Insurer-Level Estimates of Revenue From Differential Coding in Medicare Advantage

Medicare Advantage (MA) plans report diagnoses more intensely than providers in the traditional Medicare (TM) program, and there is wide variation in coding intensity across MA plans.

To estimate the extent to which coding differs among MA insurers and how much extra revenue each insurer receives as a result.

Analysis of differential patterns of coding between MA and TM and the effects of differential coding on revenue received by each MA insurer.

The U.S. Medicare program.

697 MA contracts offered by 193 insurers.

Estimates of the effects of differential coding on contract-level risk scores used in payment and on revenue.

In 2021, the average MA risk score was 1.26; the average for a comparable group in TM was 1.07. The average MA risk score was 0.19 (95% CI, 0.17 to 0.21) higher than it would have been if MA coding patterns had been identical to coding in TM. The average risk score at UnitedHealth Group was 0.28 (CI, 0.26 to 0.31) higher than it would have been if its plans had coded identically to TM. In contrast, Kaiser Permanente coded only slightly more intensely than TM. As a result of differential coding, MA plans received an estimated $33 billion (CI, $28 billion to $38.5 billion) in additional payment in 2021, $13.9 billion (CI, $12.4 billion to $15.5 billion) (42%) of which went to UnitedHealth.

The estimates may have been affected by differences in the demographic characteristics or health status of beneficiaries between MA and TM.

Any MA payment policy reform that effectively targets differential coding will have a widely disparate effect across insurers.

Arnold Ventures.