Photo: Helen King/Getty Images
The Alliance of Community Health Plans is calling out risk adjustment scores by larger insurers in Medicare Advantage plans.
ACHP, an organization that advocates for smaller health plans, said the current model presents many opportunities to “game” the system, according to a published report.
From 2019 to 2023, the average MA risk score by UnitedHealthcare was 36.2% higher than that of ACHP member plans, the report said. Humana’s risk scores were 19.2% higher.
These costs are passed on to Medicare consumers and taxpayers, ACHP said.
ACHP recommends simplifying risk adjustment to focus on demographics and a small set of Hierarchical Condition Category codes to reflect true patient care costs.
WHY THIS MATTERS
ACHP’s concern is that larger national plans are stifling competition for the smaller insurers. Smaller local plans are losing $100 million to $400 million a year in Medicare Advantage, according to ACHP President and CEO Ceci Connolly.
Risk adjustment has to change, she said. This starts with streamlining the number of Hierarchical Condition Category (HCC) codes used by the Centers for Medicare and Medicaid Services to determine risk adjustment.
There are 115 categorical conditions in HCC and under that, under 7,000 diagnoses, according to Connolly.
“That’s 7,000 opportunities for gaming,” Connolly said.
ACHP proposes going from 115 HHC codes to less than a dozen to start leveling the playing field, so that all plans will be paid for the care that they deliver and not for any extras.
“That is the big fat pot of money that CMS can control right now,” she said.
THE LARGER TREND
Risk adjustment ensures providers are paid enough to deliver appropriate care to all their patients, including the sickest, without risk of financial loss.
Risk adjustment is a method for modifying capitated provider payments based on their patients’ characteristics and health conditions, according to The Commonwealth Fund.
Patients are assigned a risk score based on demographic information, such as age and sex, as well as current health status, existing chronic conditions and disabilities. Scores are then applied to the baseline payment for each patient, resulting in higher payments for patients with higher risk scores.
Risk adjustment can be gamed by plans and provider organizations to increase revenue, The Commonwealth Fund report said. There is some evidence that some Medicare Advantage plans intentionally upcode to receive higher payments, the report said.
CMS has been attempting to address the issue, and legislation called the No Unreasonable Payments, Coding, or Diagnoses for the Elderly (No UPCODE) Act first introduced in 2023 and again this year, seeks to curb overpayments to Medicare Advantage plans by imposing changes to risk adjustment.
This would save taxpayers billions of dollars by eliminating incentives to overcharge Medicare, according to Sen. Bill Cassidy, R-La., one of the sponsors of the bill.
Email the writer: SMorse@himss.org