Bipartisan legislation takes aim at Medicare Advantage upcoding

Photo: John Baggaley/Getty Images

New legislation introduced in the Senate by Bill Cassidy, R-La., and Jeff Merkley, D-Or., seeks to curb overpayments to Medicare Advantage plans by imposing changes to MA risk adjustment.

The No Unreasonable Payments, Coding, or Diagnoses for the Elderly (No UPCODE) Act seeks to do this by improving the way MA plans assess patients' health risks. The senators expect the bill, if passed, would save taxpayers billions by eliminating incentives to overcharge Medicare for care.

"Medicare is going insolvent in four years," said Cassidy. "The challenge is preserving that which is good while squeezing out waste. This bill is a step in that direction."

WHAT'S THE IMPACT?

Traditional Medicare plans reimburse providers for the cost of treatments rendered, while Medicare Advantage is paid a standard rate based on the health of an individual patient. 

Because of this, Cassidy and Merkley contend that Medicare Advantage plans have a financial incentive to make beneficiaries appear sicker than they may be to receive a higher Medicare reimbursement.

The bill would take a number of steps to eliminate those incentives – among them, developing a risk-adjustment model that uses two years of diagnostic data instead of just one year.

It would also seek to limit the ability to use old or unrelated medical conditions to inflate the cost of care. It also attempts to ensure that Medicare is only charged for treatment related to relevant medical conditions.

The senators said the bill would also close the gap between how a patient is assessed under traditional Medicare and Medicare Advantage.

THE LARGER TREND

The bill comes weeks after 39 healthcare executives, public health and policy leaders, some with former ties to the Centers for Medicare and Medicaid Services, the CMS Innovation Center and the Medicare Payment Advisory Commission, submitted a joint letter to the Department of Health and Human Services strongly supporting proposed changes to Medicare Advantage payments.

The signers of the letter support CMS's proposed changes in the Calendar Year 2024 Advance Notice with Proposed Payment Updates for the Medicare Advantage and Part D Prescription Drug Program.

Insurers have objected to CMS's proposed 1.03% increase that AHIP and Better Medicare Alliance contend is actually a more than 2% decrease.  

The letter states, "These improvements are long overdue and badly needed to assure appropriate financial payments and stewardship for MA funds, fair payments to enable excellent care for sicker patients, sustainability of the overall Medicare program and security for all beneficiaries."

Continued overpayment to MA Plans represents a fiscally unsustainable long-term policy, according to the letter. 

CMS overpayments are the result of hierarchical condition category (HCC) coding used by plans to upcode or to increase the number of diagnoses, the letter said. The resulting overpayments are projected to total more than $600 billion over the next eight years.

In the Advance Notice, CMS proposes to decrease the coding revenue opportunities by eliminating some of the HCC's that have been abused and standardizing the prices associated with categories of codes to avoid upcoding for some conditions, the letter said.

ON THE RECORD

"Federal audits have found that taxpayers have been overpaying bad actors running Medicare Advantage plans by billions of dollars every year, threatening the stability of both Medicare Advantage and traditional Medicare," said Merkley. "This fraud has to end."
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com