New Research Shows Limits of Risk Adjustment in Protecting Traditional Medicare under Premium Support
End Notes
[1] See Paul N. Van de Water, “Medicare in Ryan’s 2015 Budget,” Center on Budget and Policy Priorities, April 8, 2014, https://www.cbpp.org/cms/?fa=view&id=4121. See also Edwin Park, “Ensuring Effective Risk Adjustment,” Center on Budget and Policy Priorities, May 18, 2011, https://www.cbpp.org/cms/index.cfm?fa=view&id=3497.
[2] Joseph Newhouse and Thomas McGuire, “How Successful Is Medicare Advantage?,” The Milbank Quarterly, Vol. 92: 2, 2014 and J. Michael McWilliams, John Hsu, and Joseph Newhouse, “New Risk-Adjustment System Was Associated with Reduced Favorable Selection in Medicare Advantage,” Health Affairs, December 2012.
[3] Medicare Payment Advisory Commission, “Report to the Congress: Medicare and the Health Care Delivery System,” June 2014, chapter 2, http://medpac.gov/chapters/Jun14_Ch02.pdf.
[4] See Government Accountability Office, “Medicare Advantage: CMS Should Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding Practices,” January 26, 2012, http://gao.gov/assets/590/587637.pdf, and Congressional Budget Office, “Designing a Premium Support System for Medicare,” December 2006, http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/76xx/doc7697/12-08-medicare.pdf. See also January Angeles and Edwin Park, “‘Upcoding’ Problem Exacerbates Overpayments to Medicare Advantage Plans,” Center on Budget and Policy Priorities, September 14, 2009, https://www.cbpp.org/cms/index.cfm?fa=view&id=2712.
[5] Richard Kronick and W. Pete Welch, “Measuring Coding Intensity in the Medicare Advantage Program,” Medicare and Medicaid Research Review, Vol. 4 No. 2, 2014, http://www.cms.gov/mmrr/Downloads/MMRR2014_004_02_sa06.pdf. Note that the Newhouse-McGuire analysis did not appear to take into account the effects of upcoding trends on the effectiveness of Medicare Advantage risk adjustment.
[6] See, for example, Park, op cit.
[7] Medicare Payment Advisory Commission, op cit.
[8] The Centers for Medicare and Medicaid Services (CMS) now periodically updates its risk adjustment models for Medicare Advantage and Medicare Part D, institutes annual adjustments to take into account coding intensity trends, and conducts retrospective audits of how private plans assign diagnoses (known as Risk Adjustment Data Validation audits), which can help ensure that enrollee diagnoses are consistent with medical records and other documentation. Medicare Advantage insurers have strongly opposed these efforts and, in some cases, have succeeded in pressuring CMS to drop initiatives to improve risk adjustment accuracy. To try to combat adverse selection adequately under a premium support system, however, all of these elements would be needed along with additional regulations, such as those Aaron and Reischauer outlined.
[9] Henry Aaron and Austin Frakt, “Why Now Is Not the Time for Premium Support,” New England Journal of Medicine, 366:877-879, March 8, 2012, http://www.nejm.org/doi/full/10.1056/NEJMp1200448.
[10] Paul N. Van de Water, “Converting Medicare to Premium Support Would Likely Lead to Two-Tier Health Care System,” Center on Budget and Policy Priorities, September 26, 2011, https://www.cbpp.org/cms/?fa=view&id=3589.
[11] Stuart Guterman, “Risk Adjustment in a Competitive Medicare System with Premium Support,” in Marilyn Moon (ed.), Competition with Constraints: Challenges Facing Medicare Reform (Washington: Urban Institute, 2000).