Medicare Advantage collected $12B in 'excess payments', watchdog report says

Medicare Advantage plans received $12 billion in excess payments in 2020, according to a March 15 congressional report from the Medicare Payment Advisory Commission.

The report says that Medicare Advantage risk scores were nearly 10 percent higher than similar fee-for-service enrollees in 2020 due to higher diagnosis coding intensity.

Though CMS does reduce Medicare Advantage risk scores to align closer with fee-for-service scores, they have never reduced lower than the minimum required by law.

CMS reduced Medicare Advantage risk scores by 5.9 percent in 2020. The watchdog report says the scores ''were about 3.6 percent higher than they would have been" if Medicare Advantage patients had received fee-for-service care, leading to the excess payments.

Three previous risk adjustment recommendations from MedPAC:

  • Exclude diagnoses collected from health risk assessments
  • Use two years of diagnostic data
  • Apply an adjustment to eliminate any residual impact of coding intensity. 

The report says that chart reviews and health risk assessments are the main factor causing coding differences between Medicare Advantage plans.

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