MedPAC Urges CMS to Take Action on Coding Intensity Overpayments

CMS’s coding intensity adjustment, which is used to account for the estimated difference between risk scores that hypothetical beneficiaries would receive if enrolled in Medicare Advantage vs. fee-for-service (FFS) Medicare, has led to more than $91 billion in payments to MA plans between 2007 and 2022, asserted a March 3 letter from the Medicare Payment Advisory Commission (MedPAC) to CMS Administrator Chiquita Brooks-LaSure. The agency in its 2023 Advance Notice proposed to use the statutory minimum adjustment of 5.9%, which MedPAC estimated will lead to an inflated $16.2 billion in payments — and that’s on the conservative end, the commission noted. MedPAC first raised this issue in 2016, when it urged CMS to consider a new model that would use two years of FFS and MA diagnostic data, exclude diagnoses documented only on health risk assessments from either MA or FFS, and then apply an adjustment that fully accounts for the remaining coding differences. The commission in its March letter reiterated its support for this approach.

*Conservative estimates assume that coding intensity will remain at 3.6% and are based on projected Medicare spending for MA plans from the 2021 Trustees’ Report.

†Conservative estimate assumes coding intensity will remain at 3.6%, is based on projected Medicare spending for MA plans from the 2021 Trustees’ Report and assumes CMS will apply the proposed 5.9% coding adjustment.

SOURCE: MedPAC analysis of CMS enrollment, risk score files and Medicare Trustee’s Reports, 2019-2021, March 2022.

From Radar on Medicare Advantage