Fee-for-service Medicare

As the Medicare Advantage industry draws attention for millions of net overpayments identified in a recent Kaiser Health News report on audits conducted by CMS, the HHS Office of Inspector General in two new reports seeks to recover estimated MA overpayments for inaccurate diagnosis codes. Separate from the contract-level Risk Adjustment Data Validation (RADV) audits used by CMS to verify the accuracy of MA organizations’ risk adjusted payments, the OIG audits may further support the notion that MA plans are overpaid. They also exemplify insurers’ fierce opposition to the use of sampling to approximate a plan’s true payment error rate.

UnitedHealth Group at its annual Investor Day projected strong Medicare Advantage membership growth of 9% next year, overall revenues in the range of $357 billion to $360 billion and earnings per share between $24.40 and $24.90. Along with financial projections shared on Nov. 29, the company said it expects to serve a total of 7.1 million MA members by the end of 2022, and estimated that figure will grow by another 600,000 to 650,000 next year. That year-over-year growth of 9% reflects a “blended projection across Individual MA and Group MA books,” wrote Barclays Steve Valiquette in a research note. “As such, we expect that Individual MA growth is likely higher than the blended 9% (likely in the low-double-digit range) which remains slightly above market growth.” He also noted that UnitedHealth’s projected medical loss ratio of 82.6% (give or take 50 basis points) was “slightly more conservative than expected” but not surprising given that the company said its MLR guidance reflects an expectation of a slightly elevated flu season in early 2023.

CMS is buying itself more time to make a final determination about its use of extrapolation in Risk Adjustment Data Validation (RADV) audits. In a Federal Register notice, the agency pushed its Nov. 1 deadline to issue a final RADV rule to Feb. 1, 2023, saying it was unable to meet the already extended deadline “because of ongoing exceptional circumstances.” The Trump administration in a November 2018 proposed rule (83 Fed. Reg. 54982, Nov. 1, 2018) said its plans to recoup improper payments starting with payment year 2020 would not involve a “fee-for-service adjuster” and that it may apply this extrapolation methodology when finalizing audits dating back to payment year 2011. That rule received pushback from insurers for its potential to inflate audit recoveries, skew the MA bidding process and impact beneficiary cost-sharing and MA product offerings. The provision was not finalized by the Trump administration. CMS in October 2021 extended the statutory three-year timeline for completing the rulemaking, explaining that it received extensive public comments on the proposal and the FFS adjuster study that it released just prior to publishing the November 2018 proposed rule.

Among Medicare beneficiaries with complex care needs, those enrolled in Medicare Advantage had lower rates of hospital stays, emergency department (ED) visits and 30-day readmissions than those enrolled in traditional Medicare, according to a new JAMA study.

Based on an analysis of more than 1.8 million Medicare beneficiaries, the study found that MA beneficiaries enrolled in health maintenance organization plans and preferred provider organization plans both saw lower rates of hospitalizations and ED visits than traditional Medicare beneficiaries across all groups, but the difference was larger for those enrolled in HMO plans.

A New York District Court judge denied Anthem, Inc.’s request to transfer a False Claims Act lawsuit to another district and to strike allegations contained in an amended complaint. The suit in question was filed by the U.S. Attorney for the Southern District of New York in 2020 and alleges that while conducting chart reviews aimed at identifying additional diagnosis codes for obtaining risk adjusted payment through the Medicare Advantage program from 2014 to 2018, Anthem neglected “its duty to delete thousands of inaccurate diagnoses” and “often generated $100 million or more a year in additional revenue” as a result. According to an opinion filed by U.S. District Judge Andrew Carter on Sept. 30, the company now known as Elevance Health filed a motion to transfer this action to the Southern District of Ohio (or dismiss the suit altogether) and to strike portions of the complaint referencing the government’s settlements with other MA organizations or health care providers.

There is limited evidence to suggest any major differences exist between Medicare Advantage and traditional, fee-for-service (FFS) Medicare when measuring beneficiary satisfaction, according to the Kaiser Family Foundation’s (KFF) recent literature review of 62 studies comparing the two programs. Nor did either program consistently stand out across quality measures. There were also few differences in length of hospital stays for common ailments or aggregate days spent in inpatient care between the two groups.

A new study published in Health Affairs urged government leaders to limit market consolidation among the largest dialysis providers as more and more seniors choose Medicare Advantage over fee-for-service (FFS) Medicare. Analyzing 2016 and 2017 outpatient Medicare claims data, the study authors found that MA organizations paid inflated costs for dialysis services compared to what FFS Medicare would have paid, especially to large national dialysis organizations — where the majority of patients receive treatment. Notably, MA plans’ median cost for in-network hemodialysis (the most common form of the therapy) was $301, which was markedly higher than the $232 median cost for out-of-network treatments. Findings were similar for peritoneal dialysis, the less common form of dialysis.

Overall, MA plans paid 131% of the FFS price for in-network hemodialysis at large chains, compared to 120% of the FFS price at regional chains, and they paid 112% of the price at independently owned facilities. These markups were also found for in-network peritoneal dialysis but were not observed for out-of-network services.

A new study published in JAMA Network Open raises questions about whether health systems can actually achieve significant savings through the Medicare Shared Savings Program (MSSP), or if Medicare Advantage could be a better bet. To identify spending patterns in MA and MSSP’s Accountable Care Organizations (ACOs), researchers studied the characteristics and claims data of about 16,000 Medicare patients at Ochsner Health System (OHS), a large, academic system in Louisiana, from 2014 to 2018. Ochsner joined MSSP in 2013, and its ACO hosts more than 2,200 providers. It also offers MA plans via a partnership with Humana Inc.

CMS’s Center for Medicare and Medicaid Innovation last year declared a goal of having all traditional Medicare enrollees in an accountable care arrangement by 2030. America’s Physician Groups (APG), which represents more than 300 physician groups that accept various degrees of risk with all payer types, including Medicare Advantage plans, wants CMS to apply that same goal to MA. In a recent comment letter on CMS’s request for information on the MA program, APG President and CEO Susan Dentzer urged the administration to incentivize the delegation of full risk to providers in MA.

The number of Medicare Advantage marketing-related complaints submitted to CMS more than doubled between 2020 and 2021, according to a recent report from Axios. Referencing CMS data, the news outlet reported that CMS received approximately 39,600 complaints about the marketing of MA and Part D plans in 2021, compared with about 15,500 in 2020 and an average of 6,000 to 7,000 in prior years. Consumers complained about things like being enrolled without contact from a health plan and misleading information about provider networks. Senate Finance Committee Chair Ron Ryden (D-Ore.) last month wrote to 15 states asking for detailed information about such complaints, while CMS has taken steps to tighten oversight of third-party marketing organizations. “While actions to reign in marketing constructs could affect competitive dynamics within MA, we should continue to see robust growth in this end market in totality, with an emphasis on consumer choice, branding, and benefit constructs affecting the competitive landscape moving forward,” observed Citi Research analyst Jason Cassorla.