Encounter Data in Medicare Advantage

The Medicare Advantage program continues to grow rapidly, accounting for over a third of all Medicare beneficiaries.  Amazingly, CMS has not yet begun routinely using data on the services rendered by the MA plans to beneficiaries.  A report from the HHS Office of Inspector General looks at issues related to the submission and use of this encounter data.   (OIG Report)   In fee-for-service Medicare, CMS has data from the intermediaries and carriers that should cover all services received by a beneficiary.  But in MA, there are no claims paid by CMS or its contractors, so to understand what is going on, CMS has begun requiring submission of encounter tapes by the plans.  These tapes reflect both claims paid by the plans, as well as information that they get from capitated providers on the services those providers render to Medicare members of the plans.  As it sounds, this can be a very complex process with multiple levels of data submission and aggregation.  One primary use for the data is to replace the current member assessment data submitted by plans that is used to create risk scores that affect reimbursement to the plans.  Because of the importance of this data, plans spend a great deal of effort to maximize diagnoses identification and subsequent payment.  Several companies, like Matrix Health, have done very well serving as vendors for Medicare Advantage plans and doing member assessments in the home.

The OIG report focuses on the difficulty CMS has had in getting accurate information, which particularly to the extent it is used for reimbursement, is very important.  Setting standards for data elements and transmission has proven to take far longer than projected and plans have slowed up the process for fear that switching to encounter data will reduce payments.  According to OIG, for the first quarter of 2014 almost 28% of records had a potential error, but most of those were corrected somewhat quickly, leaving only about 5% with a residual error, such as missing data.  A very small percentage of the MA plans were responsible for over half of all errors.  A number of the errors relate to provider identification, especially referring providers.  It is critical that CMS move to 100% use of encounter data for reimbursement purposes.  That would avoid game-playing by MA plans and ensure that they are compensated only for diagnoses that the member actually needs and receives treatment for.  It also will allow for more comprehensive comparisons of utilization, costs and quality between the Medicare Advantage program and fee-for-service Medicare, and across the Medicare program as a whole.