CMS Rule Means Medicare Advantage (MA) Plans Will Pay Back Billions in Overpayments

Medicare Advantage plans currently enroll more than 30 million beneficiaries and enrollment is expected to approach 32 million in 2023.

Advance Notice of Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Rates

Medicare managed care plans would see a slight average revenue increase of about 1.03% in 2024 under a proposal released that would set new payment rates for next year.

Shares of Humana Inc., which gets the bulk of its of revenue from Medicare Advantage, dropped 2.6% in trading after US markets closed. UnitedHealth Group Inc., Centene Corp. and CVS Health Corp. also slipped following the payment notice.

MA plans have drawn the ire of government watchdogs, regulators and some lawmakers who say they improperly withhold needed care, use deceptive marketing techniques, and submit inflated and unsubstantiated patient diagnoses in order to secure higher payments. #physician #medicareadvantage #CMS

Risk Scores and Coding Intensity

Unlike traditional Medicare, which pays a #physician for each medical service they provide, #medicareadvantage plans receive a flat monthly payment for each beneficiary based on their health risk factors, which are used to calculate their individual “risk score.”. The payments are “risk adjusted” so the sicker the patient, the higher the payment.

Risk scores reflect a patient’s projected cost of care and are partly based on the diagnoses that providers list, or “code.” That gives MA plans a financial incentive to have providers record all possible diagnoses. This “coding intensity” increases risk scores and provides higher payments to MA plans.

The #CMS imposes a 5.9% reduction to MA risk scores to offset the effect of coding intensity. But even with the reduction, excess payments to MA plans still totaled nearly $12 billion in 2020, the commission reported in its 2022 March report to Congress. The 5.9% reduction is the minimum required by federal law, but the CMS has never imposed a larger one.

CMS Rule Means Medicare Advantage Plans Will Pay Back Billions in Overpayments

With a more aggressive rule finalized, the Centers for Medicare & Medicaid Services (CMS) said it expects to recover billions more in overpayments from Medicare Advantage plans that upcoded their enrolled beneficiaries as being sicker or requiring more intense levels of care than their medical records could support.

Until now, the amount the plans were supposed to pay back was based just on those overpayments that audits found among the small sample of claims audited. But the new rule enables Medicare to extrapolate the amount owed from those audited claims to all claims submitted for patients in a diagnostic subgroup, thus putting companies on the hook to pay back a lot more money.

Physician Concerns Regarding Medicare Advantage Plans

There are several reasons physicians do not think fondly of Medicare Advantage Plans. These include:

• Strict Network of Providers
• Medicare Advantage Plan Financial Structure
• Prior Authorization

Strict Network of Providers

Physicians may have a variety of reasons for not liking Medicare Advantage plans. One reason is that these plans often have smaller networks of doctors and hospitals than traditional Medicare, which can limit the choice of providers available to patients. This can be frustrating for physicians who want to provide the best possible care for their patients by providing referrals but are constrained by the limitations of the plan.

When a Medicare Advantage plan offers a limited network, receiving a referral to the best specialist may be more difficult than anticipated.

Medicare Advantage Plan Financial Structure

The average physician is not a fan of Medicare Advantage because these plans put the patients’ financial risk in the hands of the physician.

The complex billing and reimbursement process with Medicare Advantage plans is also a common downfall in the eyes of a physician. In addition to needing to stay under budget when providing care, Medicare Advantage plans often have different payment structures and rates than traditional Medicare, which can make it difficult for physicians to understand how they will be paid for their services.

Prior Authorization

Another reason why physicians may not like Medicare Advantage plans is that these plans often require prior authorization for certain treatments or procedures. This means that practices must get approval from the insurance company before they can perform certain tests, procedures, or treatments.

Summary

Medicare Advantage provides challenges that provider organizations may not be ready for. In moving to Medicare Advantage contracts, provider organizations need to be able to:

1. Evaluate if it is desirable to move a current MSSP (Medicare Shared Savings Plan) ACO into a Medicare Advantage contract.
2. Evaluate the desirability of Medicare Advantage contracts when entering into new territories/regions.

Conclusion

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