The most interesting thing about the preliminary rate notice for 2017 Medicare Advantage plans may be what federal policymakers left out. The thick document made no mention of health-risk assessments, which surprised the industry. The Obama administration and the Medicare Payment Advisory Commission have targeted the assessments for reform because they suspect plans use them to game the program’s risk scores and get paid more.
“It was the biggest shocker in this announcement,” said John Gorman, founder of health insurance consultancy Gorman Health Group and a former CMS official. “If (a change) was ever going to happen, it would be in the last year of the administration, when scores get settled.”
Although the CMS kept home visits untouched for another year, it may look to Congress to change them and the related payment formula that has been tied to fraudulent overbilling. There’s no guarantee Congress will tackle the issue in an election year, but legislators have studied the options. Medicare insurers could score bigger payments, depending on what’s enacted.
“CMS may have concluded that it lacks discretion to make such significant changes to the risk-adjustment model,” said Richard Lieberman, chief data scientist at Mile High Healthcare Analytics.
Health-risk assessments are wellness exams usually conducted in a senior’s home. Insurers send nurse practitioners or other clinicians to check a beneficiary’s vital signs, verify drug prescriptions and identify physical-safety risks. The goal is to get a sense of a patient’s health status, which insurers code to get a risk-adjusted score.
Sicker people with multiple chronic conditions warrant higher risk scores and, therefore, higher Medicare payments. For example, a Medicare Advantage plan received $7,843 on average in 2013 to cover an 84-year-old man with heart failure. If he had polyneuropathy, that payment soared to $10,733, according to MedPAC.
But federal officials and government watchdogs have raised concerns about home visits. Insurers have a financial incentive to code as many diagnoses as possible.
MedPAC has noted that the home visits do not always lead to follow-up care in a physician’s office.
MedPAC commissioners voted last month to deny payment for diagnoses found during home visits unless a doctor confirmed the diagnoses in a separate office visit. Insurers have vigorously opposed that idea, arguing it restricts their ability to care for seniors at home. Advantage plans could also see a large financial hit. Gorman estimated that eliminating health-risk assessments for payment could ding revenue by 2%.
Yet payments from home visits avoided the chopping block in the rate notice posted Feb. 19. The CMS said that although it “appreciates the work of MedPAC,” not all of the recommendations are addressed in rate policies.
Instead, the CMS proposed changing how risk scores are calculated, which Gorman said would “blunt some of the impact of home visits.” In 2017, 50% of the risk scores would be based on encounter data, or detailed information about care that is actually delivered to the patient, while the other half would be based on historical fee-for-service claims. Currently, only 10% of risk scores are based on the newer encounter data, and the goal is to move to 100%, said Tim Courtney, a fellow at the Society of Actuaries.
If risk adjustments were based solely on encounter data, which insurers have worried would reduce revenue as well, then the CMS could phase out the “coding-intensity” adjustment that tries to equalize Medicare Advantage payments with traditional Medicare, Lieberman said. To placate the industry further, the CMS could allow insurers to use two years of diagnostic data for risk scores instead of one year.
But the overall financial effect of these byzantine changes may fall outside the CMS’ authority. Also, the coding-intensity adjustment, which would cut risk-score payments by 5.66% in 2017, is written into law. That’s why some, such as Lieberman, believe the CMS is banking on Congress to act.
The Senate Finance Committee’s Chronic Care Working Group, co-chaired by Georgia Republican Johnny Isakson and Virginia Democrat Mark Warner, put out a paper in December outlining potential changes to Medicare Advantage’s risk-adjustment model. Modifying home visits could be part of a broader bill.
Insurers could come out as net winners, Lieberman said. Negating home visits may reduce revenue by 2% on average, but eliminating or significantly reducing the coding-intensity adjustment would gain back more than 5%. “I think that the industry will quietly scream and yell, but the actuaries will be happy behind the scenes,” he said.