A risk-adjusted Medicare-Advantage health plan operated by Humana was determined by an OIG audit1 to have improperly collected excess risk adjustment payments totaling nearly $200 million in 2015 by overstating as well as understating how sick some patients were. (Download the report here) Unlike Original Medicare, which pays contracted providers on a fee-for-service basis, Medicare-Advantage relies on the diagnosis codes reported by physicians and hospitals to quantify enrollee’s illness burden, paying more to MA plans that enroll sicker than average Medicare beneficiaries and less to MA plans that enroll healthier than average beneficiaries. Unlike Original Medicare, where providing more services (volume) generates more income for providers, Medicare-Advantage plans can only garner additional income by enrolling sicker patients or by better documenting the morbidities of the patients that they have already enrolled. The OIG also found instances in which Humana was underpaid by CMS because they failed to submit all of the diagnosis codes substantiated by the audited medical records. What the OIG auditors could not determine is whether these unsubmitted diagnosis codes were never submitted to Humana in the first place by contracted physicians, or if they were actually submitted but subsequently never made it to successful submission to CMS.
It is essential for physician groups with capitated or shared savings contracts that participate in any of the government-regulated, risk adjusted programs, such as Medicare-Advantage, managed Medicaid, the ACA Marketplaces, or shared savings ACOs to stay on top of the diagnosis code data they submit to payers to ensure that the risk scores associated with your data submissions are consistent with the risk scores of the data that is submitted to government- or payer-sponsored risk scoring entity. Otherwise, you are likely to be very unpleasantly surprised when capitation rates or shared savings rates are finalized and you learn that you’re not getting paid the amount you thought you were going to get paid.
The new Mile High Healthcare Consulting, LLC, teamed with our affiliated software partner, Cortex Analytics, Inc., has software and consulting solutions designed to ensure that your provider group gets paid the shared savings or capitation rates to which it is entitled.