Risk Adjustment and Incentives for Upcoding in Medicare – Healthcare Economist


To account for variations in illness burden throughout a Medicare Advantage (MA) plans affected person inhabitants, makes use of threat adjustment based mostly on affected person illness burden. Specifically, MedPAC notes that:

Medicare makes use of beneficiaries’ traits, corresponding to age and prior well being circumstances, and a risk-adjustment mannequin—the CMS hierarchical situation classes (CMS– HCCs)—to develop a measure of their anticipated relative threat for coated Medicare spending.

In February 2023, CMS CMS revealed a discover of proposed rulemaking to replace their HCC threat adjustment algorithm (v28). These modifications included (i) leveraging ICD-10 reasonably than ICD-9 codes as the first constructing blocks, (ii) use of 115 HCC indicators reasonably than 79, and (iii) constraining some coefficients to be similar throughout severity ranges (e.g., diabetes, coronary heart failure). The new algorithm might be phased in throughout 2024–2026.

One key query is whether or not suppliers below conventional Medicare (TM) code in another way than Medicare Advantage (MA) plans. Because MA plan cost from CMS relies on affected person severity, there may be an incentive to up-code diagnoses. A paper by Carlin et al. (2024) goals to guage whether or not or not this happens. They first clarify the mechanism by way of which MA plans may extra absolutely seize affected person secondary diagnoses:

MA plans have a possibility to evaluate medical information to make sure that suppliers didn’t by accident omit a analysis from encounter information. These evaluations are extra vital when the suppliers’ reimbursement doesn’t incent detailed coding of the sufferers’ secondary diagnoses. MA plans to make corrections so as to add or (not often) delete a analysis by way of CR information. In addition, each MA and TM suppliers could document extra diagnoses by way of a HRA [health risk assessment] throughout a wellness go to or a house go to for this function.

The authors use 2019 CMS claims information and divide the information into 3 cohorts: MA plans, TM beneficiaries attributed to ACOs (“TM ACO”), and TM beneficiaries not attributed to an ACO (“TM non-ACO”). ACO contains sufferers attributable to accountable care organizations (ACO), corresponding to these collaborating within the Medicare Shared Savings Program (MSSP). The authors observe that the TM non-ACO cohort serves as a key comparability since they aren’t topic to the identical coding depth incentives skilled by MA plans and TM ACOs (since ACO shared financial savings is also threat adjusted).

The authors determine sufferers who had a HRA based mostly on whether or not they had an annual wellness go to, preliminary preventive bodily examination, or chosen house well being visits (following the Reid et al. 2020 algorithm). The authors additionally use info from encounter claims on whether or not a affected person chart evaluate came about. Using these information, the authors propensity-score matched the MA, TM ACO, and TM non-ACO cohorts. The authors then evaluate the matched and unmatched HCC scores and evaluated how the HRA and CR visits impacted the HCC threat scores. They discover:

Incremental well being threat as a result of diagnoses in HRA information elevated throughout protection cohorts according to incentives to maximise threat scores:+0.9% for TM non-ACO,+1.2% for TM ACO, and+3.6% for MA. Including HRA and CR information, the MA threat scores elevated by 9.8% within the matched cohort.

Healthcare Economist graphic derived from Table 2 in Carlin et al. (2024)

Diagnosis codes associated to vascular circumstances, congestive coronary heart failure, and diabetes had the most important contribution to common HCC rating throughout all 3 cohorts. Vascular, pscyh, and congestive coronary heart failure have been most definitely to extend as a result of HRA/CR coding depth actions.

While different papers have claimed Medicare Advantage have upcoded diagnoses for extra favorable reimbursement, this paper clearly specifies not solely the magnitude of the influence, but additionally the mechanism by way of which it’s most definitely to happen. You can learn the complete paper right here.


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