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Excess Diagnosis Coding In Medicare Advantage: Evidence From Skilled Nursing Facility Clinical Assessments
Cyrus M Kosar1, Hannah O James2, Daeho Kim3
1Cyrus M. Kosar (cyrus_kosar@brown.edu), Brown University, Providence, Rhode Island.
Abstract:
Some research suggests that risk adjustment plays a substantial role in explaining the high levels of government spending on Medicare Advantage (MA). We studied whether the reliance on diagnosis codes to risk-adjust payments to MA plans leads to the inflation of submitted diagnoses. Our approach relied on a comparison among diagnoses included in hospital claims, health status measures from similarly timed health assessments completed by skilled nursing facility (SNF) clinicians, and short-term mortality data. SNF assessments are completed for both MA and traditional Medicare enrollees and, in contrast to diagnoses in claims, cannot be directly manipulated by MA plans or inform their payments. We found that among patients with the same assessment-based health status discharged to the same SNF, claims-based disease scores were 4.1 percent higher for MA enrollees, on average, relative to traditional Medicare enrollees. However, short-term mortality risk was, on average, 8.8 percent lower for MA enrollees. About 60 percent of the payer-based difference in disease scores was attributable to MA chart review updates to diagnoses, and additional codes from chart reviews were unrelated to assessment-based health status. Given the growth of MA and current spending on the program, which reached $321 billion in 2021, this evidence of potential coding inflation may have large fiscal implications.
Insights
Medicare Advantage plans may inflate diagnoses for higher payments, according to a study comparing claims, assessments, and mortality data. This diagnosis coding inflation could have significant financial consequences for the Medicare program.
Area of Science:
- Health Economics
- Health Services Research
- Medical Coding
Background:
- Government spending on Medicare Advantage (MA) is substantial, with risk adjustment playing a key role.
- The accuracy of diagnosis codes used for risk adjustment in MA payments is a concern.
Purpose of the Study:
- To investigate whether reliance on diagnosis codes for risk adjustment inflates submitted diagnoses in Medicare Advantage plans.
- To assess the fiscal implications of potential diagnosis coding inflation in MA.
Main Methods:
- Compared diagnoses from hospital claims with health status measures from skilled nursing facility (SNF) assessments and short-term mortality data.
- Analyzed data for both MA and traditional Medicare enrollees, using SNF assessments as a non-manipulable benchmark.
- Examined the impact of MA chart review updates on diagnosis codes.
Main Results:
- MA enrollees had 4.1% higher claims-based disease scores than traditional Medicare enrollees with similar SNF assessment health status.
- Short-term mortality risk was 8.8% lower for MA enrollees.
- Approximately 60% of the difference in disease scores was linked to MA chart review diagnosis updates, with added codes unrelated to assessment health status.
Conclusions:
- Evidence suggests potential inflation of diagnoses in Medicare Advantage claims, driven by chart reviews.
- This coding inflation, unrelated to actual health status, may have significant fiscal implications given MA's growth and spending.
- Further scrutiny of MA risk adjustment and coding practices is warranted.
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