Medicare Advantage insurers may be upcoding patients’ risk scores during health risk assessments (HRAs) — and collecting billions of dollars in payments as a result of this practice, according to a new study published in HealthAffairs.
“There is significant concern that plans may seek to maximize risk-adjusted payment rates through the addition or escalation of diagnosis codes,” the researchers said. “Given that MA plans are responsible for the actual cost of care for their enrollees, coding efforts that increase plan payments have the potential to equip plans with additional resources that they may invest in additional or enhanced benefits … or instead, plans may retain additional payments as profits.”
The researchers analyzed 2019 MA encounter data for more than 4 million beneficiaries. They found that beneficiaries who received HRAs — which are typically performed in beneficiaries’ homes — were given risk scores that were almost 13% higher, on average, compared to those that did not. As a dollar amount, risk coding from HRAs could run the Centers for Medicare & Medicaid Services a bill as high as $12.3 billion annually, the study found.
HRAs allow insurers to capture patient information that is used to determine risk-adjusted payments. While these payments are intended to give insurers the resources to better support sicker patients, MA plans have drawn scrutiny in recent years for allegedly upcoding patients’ risk scores to increase payment rates from CMS.
Calls for crackdown
Most recently, the Better Medicare Alliance published a report in October calling for MA insurers to be more transparent about their HRA practices amid reports of upcoding. In 2020, the Department of Health and Human Services Office of Inspector General raised concerns that MA plans were abusing HRAs to reap billions of dollars in overpayments. And in 2015, the Medicare Payment Advisory Commission found that risk scores among MA beneficiaries were about 8% higher, on average, than traditional Medicare enrollees.
About 44% of community-dwelling MA beneficiaries had received at least one HRA in the prior year, according to the HealthAffairs study. But despite HRAs’ widespread use, the researchers found little connection to their impact on patients’ care quality or health outcomes.
“The overuse of HRAs by some plans may lead to substantial payment distortions in the MA program if the risk score increases due to HRAs are not necessarily associated with increased resource use,” they wrote.
