Coding intensity variation in Medicare Advantage

Area of Science:

• Health Economics
• Health Policy
• Biostatistics

Background:

• Medicare Advantage (MA) enrollment exceeds 50% of eligible beneficiaries.
• MA payments rely on risk scores based on prior-year diagnoses, creating incentives for intensive coding.
• Existing methods for assessing coding intensity have limitations.

Purpose of the Study:

• To estimate coding inflation rates for individual MA contracts using a novel method.
• To analyze factors associated with higher coding intensity in MA plans.
• To assess the prevalence of coding inflation exceeding Medicare's adjustment.

Main Methods:

• Developed a novel method using plan-level mortality rates to infer coding intensity.
• Applied the method to 2014 Medicare Advantage risk score and health condition data.
• Analyzed coding inflation rates across different MA contract characteristics.

Main Results:

• The enrollment-weighted mean coding inflation rate was 8.4% in 2014.
• Coding inflation rates varied significantly across MA insurers and contracts.
• Higher coding intensity was associated with HMOs, provider-owned plans, larger/older plans, and those with high star ratings.
• 68.1% of MA enrollees were in contracts with coding inflation rates exceeding Medicare's adjustment.

Conclusions:

• Significant coding inflation exists within Medicare Advantage plans.
• The novel method provides a robust way to assess coding intensity.
• Coding inflation impacts a majority of Medicare Advantage enrollees, potentially affecting program integrity.