To account for differences in disease burden among Medicare Advantage (MA) plan patient populations, risk adjustment was performed based on patient disease burden. Specifically, MedPAC states:
Medicare uses beneficiary characteristics (such as age and preexisting health conditions) and risk adjustment models (CMS Hierarchical Condition Categories (CMS-HCC)) to measure their expected relative risk of covered Medicare expenditures.
In February 2023, CMSCMS released Notice of Proposed Rulemaking to Update the HCC Risk Adjustment Algorithm (v28). These changes include (i) utilizing ICD-10 rather than ICD-9 code as the primary building block, (ii) using 115 HCC indicators instead of 79, and (iii) limiting certain coefficients to different severity levels Stay the same (e.g., diabetes, heart failure). The new algorithm will be implemented in phases from 2024 to 2026.
A key question is whether providers under traditional Medicare (TM) codes are different from Medicare Advantage (MA) plans. Because CMS's MA plan payments depend on patient severity, there is an incentive to upgrade diagnostic codes. The paper by Carlin et al. (2024) aimed to assess whether this occurs. They first explained the mechanism by which MA plans can more comprehensively capture patients' secondary diagnoses:
MA plans have the opportunity to review medical records to ensure that providers do not accidentally omit diagnoses from visit notes. These reviews are even more important when provider reimbursement does not incentivize detailed coding of patients' secondary diagnoses. MA plans to make corrections by adding or (rarely) deleting diagnoses via CR records.In addition, both MA and TM providers can document additional diagnoses through the HRA [health risk assessment] During a health visit or home visit for this purpose.
The authors used 2019 CMS claims data and divided the data into 3 groups: MA plans, TM beneficiaries attributable to ACOs (“TM ACOs”), and TM beneficiaries not attributable to ACOs (“TM Non-ACOs”) . ACOs include patients of Accountable Care Organizations (ACOs), such as those enrolled in the Medicare Shared Savings Program (MSSP). The authors note that the TM non-ACO cohort serves as a key comparison because they are not subject to the same coding intensity incentives experienced by MA plans and TM ACOs (because ACO shared savings are also risk-adjusted).
The authors classified patients based on whether they had an annual well visit, an initial preventive physical exam, or a selected home health visit (follow Reed et al. 2020 algorithm). The authors also used information from encounter claims to determine whether a patient record review was performed. Using these data, the authors propensity score matched the MA, TM ACO, and TM non-ACO cohorts. The authors then compared matched and unmatched HCC scores and assessed the impact of HRA and CR visits on HCC risk scores. They found:
Health risks due to diagnoses in HRA records increased across the coverage cohort, consistent with incentives to maximize risk scores: 0.9% for TM non-ACOs, 1.2% for TM ACOs, and 3.6% for MAs. Including HRA and CR records, the MA risk score increased by 9.8% in the matched cohort.
Across all 3 cohorts, diagnostic codes related to vascular disease, congestive heart failure, and diabetes contributed most to the mean HCC score. Vascular, psychiatric, and congestive heart failure are most likely to increase due to HRA/CR coding intensity activity.
While other papers claim that Medicare Advantage has upgraded diagnoses to obtain more favorable reimbursement, this paper clearly identifies not only the magnitude of the impact, but also the mechanism by which the impact is most likely to occur.You can read the full article here.
