JustCare

Tag: UnitedHealth

  • United Health now controls 1 in 10 physicians

    United Health now controls 1 in 10 physicians

    Steph Weber reports for Medscape that UnitedHealthcare’s owner, UnitedHealth Group now controls–either owns or otherwise works with–one in ten physicians. Concerns are mounting about corporate control of health care. Treating physicians are no longer in full charge of patient care as insurers increasingly overrule their treating decisions.

    Legally, insurers are not allowed to interfere in the practice of medicine. But, what does that really mean? It apparently does not prevent insurers from telling physicians how much time to spend with their patients or who to refer them to if they need to see a specialist–anti-competitive behavior. It also does not stop insurers from providing financial incentives to their physicians to withhold or otherwise delay costly care.

    UnitedHealth now controls around 90,000 of the 950,000 physicians in the US. It is adding multispecialty physician groups in large numbers. These physicians all work for Optum Health, a subsidiary of UnitedHealth.

    UnitedHealth’s ownership or control of these physicians is endangering people’s health. There’s no good independent data to evaluate the consequences of UnitedHealth’s ownership of these physicians. Based on the horror stories reported in the press–from insurer use of AI to conduct massive denials of care without regard to particular patient needs, to inappropriate withholding of payment to hospitals and “ghost” networks–UnitedHealth is interfering in the practice of medicine to the detriment of its enrollees.

    Some experts suggest that there could be some good in what UnitedHealth is doing. But without data to conduct independent assessments and with mountains of horror stories, these experts are likely dreaming. Insurer control of physicians means putting profits ahead of patient needs, with potentially horrific consequences.

    One recent study published in JAMA finds that private equity ownership of physician groups has driven up health care prices. That study looked at dermatology, gastroenterology, and ophthalmology practices. Several other studies have had similar findings, including one on private equity ownership of dental practices. Nursing homes, emergency medicine, urology and cardiology practices are all being taken over by private equity and corporations.

    The Biden administration has focused some attention on anti-trust issues, but it seems that the anti-trust train left the station a long time ago and undoing the damage that has already been wrought would be a very heavy lift. Moreover, when insurers hire physicians, rather than acquiring them, they are not subject to anti-trust laws.

    The dangers to patient health from the corporatization of healthcare are potentially massive, with costly care particularly hard to come by. Insurer ownership or control of physician practices is hurting physicians as well. They may no longer be able to practice the medicine they think is in their patients’ interest.

    Recently, UnitedHealth and Humana have been sued for using AI algorithms to deny patient care, overruling treating physicians, and overlooking the particular needs of their enrollees in Medicare Advantage plans.

    Here’s more from Just Care:

  • UnitedHealth deprives members of critical rehabilitation care

    UnitedHealth deprives members of critical rehabilitation care

    A new investigation by Bob Herman and Casey Ross, reported in Stat News, reveals that UnitedHealth, Humana and other insurers are using algorithms to deny critical rehabilitation care to people in Medicare Advantage plans, in violation of Medicare rules and endangering their members. (You can bet real money that people needing all kinds of costly care are facing wrongful denials.) The report explains that these insurers are using A.I. software to keep people in critical condition from getting the medically necessary rehab services that people with Medicare get in Traditional Medicare and that the government pays these insurers to provide their enrollees.

    UnitedHealth pushed its staff to adhere to the treating decisions of its NaviHealth software, without regard to the specific needs of rehab patients, endangering their health and well-being. Through these denials, UnitedHealth can keep more of the money that the government gives them to provide care. Not surprisingly, United’s NaviHealth software severely restricts or withholds needed care.

    NaviHealth staff were fired or quit when they could not tolerate the medical decisions UnitedHealth was pressuring them to make based virtually exclusively on its NaviHealth software. UnitedHealth continues to claim that it is giving its members all the care they need.

    Senior former officials at Medicare designed the NaviHealth product, which boosts UnitedHealth’s revenue by hundreds of millions of dollars a year. The Centers for Medicare and Medicaid Services, which oversees Medicare, is investigating, but it is clear that it lacks the resources and the power to hold the large insurers offering Medicare Advantage plans to account. It never has. President Biden needs to step in with an Executive Order.

    Advocates are pressuring members of Congress and the administration to stop these insurers from enrolling new members and, at the very least, to warn enrollees about the risks to their health if they are enrolled in Medicare Advantage plans offered by these insurers. To date, CMS has done little. In fact, the information it provides on Medicare options is extremely misleading, steering people to Medicare Advantage plans that could endanger their health. Several members of Congress, including Mark Pocan, Katie Porter, Pramila Jayapal, and Jan Schakowsky, have sent letters to CMS asking it to hold the insurers to account.

    Here’s more from Just Care:

  • 200,000 UnitedHealth enrollees in North Carolina likely losing coverage

    200,000 UnitedHealth enrollees in North Carolina likely losing coverage

    The University of North Carolina (UNC) Health is planning to end its contract with UnitedHealth because it is  “not negotiating with us in good faith.” Two hundred thousand people enrolled in UnitedHealth’s North Carolina plans are likely to lose their access to UNC Health, reports MedPage Today. As more and more hospital systems throughout the country face health insurer prior authorization delays and denials, denials of payments and other financial and administrative burdens, people are at serious risk of care disruptions.

    If UnitedHealth doesn’t meet UNC’s needs, tens of thousands of people in UnitedHealth’s Medicare Advantage plan in North Carolina will lose access to UNC hospitals and providers effective April 1, 2024. They are not alone. Equally concerning is that many smaller and rural hospitals are closing as a result of UnitedHealth and other health insurers failing to pay them appropriately.

    UNC Health’s chief clinical officer Matthew G. Ewend, MD says that UNC needs to hold UnitedHealth accountable for underpayments and undermining patient care. UnitedHealth is not prioritizing patient health and well-being. He says, “UnitedHealthcare improperly denies claims and causes unnecessary delays in patient care. This can negatively affect your well-being.”

    Since now is open enrollment season, UNC is urging its patients to find a new insurer rather than face disruptions in care in 2024. John Buse, MD, director of the UNC Diabetes Care Center, said “We need a single-payer healthcare system! The incentives are all wrong.” He is so right.

    So long as insurers profit from delays and denials of care and coverage, they will continue to delay and deny care and coverage inappropriately. Unfortunately, it seems that neither the states nor the federal government have the will or the power to hold them accountable for their bad acts. A review of enforcement actions by the Centers for Medicare and Medicaid Services against Medicare Advantage plans in 2023 reveals not a single enforcement action.

    Here’s more from Just Care:

  • UnitedHealth renames company responsible for massive inappropriate denials

    UnitedHealth renames company responsible for massive inappropriate denials

    A while back, I reported on a story in Stat News that exposed a division of UnitedHealth, NaviHealth that uses artificial intelligence, AI, to deny thousands of Medicare Advantage claims, in seconds. Now, Stat News reports that UnitedHealth is renaming NaviHealth, with all the evidence pointing towards UnitedHealth continuing to deny claims en masse with the help of the renamed company. If you need a reason not to enroll in a Medicare Advantage plan or to disenroll from one, NaviHealth or whatever it’s new name, is as good as any.

    The original Stat News story explained that UnitedHealth, as well as many other health insurance companies, rely on NaviHealth, an AI system, in its medical decisionmaking to inappropriately deny care to people in Medicare Advantage plans. Former employees at NaviHealth report that its AI algorithms wrongly deny care to Medicare Advantage enrollees in serious health.

    Employees at NaviHealth complained in internal communications that insurers were denying care to people who are on IVs in rehab facilities. Medicare should cover up to 100 days in a rehab facility or nursing home for eligible individuals. But, NaviHealth sometimes determines that people need to leave rehab before their treating physicians believe that it is appropriate for them to do so. In 2022, the Office of the Inspector General of the Department of Health and Human Services reported widespread and persistent delays and denials of care in some Medicare Advantage plans, including denials of rehab and skilled nursing services.

    As Stat previously reported, insurance corporations use AI–computer programs–to deny care to Medicare Advantage enrollees with serious diseases and injuries, when traditional Medicare would have covered the care. The NaviHealth system wrongly does not consider individual patient’s needs in its determinations about when to stop covering care. Patients, physicians and NaviHealth workers are “increasingly distressed” that patients are not able to get the care they need as a result of these computer algorithms.

    Here’s more from Just Care:

  • Medicare Advantage endangers rural hospitals

    Medicare Advantage endangers rural hospitals

    Rural hospitals are a critical source of health care for millions of Americans. But, Medicare Advantage plans are refusing to pay them Medicare rates and denying coverage for a large portion of services they provide. Corporate health insurers offering Medicare Advantage plans are putting the survival of rural hospitals at risk, reports Axios.

    At more people enroll in Medicare Advantage, more rural hospitals are closing or feeling the threat of closure. These hospitals don’t have the negotiating power of larger hospitals to ensure Medicare Advantage plans pay them adequately and appropriately. (And, even some larger hospital systems are cancelling their Medicare Advantage contracts because of inadequate payments and patient care concerns.) Traditional Medicare is a far better payer that they have relied on.

    Still, rural Americans are enrolling in Medicare Advantage, likely unaware of the risks to their health and well-being, particularly if they develop a complex and costly condition. Medicare Advantage marketing and sales agents highlight the “free” benefits in Medicare Advantage, without describing the dangers–inadequate networks, inappropriate delays and denials of care and coverage, and more.

    The biggest dangers in Medicare Advantage come when you most need health care. You can face long waits for approval of care. And, too often, Medicare Advantage plans wrongfully refuse to pay for care that traditional Medicare covers. Hundreds, if not thousands, of Medicare Advantage plans deny care and coverage inappropriately.

    People don’t appreciate that it can be hard to come by a good oncologist in Medicare Advantage if you’re diagnosed with cancer. Mental health benefits can also be hard to get. And, Medicare Advantage plans have been found to deny people rehab therapy post hip and knee replacements or to cover far less therapy than people need.

    Some Medicare Advantage plans might actually be doing right by their members. But, if they are, no one is disclosing which are the good ones and which are the bad ones. Imagine buying a car without knowing whether the engine is likely to fail or buying a house without being able to inspect for termites. Tens of thousands of older adults and people with disabilities end up with serious health complications or worse because their Medicare Advantage plans refused to cover the care they needed.

    Now, hundreds of rural hospitals are at risk of closure, in part because Medicare Advantage plans are not paying them as they should. Corporate insurers such as UnitedHealth and Cigna, which both cover care for people in Medicare Advantage and in the employer market, profit from denying care and coverage. Because the Centers for Medicare and Medicaid Services lacks the resources to oversee them properly, they can get away with these denials with impunity.

    Let your representatives in Congress know that you will hold them accountable if they don’t protect Medicare Advantage members and their hospitals from the bad actors in Medicare Advantage. At the very least, the government should be identifying the Medicare Advantage plans with high rates of delays and denials rather than giving some of them four and five star ratings.

    Here’s more from Just Care:

  • Corporate health insurers use NaviHealth algorithms to deny care in Medicare Advantage plans

    Corporate health insurers use NaviHealth algorithms to deny care in Medicare Advantage plans

    Beware of corporate health insurers that use NaviHealth, an AI system tha can inappropriately deny care to people in Medicare Advantage plans. Former employees at NaviHealth report that its AI algorithms wrongly deny care to Medicare Advantage enrollees in serious health, reports Stat News. UnitedHealth, which owns NaviHealth, and other health insurance companies, rely on NaviHealth in their medical decisionmaking,

    Employees at NaviHealth are complaining in internal communications that insurers are denying care to people who are on IVs in rehab facilities. Medicare should cover up to 100 days in a rehab facility for eligible individuals. But, NaviHealth sometimes determines that they need to leave rehab before it is appropriate for them to do so.

    As Stat previously reported, insurance corporations use AI–computer programs–to deny care to Medicare Advantage enrollees with serious diseases and injuries. The NaviHealth system does not consider individual patient’s needs in its determinations about when to stop covering care. Patients, physicians and NaviHealth workers are “increasingly distressed” that patients are not able to get the care they need as a result of these computer algorithms.

    Former medical review employees at NaviHealth say that they were not allowed to use their independent clinical judgment to allow continued stays in rehab facilities when the NaviHealth system said to deny care; they had to follow the algorithms. “That was very different from before we were owned by Optum.”

    As Stat News reports, this is the dark side of AI. Reporters spoke with five former NaviHealth employees, patients, lawyers, experts; they also reviewed internal communications at NaviHealth. For its part, NaviHealth says its algorithms are merely a guide and NaviHealth does not make coverage decisions. But, how often do insurance company medical review staff not follow the NaviHealth “guide” when the medical evidence suggests patients still need care?

    Stat News finds that the NaviHealth algorithms are central to coverage decisions, influencing outcomes. NaviHealth likely is responsible for huge profits for UnitedHealth and other health insurance corporations. But, those profits come at the cost of people’s health and sometimes endanger their lives. Patients’ only resort when NaviHealth denies care is to pay privately for the health care services and appeal the denials. (And, that’s only if they have the means to do so.) Patients have a high likelihood of prevailing, but many of them cannot afford to pay for that care privately.

    Here’s more from Just Care:

  • Medicare Advantage plans lay groundwork for higher government payments

    Medicare Advantage plans lay groundwork for higher government payments

    UnitedHealth, Humana and other major insurers offering Medicare Advantage plans, corporate health plans that contract with the government to provide coverage to people with Medicare, already are laying the groundwork for higher government payments and/or cost increases for their enrollees. Paige Minemyer reports for Fierce Healthcare that these insurers claim that people are using a lot more healthcare this year and that their costs are rising.

    In filings to the Securities and Exchange Commission, Humana and United Healthcare claim that they will be spending .87 cents of every dollar they receive from the government on benefits. They attribute this increase to greater use of outpatient services, emergency care and surgeries by their enrollees with Medicare. Humana also claims that it has seen greater enrollment by older people with Medicare, who cost them more than younger people.

    United Healthcare has seen greater use of behavioral health services. Still, both companies have been able to contain inpatient costs. And, United Healthcare has been able to keep medical spending down to as low as 0.821 cents on the dollar.

    The major health insurers all appear to attribute higher use of health services this year to delayed care because of the Covid-19 pandemic. But, whatever the reason, they are still engaged in widespread inappropriate delays and denials of care and coverage and, this year alone, are overcharging the federal government as much as $75 billion for their services, according to a new study.

    Congress is sitting on its hands, notwithstanding the massive overpayments to Medicare Advantage plans and the widespread inappropriate delays and denials. As troubling, the administration is still suggesting that people can choose a Medicare Advantage plan that’s right for them, even though they are not warning people about the Medicare Advantage plans that are engaged in widespread inappropriate delays and denials of care or cancelling their contracts.

    Here’s more from Just Care:

  • 19 Leaders Support CMS Medicare Advantage Proposed Payment Changes using data from United Health Group’s Study

    Press release: 19 Healthcare leaders from across the industry, using data from a UnitedHealth Group/Optum Team study, demonstrate how Medicare Advantage (MA) Plans create massive overpayments and urge CMS to finalize its 2024 MA Payment Proposal to improve accuracy of payment.    

    Washington, DC, March 9, 2023 – Today 19  leaders from public health, public policy, health care executive management, and clinical care are making public a joint letter of comment previously submitted to the Department of Health and Human Services in strong support for the Medicare Advantage payment policy changes proposed by the Centers for Medicare and Medicaid Services in the “Calendar Year 2024 Advance Notice with Proposed Payment Updates for the Medicare Advantage and Part D Prescription Drug Program.”

    The signers of this letter of comment urge CMS to proceed with its proposed changes with Don Berwick, MD a former CMS Administrator and a signer of the letter saying, “The continuing excess payment to Medicare Advantage plans through the coding game drains resources from taxpayers, patients, and important investments in improving the community conditions that generate health. CMS’s proposed changes offer an opportunity for health plans to come to the table, help fix the broken payment system, and redirect efforts toward the needs of patients and population health.”

    In the face of massive pushback to the rules by MA Plans and some affiliated providers, this comment letter uses data provided by UnitedHealth Group/Optum authors in a recent study comparing the experience of MA patients with FFS patients. The letter concludes:

    “…the submission of more codes from MA Plans results in marked overpayments. In the case of the study by UHG / Optum authors our estimate is that this creates an opportunity for at least a 34% increase in payment from CMS.”

    MA Plan coding excess, where Plans submit diagnosis codes that are irrelevant for care but important for payment, is a well-documented source of overpayment to the Plans. But an MA organization revealing the detail for a covered population and contracted practices may be a first.  And in this case the UHG/Optum author’s premise is that the two populations are comparable so the argument that “our patients are sicker” is eliminated .  Tia Goss-Sawhney, DrPH, Fellow of the Society of Actuaries and a signatory to the letter said,

    “The study shows that these MA Plans documented nearly twice as many diagnoses. The reported rates for many diagnoses are not at all similar to the FFS rates and are stunningly high including 5.71x the prevalence of substance abuse disorder (10.0% vs. 1.7%), 3.45x the prevalence of psychiatric disorders, 2.83x for non-diabetes metabolic disorders (23.6% vs. 8.4%), and 2.25x the COPD (21.4% vs. 9.5%).  Vascular disease was coded 3.6x more often, with fully one half of the entire MA population, 50.7%, so coded vs. 14% in FFS.”

    These extra codes resulted in an estimated 44% higher risk score which when combined with the full risk contracts gave the “national healthcare delivery system” provider the opportunity to make thousands of dollars more per patient per year.

    The letter demonstrates how plans use two-sided full risk contracts to incent more coding by providers by paying them a large percentage, often 85%, of the additional premium Plans receive through increased coding. The result is that for patients cared for in practices using these contracts and owned by insurers, spending on actual healthcare services is significantly less than the expected 85% of Medicare payments.

    Richard Gilfillan, MD a former deputy administrator at CMS commented: “This percentage of premium approach and the resulting extraordinary profits are widespread in the industry.  CMS’s proposed overall  1% increase in payments provides plenty of funding  in the system to maintain  current benefits and care for all communities, particularly lower income communities where the coding profits may be highest.    MA firms should be planning to become more efficient and accept lower profits, not threatening to reduce care or benefits for lower income people.”

    Brief Explanation of MA Advance Notice Comment Letter from 19 Industry Leaders 

    In our comment letter [below] on the 2024 MA Advance Notice we offered strong support for CMS to finalize their proposed approach to changes in the MA Risk Adjustment system. The letter included an extensive analysis of a two- sided full risk contract study by UHG/Optum Authors that we believe illustrates the urgent need to improve how Medicare pays MA Plans. A briefer summary of our analysis of that study follows.

    Our Conclusions:

    1. This study demonstrates that MA plans and practices operating under two-sided full risk contracts have powerful incentives to increase coding that results in higher risk scores, premiums and profits sufficiently to increase CMS payments by at least 34% more than they would be if based on the actual FFS spending.
    2. Health Plans purchase provider practices to capture both the insurance and provider profits from these contracts ultimately spending much less than 85% of premium on actual healthcare services for Medicare beneficiaries
    3. Any comparison of MA and FFS hospital use through analysis of claims is invalid because MA plans deny and downgrade up to 30% of inpatient stays rendering the data incomparable .

    Background:

    United Health Group (UHG) authors published a study of the experience of two comparable sets of Medicare beneficiaries, one with traditional FFS Medicare coverage seen by varied providers, one with MA coverage seen in physician practices operating under “two-sided full risk contracts” with MA Plans. Neither the insurer nor the practices were identified although the MA practices were described as part of a large national health care delivery organization which sounds similar to UHG’s Optum subsidiary but was not identified.

    The populations were matched for age, sex and state. The Study included a table describing the matched populations of 158,156 beneficiaries each with the frequency of various Hierarchical Condition Categories (HCC’s) which are used to create the risk scores CMS uses to adjust payments.

    Our Analysis:

    • These are comparable populations demographically
    • The FFS population was somewhat sicker with more cancer and transplants
    • The reported rates of reporting of acute serious, unequivocal HCC’s are very similar
    • The MA population was coded with almost twice as many HCC’s per person (3 vs. 1.56)
    • The differences in HCC reported rates was concentrated in codes that are more discretionary. The MA reported rates were multiples of the FFS rates:
      • 5.7x substance use disorder (10.0% vs. 1.7%)
      • 3.5x the prevalence of psychiatric disorders
      • 2.8x for non-diabetes metabolic disorders(23.6%vs.8.4%)
      • 2.2x the of rate COPD (21.4% vs. 9.5%)
      • 3.6x the rate of Vascular disease – 50.7% vs. 14%
    • The resulting risk score was 45% higher in the MA Population – 1.4 vs. .98. This is the minimum increase because we could not model several other factors that would increase the risk significantly
    • This produces 34% higher potential CMS payments for the same population

    How much extra money would this produce for 2024 under a “two-sided full risk contract” and where does it go? We cannot say with certainty how high the additional payments were given the complexity of the Medicare bidding system. We created a model using the MedPAC description of average 2023 bids to estimate the potential financial flows yielding these estimates:

    • CMS would pay Plans $300 Per Member Per Month (PMPM) more
    • Practices would get $255 PMPM more
    • Plans would get $45 PMPM more to use for profits or improved benefits
    • If the Plan/subsidiary owns the practices they get the full $300 ultimately therebyincreasing parent profits markedly
    • In insurer owned practices the dollars spent on actual healthcare services will likely bewell below the expected 85% and possible less than 70%.
    • For the study population of 158,156 the total dollars would be:

    UHG/Optum Study Authors Conclusions:
    1. The practice population had lower hospital use that reflected better care and outcomes.

    Our Response: The comparison of hospital use is invalid because the MA Plans decrease reported hospital use through denials and downgrades of inpatient stays to observation stays.

    2. CMS HCC Risk adjustment system may appropriately align reimbursement with health burden of the population.

    Our Response: This is rebutted by the data showing that their doubling of HCC’s results in a 45% higher risk score and 34% higher payment for the same health burden.

    3. CMS payments can support the infrastructure necessary to improve care efficiency and quality.

    Our Response: MedPAC has documented for years that it is impossible to demonstrate better quality in MA Plans. Estimates of the cost of investments for quality and efficiency are highly varied. We suggest $52 PMPM above already reimbursed administrative care costs would be a generous amount. MA Plans receive on average about $40 PMPM in Quality bonuses. The extra $300 PMPM in payments dwarfs any incremental amount of spending related to improving care.

    How do Plans and Practices Increase risk scores?

    Here is an example used in a MA industry firm’s on-line brochure. The narrative in the headers is ours, the HCCs and scores for the same person are from the firm’s slides.

    Comment to Secretary of Health and Human Services and Administrator, Centers for Medicare and Medicaid Services (CMS) 

    March 6, 2023

    Honorable Xavier Becerra
    Secretary of Health and Human Services Washington, DC

    Ms. Chiquita Brooks-LaSure
    Administrator, Centers for Medicare and Medicaid Services Washington, DC

    Docket Number CMS-2023-0010-0001
    Dear Secretary Becerra and Administrator Brooks-Lasure,

    The policy changes for Medicare Advantage (MA) payments proposed by CMS in the “Calendar Year 2024 Advance Notice” constitute important advances. 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. We support CMS’s finalizing these propose MA payment changes.

    MedPAC has estimated that in 2023 there will be $27 billion in excessive and unwarranted payments to MA plans. Other have projected that these overpayments will cost taxpayers $600 billion over the next 8 years. Beneficiaries will ultimately directly shoulder approximately 15% of these costs, almost $90 billion in increased Part B premiums. This is a direct transfer of funds from beneficiaries to MA plans.

    Summary Comments

    On February 1, 2023, CMS released an “Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies”1 that proposes substantial changes to the MA Part C risk adjustment methodology. We support CMS’s approach and urge you to finalize this methodology for 2024.

    Our reasons for support include:

    1. The HCC Risk Adjustment system has allowed plans to in effect set their own premium by incessantly creating, hunting for and submitting more diagnosis codes to CMS with resulting overpayments that are projected to total more than $600 billion over the next 8 years. (2)
    2. Medicare Beneficiaries will pay out of their pocket for about 15% of these overpayments, or more than $90 billion, by way of increased Part B benefits.(3) This represents a direct transfer of wealth from seniors to insurance companies and investors.
    3. A recent study by authors from UnitedHealth Group / Optum (discussed further below) demonstrates that MA Plans can generate approximately twice as many HCC’s per person as there are in an equivalent FFS population despite the health burden being somewhat greater in the FFS population.
    4. Because the financial value for each HCC is calculated from the FFS Medicare data, which have fewer codes, the submission of more codes from MA Plans results in marked overpayments. In the case of the study by UHG / Optum authors our estimate is that this creates an opportunity for at least a 34% increase in payment from CMS.
    5. As demonstrated in the below analysis of the study by UHG/Optum authors, Plans have used percentage of premium contracts to entice providers into helping them drive more coding, higher premiums, and more profits for all by simply arbitraging the difference between FFS and MA coding rates to make their population appear sicker.
    6. Insurer owned primary care practices using these contracts give plans the opportunity to collect even more profits masking the reality that the actual medical loss ratio for benficiaries in these practices may run less than 70%, well below the 85% minimum MLR required for Plans.
    7. This Risk Adjustment arbitrage has created a gold rush of investment, driven directly by these MA overpayments, that is distorting the delivery of primary care.
    8. The MA marketplace is highly concentrated; the top two for-profit MA contracting organizations, UnitedHealth Group and Humana, have 46% market share and the top 10 have 79%. These large plans have become the most adept at-risk coding and as a result are taking an even greater proportion of premium to drive greater market share to the disadvantage of smaller, frequently non-profit, community-based health plans.(4)

    We believe CMS’s approach will significantly and properly recalibrate MA payments thereby decreasing these overpayments and hopefully beginning to reestablish investment patterns driven by the objective of improving care not non-care related diagnosis coding. As a result of the reduction in risk-adjustment diagnoses codes, and the elimination of highly abused HCC’s like Vascular Disease and Protein Malnutrition, dollars will be redistributed across other more appropriately utilized diagnosis codes.

    CMS estimates that this risk model revision and normalization, along with other changes and the expected continued increase in MA risk scores will result in an average 1.3% payment increase for 2024. The impact will not be even across MA plan organizations and will generally redistribute MA premium away from the largest and most aggressive coders to community-based plans that have traditionally served low-income and minority populations.

    America’s Physician Group(APG) has criticized the CMS proposed approach and raised the specter of their members decreasing care or leaving lower income communities. Many APG members have provided outstanding care in their communities for many years and did so well before the onset of risk adjustment and coding games. Many are non-profit firms that have long term commitments to serve lower income populations and no doubt will continue with their missions. Many have also become highly dependent on risk coding to improve care models and drive higher profits.

    Others are new provider entities created explicitly to profit investors by creating Medicare Advantage overpayments. The resulting overpayments by CMS make clear that these are not “Value Based Contracts,” they are value consuming contacts that will more rapidly exhaust the Medicare Trust Fund. Many of these providers have already been acquired by the major MA plan organizations including UnitedHealth Group, Humana, Aetna, and Cigna. These leading MA plan organizations have also purchased and/or signed high-profile deals with software vendors whose inflated values are based on their ability to identify “missing” risk adjustment diagnosis codes; others have developed in-house capabilities. As demonstrated by the study we will examine below, there are extraordinary profits being made by aggressive coders. Many of these profits end up leaving the healthcare system as dividends and stock buybacks to benefit investors, not patients.

    The proposed CMS changes, while significant, leave many opportunities for aggressive coders. Along with the inflated benchmarks MedPAC has long cited, MA plan organizations will continue to have ample funding that will allow them to continue to provide care and coverage for lower income communities. They just may need to adjust their profit expectations and create more effective care models that produce real savings, not illusionary savings from the use of discretionary diagnosis codes.

    It is true that in the MA industry plan organizations are compelled to try and increase their risk scores to be competitive. Some are much more aggressive than others. We know that plans can’t just unilaterally stop. But all plan leaders know it is a broken system that is creating overpayments. For those who claim to be committed to delivering high value care, addressing the Social Determinants of Health and helping the country address other social conditions, now is the time for them to stand up and support this CMS effort to begin to improve the system.

    Recommendations: The chart below includes our overall recommendations along with a brief explanation for each.

    Num

    Recommendation

    Rationale

    1

    CMS should finalize their proposed changes to the Medicare Advantage Risk Adjustment System.

    The changes use more contemporary data and close well-documented abuses.

    2

    CMS should consider additional ways to pay MA plans in a manner that better matches payment with the health burden of the population being served.

    We are doubtful that an HCC based system is the best way to accomplish that and urge CMS to consider exploring alternative risk adjustment systems and in particular ones that will factor in the impact of social deprivation indices on the cost and quality of care and will be better able to withstand upcoding behavior.

    3

    CMS should eliminate the use of percentage of premium contracts, gainsharing contracts, and other arrangement that position providers to assist plans in inappropriately increasing premium and CMS costs as long as the Risk adjustment system allows them to manipulate their own payment.

    These arrangements are becoming more prevalent and are distorting the primary care delivery system and the actual delivery of care. Their power is well demonstrated in our analysis of a “national health delivery system” operating under such arrangements.

    4

    CMS should require MA plans to file provider risk contracts and resulting MLR’s, require all MA subcontractors to meet the 85% loss ratio requirement, and include provider level identification under such contracts in public files

    We believe that CMS should have insight into the incentives and financial operation of these contracts and that making them public will allow researchers and policy makers to more deeply understand the dynamics of healthcare delivery and finance.

    5

    CMS should also require reporting of all inpatient claim denials and downgrades to observation status

    We believe avoidable inpatient hospitalizations are too-often avoided by administrative denials and downgrades rather than by better quality of care.

    In the remainder of this comment letter, we present data from a recent article written by UHG/Optum employees that we believe illustrates the above points dramatically. Thank you for this opportunity to comment on CMS’s important initiative to improve the accuracy of payment for Medicare Advantage plans and the sustainability of the Medicare Trust Fund.

    Background

    On February 1, 2023, CMS released an “Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies” (5) that proposes substantial changes to the MA Part C risk adjustment methodology. Three risk-adjustable HCCs will be eliminated entirely. More than 2,200 diagnosis codes, from the three eliminated HCCs and portions of the remaining HCCs, will no longer impact risk adjustment payments. The remaining HCCs will be split into more-granular HCCs, renumbered, and renamed to create a new list of HCCs. Risk adjustment factors (RAFs) for the new HCCs will then be calculated using 2018 diagnoses and 2019 expenditures.

    CMS determined that the 2,200+ diagnoses codes and 3 HCCs “should be reclassified based the relative coding in MA versus in FFS and on clinical input regarding the degree of discretion to code each condition.” CMS discussed the rationale for these changes in its 2021 “Report to Congress: Risk Adjustment in Medicare Advantage”.(6)

    In the MA Money Machine Part 1 and MA Money Machine Part 2, Gilfillan and Berwick (among letter signatories below) described how MA plans used two-sided full risk contracts to incent providers to find, gather and submit more diagnosis codes to increase premium and payment. Citing evidence from MedPAC and many others they showed an industry wide increase in coding in MA vs. FFS and the resulting overpayment of MA plans. However there has been no clear quantification of how coding intensity varies at the HCC level or at the provider level that would allow confirmation of the Money Machine Model or the actual magnitude of the profits involved. (7)

    Against this backdrop, a remarkably welcome level of coding intensity transparency has been provided in the recent paper “Comparison of Care Quality Metrics in 2-Sided Risk Medicare Advantage vs Fee-for- Service Medicare Programs” by a team of UHG’s Optum employees published December 12, 2022, in

    JAMA Health Policy.8 Apparently in response to the Money Machine articles, the authors sought to demonstrate the effectiveness of two-sided full risk arrangements in improving quality, reducing utilization and “aligning Medicare payment with the health burden of the population.” We believe this paper instead proves the opposite: it confirms that MA Plans use provider risk contracts to create overpayments and demonstrates the importance of CMS’s proposed changes.

    The UHG/Optum Team Paper (9)

    General Approach and Results: The authors’ compare the healthcare utilization of a population of MA patients cared for by “a nationwide delivery system operating under two-sided risk contracts” and a comparable matched population of Fee for Service (FFS) Medicare beneficiaries. (10) The documentation includes the distribution of HCC codes across the populations. The results are breathtaking, not for the assertion of lower MA plan utilization but rather for the illumination of MA coding practices in provider groups under two-sided risk. It appears that while the dynamics reported in the Money Machine articles were accurate, those articles significantly underestimated the ability of incented provider groups to drive extraordinarily high levels of questionable coding. The paper shows that the MA plan and delivery system documented twice as many HCC’s, almost doubled the risk HCC portion of the total population risk score and created at a minimum an opportunity for 34% higher Medicare payments versus what would be justified by the Medicare fee-for-service (FFS) risk score. Furthermore, it demonstrates clearly that the CMS proposed adjustments to the HCC coding system are essential and appropriately target several of the codes that are driving massive overpayments.

    Methodology: The UHG/Optum authors describe their approach as intended to evaluate the quality and efficiency of care for MA patients seen in “practices that are part of a nationwide health care delivery organization for which they had complete data.” The MA population studied “included only members in value-based compensation programs in which physicians were at full medical risk.” They created a subset of such 2018-2019 MA beneficiaries and a matched population of FFS beneficiaries from Medicare’s 5% sample population.11 The final 158,156 MA beneficiaries and 158,156 FFS beneficiaries are explicitly matched on:

    • 24 months of continuous enrollment
    • Non-dual status
    • Non-hospice user
    • Non-institutionalized status
    • Non-ESRD status
    • Age 65+
    • State
    • Age
    • Sex

    Exhibit 1 in the Appendix illustrates the characteristics of the resulting populations.

    The authors then report the baseline characteristics of the population including individualized HCC counts summarized using 31 categories rather than the 80+ HCCs in version 24 of the CMS-HCC risk adjustment model. This data from the article is recreated in Exhibit 2 along with the ratios of the prevalence rates for different HCC groups in the two populations. The ratios, and hence the prevalence rates of the most severe acute HCCs, are generally similar (marked in the Exhibit with one star). These conditions include heart attacks, strokes, intestinal obstructions and perforations, and leukemia. Similarity is expected based on the matching process. But it appears that the FFS population is somewhat sicker as the MA population has 14% fewer cancers and 37% fewer transplants (marked with two stars).

    But the similarities stop there. Overall, the MA risk group patients were coded with almost twice (1.9 times) as many HCC’s per person versus the FFS population, 3.00 vs. 1.56. The MA prevalence for HCC groups that are less severe and provide opportunities for more documentation are stunningly high (all marked with 3 stars). For example, the MA population is coded as having 5.7x the prevalence of substance abuse disorder (10.0% vs. 1.7%), 3.5x the prevalence of psychiatric disorders, 2.8x for non- diabetes metabolic disorders (23.6% vs. 8.4%), and 2.2x the of rate COPD (21.4% vs. 9.5%). Vascular disease was coded 3.6x more often, with fully one half of the entire MA population, 50.7% so coded as having vascular disease vs. 14% in FFS. It is well-known that plans maximize the vascular disease HCC by sending staff into MA patients homes with digital diagnostic devices to try and find the slightest hint of sclerosis with little or no clinical relevance. (12) Many of these diagnoses and HCC’s are the very ones that CMS has addressed in their 2024 proposed changes to the risk adjustment system.

    Our Estimate of the Value of Aggressive Coding: The paper shows an MA population that has a lower burden of illness but is coded to make them look much sicker with presumably a higher risk score. To quantify how much higher the risk score was over the typical Medicare FFS population, we created a model, explained in Exhibit 3, using the study’s population demographics and MA-to-FFS ratios by HCC category.

    A plan’s risk score includes two pieces, a demographic piece based on age and sex and an HCC piece using submitted diagnosis codes. Per our model, the demographic scores (.44) for the two populations were the same, as expected for demographically matched populations. Our model shows that, at a minimum, the MA population HCC portion of the risk score was almost double the FFS score (0.96 vs 0.54).

    The total MA risk score was 1.403 for MA and .98 for TM population or a minimum of 44% higher. This result likely understates the MA score significantly because the Study used HCC groups rather than individual HCC’s. Our model used the national FFS distribution of HCCs within groups for both populations, even though we know that MA plans typically submit the more complicated and costly HCCs within groups. We also cannot use CMS’s additional coefficients for people with multiple HCCs because we don’t have individual level information. These two additions would likely add significantly to the risk scores and explains why we talk about our results as being a “minimum increases.”

    UHG/Optum Author Conclusions: The authors draw three conclusions:

    1. The MA model of care was “associated with improved health outcomes and care efficiency” asdemonstrated by fewer MA inpatient hospitalizations, fewer readmissions and fewer ER visits.
    2. The “Medicare Advantage risk adjustment model may be meeting its intended goal by aligning the capitation payments to the health care burden of both the individual beneficiary” and the “aggregate population served“.
    3. The Risk Adjustment system “may allow revenue to be deployed to develop the infrastructure that improves the quality and efficiency of care” for MA members.

    Our Response to the Authors’ Conclusions: We believe that each of the conclusions is unfounded, that the paper validates the Money Machine model and that it provides a compelling imperative to reform the HCC risk adjustment model.

    1. MA is associated with improved quality and efficiency as demonstrated by reduced utilization of services.

    This conclusion is wholly unsupported by the data. The authors report that in the study period the MA population had 18% lower inpatient utilization and 11% lower emergency room use. They also cite another study from Aetna comparing MA and FFS that found lower inpatient cost and utilization in MA. We have previously pointed out that such studies by MA firms are not reliable because MA Plans deny or downgrade to observation status 30% or more of inpatient stays. (13) Downgrades to observations status are not a reflection of the quality of prior patient care nor of the acute care a patient needs; it is simply changing an artificial classification that allows payers to pay the provider less.

    Another highly touted MA sponsored study comparing MA and FFS use of acute care utilization actually demonstrated this very point with that the total count of observation stays plus inpatient stays being higher for the MA population. (14) Most recently Beckman et al in a study of Ambulatory Care Sensitive Conditions (ACSC’s) across 10 million MA beneficiaries showed how MA Plans shift inpatient admissions to observation status. (15) They concluded that MA actually had more ACSC acute events in total and raised the question of whether ER early discharges impacted the quality of care. Claims data from MA firms cannot be used to evaluate the efficiency and quality of care unless it effectively recaptures the care that is never recorded because of their often arbitrary claims payment decisions.

    2. The Medicare Advantage risk adjustment system appears to be meeting its intended goal by aligning the capitation payments to the healthcare burden of the individual beneficiary and aggregate population served.

    This conclusion is not only unsupported, it is clearly refuted by the data. To make this simpler, we will disregard the higher frequency of cancer and transplants and assume that the MA population has the same health burden as the FFS population. The actual total average cost per person for the entire medicare population for 2024 is projected to be approximately $1,200 Per Beneficiary Per Month (PBPM). (16) For the FFS population in the study risk score of .98 normalizes to 2024 (17) as .85. Using the average of $1,200 Medicare’s FFS expected cost would be $1,026 (PBPM). The MA risk score of 1.40 after normalizing would be 1.22 and with CMS’s 5.9% coding intensity adjustment, the MA population score would be 1.15. The potential MA premium is $1,379 (PMPM), $353 more than the expected cost to Medicare. The Risk adjustment system results in 34% more potential premium for populations of the same risk. Annualized, the system has generated excess potential payments of $4,272 per individual and $670 M across the population of 158,156. Clearly payment is not aligned with health burden. We will explain below what happens to this additional potential premium.

    It is worth reinforcing here that the FFS payment level is the current aligned capitation payment for the health burden of the population. The MA population has the same health burden. The addition of more diagnosis codes does not change the health burden. Overpayment result from the process for two reasons:

      1. The dollars allowed for each HCC, called the coefficient, is calculated from FFS data where there are many fewer HCC’s because fewer diagnoses are submitted. The result is that every HCC is valued higher than it would be if, as in MA, every diagnosis possible was submitted. For any sizeable population, multiplying the smaller number of HCCs by the larger coefficient delivers the actual Medicare costs for the population.
      2. Every additional HCC the MA Plan submits above the FFS number is valued at the FFS derived coefficient and automatically creates a payment above the FFS amount. It is of course likely that many of the diagnoses that MA plans identify represent less intensive or long resolved conditions.

    3. The current risk adjustment system allows revenue to be deployed to develop the infrastructure that improves the quality and efficiency of care for the patients enrolled in Medicare Advantage plans.

    Does it require $353 PMPM more to build the infrastructure suggested? MedPac has long reported that it is impossible to analyze differences in the quality of FFS vs. MA suggesting that not all that much is going into improving quality. Studies have shown that PCP practices spend on average $40,000 per physician per year on activities related to quality documentation. (18) EHR systems many of which include care management and quality improvement capabilities are estimated to cost $1,200 per user per year. (19) Spread across an average physician panel of 2,000 patients they would add about $20 PMPM in costs. The costs of care coordination have varied widely but spread across an average medicare population at a high end might add about $30 for a total of $52 PMPM. MedPAC says that the Quality Bonuses paid to plans would add about $36 PMPM. The extra $353 above the FFS projected spending dwarfs these expenses. Where does it go?

    The Real Impact of Two-sided Full Risk Contracts: The one clear conclusion from the UHG/Optum paper is that two-sided full contracts successfully incent providers to generate more diagnosis codes. The UHG/Optum paper reports 1.9x more HCCs for MA beneficiaries in a two-sided risk arrangement relative to matched FFS beneficiaries with the same health burden. The resulting average risk score is at least 44% higher. These differentials between equivalent MA and FFS populations are far higher than the differentials that have been reported by MedPAC and others for the total MA program where most providers are not at two-sided full risk. (20) The ultimate size of the extra payments will be decided through the MA Bid process. The ultimate destination of the payments is a function of ownership of the provider practices.

    A simplified Bid Example: The FFS population in the study had risk score of .85 and an expected FFS cost of $1.026 PMPM. Per MedPAC the bids to provide Part A and Part B services average 85% of FFS cost. So a plan using this expected FFS cost will bid .85 times $1,026 or about $872. This would include about 15% for Administrative and Profits or $130 PMPM leading the remainder in the bid, $742, as the expected medical cost for the population. Most bids will actually become the base A&B premium that the plan is paid.

    But now, working in concert with provider group under the two-sided risk model, the Plan has documented a higher risk score and presumably higher expected cost of $1,379 as described above. At 85% of the projected cost, the bid can now increase to $1,173, a 34% increase above the $872 bid. But the population is the same, the actual expected medical costs are the same. The only difference is, as described below, the plan will pay most of the extra dollars to providers as a surplus. The way the bid model works, the Plan’s increased bid will actually improve their competitive position because the risk score increase also provides more rebate revenue. To keep the illustration simple, we will only look at the A&B portion of the Bid. Suffice it to say that the higher risk score will also increase the rebate which will allow the plan to make more profits and offer some additional benefits.

    Independent Practices: The two-sided full risk “value-based contract” referenced in the paper are most often a percentage of premium contract between the payer and the provider. Under these contracts, the Plan establishes a medical expense target based on a percentage of the premium (inclusive of risk adjustment) the Plan receives from CMS for a practice’s population. The target is typically about 85% of premium. If the total costs are less than the target, the provider keeps the excess. If the costs are higher than the target, the provider pays the plan the difference.

    We use the first FFS bid example above to demonstrate the financial flows under a non-percentage of premium Value Based Contract that uses a historically based medical expense target to incent providers to improve care and reduce costs. Simply put, the medical expense target for the VBC is set at $742 based on the history. If the provider can decrease the total cost by another 5%, they will get a gain of $37 PMPM.

    Now the practice contract changes to an 85% of premium contract. The practice is at full risk for total medical costs. Any spending below the target becomes their gain. Any spending above the target will be their cost. But the reality is there is no risk of the spending being above the target. Because the practice increased the risk score to 1.4 the bid/premium increased to $1,173 and the 85% medical expense target becomes $997. The expected medical expense of $742 is unchanged because as shown in the Study, the population has the same severity of illness they just are coded more. Without any improvement in medical costs, the surplus for the practice is now $255 PMPM. In addition, this leaves 15% of the higher premium, or $176 PMPM for the Plan, an increase of $45 PMPM. Because the administrative expenses are minimally changed, the Plan can use these dollars for additional profits or some improvement in benefits or premium. Through the bidding process and the two-sided full risk contract the provider and the plan share $300 of the potential $353 additional revenue generated by the increased risk score.

    Insurer Owned Practices: These mutual wins can be combined. If the plan parent corporation acquires provider practices, then the parent collects both the practice gain and the additional 15% administration and profit load. The contract works the same way with a percentage of premium contract between the insurance subsidiary and the practice subsidiary. The dollar flows work as described for the independent practice. The difference is that the practice profits become consolidated into the parents’ profits. One added advantage for the parent is that the insurance subsidiary has an 85% MLR requirement. The contract with the practice assures that the insurance side will meet this. However, when the profits of the practice are consolidated the reality of the overall MLR is obscured. Even if we assume that $50 PMPM are used to gather codes and pay their employed physicians more, the total medical expenses are still about $792 but the total premium is $1,173 for an MLR of 68%.

    MA organizations have figured this out. Insurer owned practices are becoming the norm as evidenced by Humana’s creation of CenterWell and Aetna’s $10.8 B acquisition of Oak Street Health. UHG, however, is far ahead because they have been building Optum Health as a capitated medical group to these ends for the past 10 years. One executive explained in a recent earnings call when asked about practice acquisitions and moving their medical groups to capitation “what you are really seeing is the result of almost 10 years of building a flywheel that now has significant momentum.” (21)

    Our Conclusions from the UHG/Optum Team Paper: In contrast to the authors’ conclusions, our conclusions are that:

    1. It is impossible to use claims-based utilization measures to demonstrate lower hospital use in MA populations because of high rates of denials and downgrades to observation status.
    2. The combination of premium based two sided risk contracts with the HCC adjustment model creates a Money Machine allowing providers and plans alike to dramatically increase profits for themselves and costs for taxpayers, Medicare beneficiaries and CMS.
    3. Most increased payments under two-sided risk arrangements go to provider and the plan, not better benefits.
    4. Insurers can markedly improve their profitability by owning primary care practices operating under two-sided risk contracts where premium is dependent on risk scores obscuring the reality that they may be spending only 60-70% of CMS premium on healthcare costs.

    With this study, the UHG/Optum authors have documented the power of two sided full risk contracts to increase coding, CMS overpayments and corporate profits. In short, they have confirmed the reality of the Money Machine model. (We have not assumed that the “national health system operating under a two-side risk contract” described in this report is Optum Health nor that the insurer is UHG.) It is clear to us that CMS must take action to limit the impact of discretionary diagnosis codes.

    The UHG/Optum authors’ paper is an important start on bringing transparency to the world of MA risk contracting. We believe it would be helpful for the authors to provide more clarity on the types of contracts, the ownership of the practices and the sources of coverage. Given the concerns raised by America’s Physician Groups we believe they should join their Optum colleagues and be transparent about their contracts, their risk scores, and the degree to which their overall results are a function of risk coding rather than improved medical care.

    Footnotes:

    1 Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (cms.gov)
    2 Kronick and Chua, Industry wide and Sponsor Specific MA Coding Intensity, November, 2021
    3 Part B premium is based on covering 25% of Part B costs. Part B costs are approximately 59% of total A&B spending –see USPCC 2023
    4 MedPAC Report to Congress May 2022
    5 Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (cms.gov)
    6 Report to Congress: Medicare Advantage Risk Adjustment – December 2021 (cms.gov)
    7 The Medicare Advantage program: Status report | March 2021 | MedPAC
    8 Comparison of Care Quality Metrics in 2-Sided Risk Medicare Advantage vs Fee-for-Service Medicare Programs | Health Care Economics, Insurance, Payment | JAMA Network Open | JAMA Network
    9 Seven of the 8 paper authors are employed by Optum, a company owned by UHG. The Office of Human Research Affairs of UHG provided the IRB waiver. The authors, however, are not explicit about whether MA patients were UHG beneficiaries, nor whether the national delivery system is Optum Health. We know of no other “national delivery system” of similar breath but we make no such assumptions here. The model described in the paper is consistent with UHG increasing Optum’s capitated MA population as has been described on their analyst calls for the past several years. Given the uncertainty, we refer to “MA/members/patients/beneficiaries,” “the MA Plan” and the “at-risk providers.” Given that all authors are employed by or received payment from UHG we will refer to the paper as the “UHG/Optum Team Paper”. We cannot specify the insurer or the delivery system.”
    10 Comparison of Care Quality Metrics in 2-Sided Risk Medicare Advantage vs Fee-for-Service Medicare Programs Health Care Economics, Insurance, Payment | JAMA Network Open | JAMA Network
    11 The authors do not describe how they selected the physician groups from which the patients were selected introducing a potential bias that goes unmentioned in the article and renders any conclusions regarding utilization differences unreliable.
    12 Signify Health: Company Requires Clinicians to Perform PAD Test for Some Patients Even When Clinicians Don’t Think it is Medically Necessary; Experts Say Data Does Not Support Performing PAD Test on Asymptomatic Patients – The Capitol Forum
    13 Health Affairs, The Emperor Still Has No Clothes, Gilfillan and Berwick, HA 2022
    14 BMA-High-Need-Report.pdf (bettermedicarealliance.org)
    15 JAMA Health Forum – Health Policy, Health Care Reform, Health Affairs | JAMA Health Forum | JAMA Network
    16 USPCC 2023 cost projections on cms.gov (Note: we use the Terms PBPM and PMPM interchangeably)
    17 For normalization we used CMS’s 2024 V24 factor of 1.146 per the 2024 Advance Notice
    18 US Physician Practices Spend More Than $15.4 Billion Annually To Report Quality Measures | Health Affairs
    19 2022 EHR report (latest research and insight on the EHR market) (softwarepath.com)
    20 The Medicare Advantage program: Status Report (MedPac), Jan 2023
    21 Q 1 UHG Earnings Call transcript

    Recommendations

    We believe that the risk adjustment changes proposed by CMS address MA overpayment in an effective and appropriately targeted manner. CMS should continue down this path for 2024 and consider additional ways to pay MA Plans in a manner that better aligns payment with the health burden of the population being served. We offer the following additional recommendations and rationales.

    Num

    Recommendation

    Rationale

    1

    CMS should finalize their proposed changes to the Medicare Advantage Risk Adjustment System.

    The changes use more contemporary data and close well-documented abuses.

    2

    CMS should consider additional ways to pay MA plans in a manner that better matches payment with the health burden of the population being served.

    We are doubtful that an HCC based system is the best way to accomplish that and urge CMS to consider exploring alternative risk adjustment systems and in particular ones that will factor in the impact of social deprivation indices on the cost and quality of care.

    3

    CMS should eliminate the use of percentage of premium contracts, gainsharing contracts, and other arrangement that position providers to assist plans in inappropriately increasing premium and CMS costs as long as the Risk adjustment system allows them to manipulate their own payment.

    These arrangements are becoming more prevalent and are distorting the primary care delivery system and the actual delivery of care. Their power is well demonstrated in our analysis of a “national health delivery system” operating under such arrangements.

    4

    CMS should require MA Plans to file provider risk contracts and resulting MLR’s, require all MA subcontractors to meet the 85% loss ratio requirement, and include provider level identification under such contracts in public files

    We believe that CMS should have insights to the incentives and financial operation of these contracts and that making them public will allow researchers and policy makers to more deeply understand the dynamics of healthcare delivery and finance.

    5

    CMS should also require reporting of all inpatient claim denials and downgrades to observation status

    We believe avoidable inpatient hospitalizations are too-often avoided by administrative denials and downgrades rather than by better quality of care.

    We commend CMS for its hard work addressing this very complex and important issue. We are grateful for the opportunity to comment on this important policy issue. The ongoing solvency of the Medicare trust funds is important to all Americans.

    Sincerely,

    Scott Armstrong
    Former President & CEO
    Group Health Cooperative
    Former Commissioner,
    Medicare Payment Advisory Commission (MedPAC)

    Richard J. Baron, MD
    CEO and President, American Board of Internal Medicine Former Director, Seamless Care Division
    Center for Medicare and Medicaid Innovation, CMS

    Elaine Batchlor, MD
    CEO MLK Community Healthcare

    Robert Berenson, MD
    Institute Fellow, Urban Institute
    Former Acting Deputy Administrator, CMS
    Former Vice-chair, Medicare Payment Advisory Commission (MedPAC)

    Donald Berwick, MD
    President Emeritus and Senior Fellow, Institute for Healthcare Improvement

    Former Administrator,
    Center for Medicare and Medicaid Services

    Lawrence Casalino, M.D., Ph.D.
    Professor Emeritus of Population
    Health
    Livingston Farrand Professor of Public Health (2008-2022) Chief, Division of Health Policy and Economics (2008-2021) Weill Cornell Medical College

    Tina Castanares, MD
    Principal, Castanares Consulting

    Elliott Fisher, MD, MPH
    Professor of Medicine and Health Policy The Dartmouth Institute
    Senior Fellow
    Institute for Healthcare Improvement

    Richard J. Gilfillan, MD
    Independent Consultant
    Former Deputy Administrator
    Center for Medicare and Medicaid Services Former CEO, Trinity Health

    Paul Ginsburg, PhD
    Senior Fellow, USC Schaeffer Center
    Professor, Practice of Health Policy and Management
    USC Price School of Public Policy
    Nonresident Senior Fellow, Brookings Institution
    Former Vice-Chair, Medicare Payment Advisory Commission

    Gary S. Kaplan MD, FACP, FACPE CEO Emeritus

    Virginia Mason Health System Virginia Mason Franciscan Health

    John C. (Jack) Lewin, MD Principal and Founder
    Lewin and Associates LLC
    Health Science Innovation and Policy

    Arnie Milstein, MD Medical Director,
    Purchasers Business Group on Health
    Clinical Excellence Research Center Director Stanford University Former Commissioner, MedPAC

    Michael R. McGarvey, MD
    Chair, Board of Directors
    New York County Health Services Review Organization.

    Tia Goss Sawhney, DrPH, FSA, MAAA
    Adjunct Clinical Associate Professor
    New York University School of Global Public Health Owner and Managing Director, Teus Health, LLC

    Roy Schutzengel, MD, MBA
    Former Medical Director
    California Department of Health Care Services Integrated Services Division

    Cary Sennett, MD, PhD Principal
    The Sennett Consulting Group
    Former Executive Vice President,
    National Committee on Quality Assurance

    Bruce Vladeck, PhD
    Former Administrator,
    Healthcare Financing Administration
    U.S. Department of Health and Human Services

    Judy Zerzan-Thul, MD, MPH Chief Medical Officer Washington State Health Care Authority
    Former Chief Medical Officer
    Colorado Dept of Health Care Policy and Financing

    *All affiliations are for identification purposes only and do not reflect the views of the affiliated institutions

    MA Risk Adjustment Changes Commentary Appendix

    Exhibit 1: UHG/Optum Paper Populations

    Characteristic

    From Table 1 of Paper

    Provider Full-Risk MA Population

    FFS Comparison Population

    Total beneficiaries

    158,156

    158,156

    Sex

    Women Men

    85,231 72,925

    85,231 72,925

    Age 65-69 70-74 75-79 80-84

    ≥85

    51,749 46,887 30,125 17,149 12,576

    51,749 46,887 30,125 17,149 12,576

    State of beneficiary residence

    Arizona California Florida Nevada Texas Utah

    22,433 9,703 47,029 8,083 64,068 6,840

    22,433 9,703 47,029 8,083 64,068 6,840

    In addition the populations were matched on:

    24 months of continuous 2018-2019 enrollment
    Non-dual status
    Non-hospice user status
    Non-institutional status
    Non-ESRD status

  • Medicare Advantage plans are an “Insatiable Cash Monster”

    Medicare Advantage plans are an “Insatiable Cash Monster”

    In a no holds barred expose, Reed Abelson and Margot Sanger-Katz report for the New York Times on the fraudulent activities of the largest health insurers offering Medicare Advantage plans. “The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions” takes a deep dive into how Medicare Advantage plans add diagnosis codes to patients’ medical records in order to receive higher payments from the government and drive up profits. The overpayments the Medicare Advantage plans collect increase Medicare spending to the tune of tens of billions of dollars each year and do nothing to ensure that people in Medicare Advantage plans get the care they need.

    The story explains how Medicare Advantage insurers reward physicians with champagne, money and other goodies for adding diagnosis codes to patient records. Each diagnosis code means more money for the Medicare Advantage plans, which receive a fixed amount for each enrollee, adjusted up for enrollees with multiple diagnoses.

    Abelson and Sanger-Katz explain how “major health insurers exploited the [Medicare Advantage] program to inflate their profits by billions of dollars. Of the five large Medicare Advantage participants, UnitedHealth, Humana, Elevance (formerly Anthem) and Kaiser Permanente have been charged with fraud for adding inappropriate diagnosis codes to patient files. The Justice Department is currently investigating CVS Health for related conduct.

    Instead of saving money, Medicare Advantage costs taxpayers a lot more than traditional Medicare. One former government official projects that overpayments in 2020 alone totaled $25 billion and that overpayments will total $600 billion over the next nine years. Not surprisingly, the Kaiser Family Foundation reported that the companies offering Medicare Advantage plans generate twice as much gross profit from Medicare as from their commercial health insurance businesses.

    For reasons unknown, the Centers for Medicare and Medicaid Services (CMS) has done a poor job of keeping the Medicare Advantage plans from overbilling the government and an equally poor job of collecting overpayments that are identified. Instead of reducing Medicare Advantage rates to adjust for the overbilling, CMS has increased them substantially, up eight percent in 2023. And, when CMS audits plans and finds overpayments, it only goes after the plans for the small number of overpayments it finds through its audits.

    Where’s the value in Medicare Advantage? “Even when they’re playing the game legally, we are lining the pockets of very wealthy corporations that are not improving patient care,” according to Dr. Donald Berwick, the head of CMS during the Obama administration. Contrary to what some might believe, traditional Medicare offers better value than Medicare Advantage, as good or better care, particularly for people with complex and costly conditions, at lower cost.

    Here’s more from Just Care:

  • Congress must overhaul the way it pays Medicare Advantage plans

    Congress must overhaul the way it pays Medicare Advantage plans

    For years, government and independent analysts have shown that the Centers for Medicare and Medicaid Services (CMS) is overpaying Medicare Advantage (MA) plans–the corporate health plans that cover Medicare benefits–billions of dollars each year. The government’s payment model increases the amount it pays MA plans when they add diagnoses codes to a patient’s profile, regardless of whether they provide more services to the patient. Christopher Rowland reports on incidents of fraudulent billing in Medicare Advantage for the Washington Post.

    The problem with “risk-adjusted” capitated payments–fixed monthly payments based on the diagnoses codes in a patient’s chart–is that they incentivize insurers to add irrelevant or even inappropriate diagnoses codes to a patient’s profile in order to get paid more, driving up Medicare spending. In an ideal world, there would be the ability to monitor the problems and correct the overpayments. But, CMS does not begin to have the resources to do so.

    Kathy Ormsby worked for  the Palo Alto Medical Foundation, a subsidiary of Sutter Health in California, which was looking at patients’ health histories as a way to get doctors to add diagnoses codes to their records. Sutter dismissed Ormsby’s concerns about upcoding. Ormsby found a lot of mistakes, and Sutter had no interest in refunding the government. Medicare Advantage plans appear focused on a ‘dash for cash,” first and foremost.

    Ormsby filed a whistleblower lawsuit against Sutter Health because its practice of adding diagnosis codes. The upcoding was not designed to improve patient care, but rather to increase payments for that patient.

    Sutter health ended up paying $90 million to the government to settle the lawsuit filed by Ormsby last August. It was a clear case since Ormsby found that nine in ten cancer and stroke diagnoses were false. More than six in ten fracture diagnoses were also false.

    Sutter is hardly the only bad actor. Abusive billing practices appear to have become the norm in Medicare Advantage. Many Medicare Advantage plans see no reason not to give patients as many diagnoses as possible in order to increase their revenues. The government does not pay Medicare Advantage plans, or even adjust payments, based on the cost of services they deliver. Medicare Advantage plan incentives are perverse thanks to this payment model, and the proof is in the pudding,

    The Justice Department has filed lawsuits against several Medicare Advantage companies for fraudulent billing. Rowland writes: “Justice Department whistleblower allegations and similar lawsuits also are playing out in federal courts against UnitedHealth Group, Cigna and Anthem. The government’s Office of Inspector General has audited Humana and found it overbilled the government. United Healthcare, which is under the umbrella of UnitedHealth Group, and Kaiser Permanente denied any improper conduct. Cigna, Anthem and Humana did not respond to requests for comment.”

    Richard Kronick, a health economist, projects that if not stopped, overpayments to Medicare Advantage will amount to more than $600 billion in the next nine years. Putting aside the propriety of Medicare Advantage plan behavior to generate more revenue, what’s clear is that the risk-adjusted capitated payment system is fraught, leaving insurers holding the bag if they attract too many cancer and stroke patients and profiting wildly if they have disproportionate numbers of people who are relatively healthy.

    The problem in a nutshell: The government pays Medicare Advantage plans way too much for people who use relatively little care and too little for people who need a lot of care. That payment model needs overhauling. Like large employers, the government should pay health plans a management fee for coordinating care, on top of the cost of covering medically necessary services for their enrollees. Medicare Advantage plans should not profit more the less care they provide.

    Rowland spoke with a number of doctors who all confirmed that Medicare Advantage plans are mining data to add codes to patient records. They are expected to add these codes and pressured in various ways to do so.

    Kaiser Permanente was giving so many of its patients diagnoses for  aortic atherosclerosis that it was overloading its cardiovascular disease management program. Instead of eliminating the diagnosis code and losing revenue, it stopped referring all of these patients to the cardiovascular disease program. Pressure was on to include that diagnosis in patient medical records because it generated an extra $40 million a year for one physician group.

    The HHS Office of the Inspector General has issued reports on the cost of upcoding. Donald Berwick and Richard Gilfillan, the former heads of CMS and the Centers for Medicare and Medicaid Innovation, respectively, just published an article in Health Affairs in which they take the available evidence to show that Medicare Advantage not only costs a lot more than traditional Medicare, but it delivers care of questionable quality and promotes health inequities. (Here’s the Just Care post I wrote on topic.)

    Berwick and Gilfillan dismiss patient satisfaction with Medicare Advantage as a table rabbit. People choose it to save money, as the upfront costs of Medicare Advantage are less than traditional Medicare; But, out-of-pocket costs in Medicare Advantage are generally much higher than traditional Medicare with supplemental insurance for people with costly health care needs.

    Here’s more from Just Care: