage payments and those adjustments have become a focus for critics who think that CMS overpays the MA plans, and who really, frankly just don’t like the privatized MA program at all.  A new Government Accounting Office report may give them further ammunition.   (GAO Report)  There is a history of GAO review of the CMS MA payments and in previous reports GAO felt it had identified a level of overpayment based on excess coding, and in this report it suggests that CMS has not fully reduced payments to account for the over-coding.  This excess diagnosis identification supposedly results from MA plans being motivated to list every diagnosis for a member, while fee-for-service physicians don’t do this.  CMS thinks the level of overpayment in the three years 2010, 2011 and 2012 is between $3 and $5 billion, which isn’t huge in the overall Medicare program but isn’t insignificant.  The biggest problem is that GAO is pushing CMS to be more aggressive in identifying supposed “over-coding”, which may cause more inadequacies in MA payments, leading to disruptions for beneficiaries.

There is of course, a major flaw in the reasoning of CMS, the GAO and other critics of the MA payments:  the assumption that somehow it is bad that MA plans are being sure that their members get to the doctor and have all their potential health issues identified and that somehow it is good that in fee-for-service Medicaid, beneficiaries don’t have as many diagnoses, which may well reflect inadequacies of care.  In the absence of proof of fraud in the assignment of diagnosis codes, it seems more likely that the FFS beneficiaries are being under-treated than that MA ones are being over-treated.  CMS wants beneficiaries to receive more preventive services and to have more proactive management of their health, because it believes that saves money in the long run.  This is exactly what the MA plans are doing and now CMS and GAO want them punished for it?  It would make more sense for CMS to explore under-diagnosis among the FFS population and adjust MA payments on what the likely range of diagnoses should be for members.  In addition, the current adjustments do not take into account the variance in geographic practice patterns which may also be reflected in coding.  CMS has a knack for designing well-intentioned programs badly, as with this coding adjustment and the hospital readmissions program.

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