Washington, D.C. – Congressman Charles Rangel announced today the release of a Government Accountability Office (GAO) report revealing that billions of dollars could be saved if the Centers for Medicare and Medicaid Services(CMS) adjusts payments for Medicare Advantage (MA) plans to more accurately reflect the health of MA enrollees. Other requesters of the report were: Ways and Means Ranking Member Rep. Sander Levin (D-MI), Rep. Pete Stark (D-CA), Ranking Member on the Ways and Means Health Subcommittee, Rep. Henry A. Waxman (D-CA), Ranking Member on the Committee on Energy and Commerce, Rep. Frank Pallone (D-NJ), Ranking Member on the Committee on Energy and Commerce Subcommittee on Health and Rep. John Dingell (D-MI).

“The report proves that we can continue to make Medicare more effective while saving tax payer dollars,” said Rangel.  “It is crucial that we cut excess costs and prevent misuses so we may uphold the goodness Medicare provides to millions of American seniors."

The GAO report, Medicare Advantage: CMS Should Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding Practices, found the Medicare program continues to overpay MA plans despite the CMS' efforts to adjust payments to more accurately reflect the health status of a beneficiary. The report evaluates the methodology used by CMS to adjust MA risk scores and recommends that the Agency take additional steps to improve the accuracy of these scores. While a more accurate adjustment would increase payments for some beneficiaries, it would decrease payments for others. On net, GAO estimates that the recommended methodological improvements would have saved the Medicare program $1.2 to $3.1 billion in MA plan payments in 2010 alone.

 “We must make these changes to improve Medicare for beneficiaries, and ensure its sustainability for future generations,” said Rangel.  “I promise to fight for such changes to Medicare while protecting its promise to our aging population."  

Background:

The Medicare Advantage (MA) program has grown substantially in recent years, increasing from $65.2 billion in 2006 to $116.1 billion in 2010. While Congress took action through the Affordable Care Act (ACA) in 2010 to reduce excessive base rate payment rates to these private plans, those payments continue to be adjusted to reflect the relative health and risk associated with each beneficiary. These adjustments depend on the plans’ own reporting of patient severity.

Documented evidence shows that MA plans tend to report higher patient severity than is actually supported by medical records. It also shows that the reported patient severity increased faster than for comparable patients in traditional fee-for-service Medicare (FFS). In 2005, the Deficit Reduction Act required CMS to reflect differences in coding patterns between MA plans and FFS in its risk score calculations for three years beginning in 2008, to the extent that the impact of such differences on risk scores could be identified.  CMS did not adjust risk scores in 2008 or 2009; however, it did estimate and implement a 3.41 percent reduction in risk scores in 2010.