Filed Under:Health Insurance, Individual Health

GAO: Fix the Medicare Advantage Diagnosis Gap

Carolyn Yocoum (Photo courtesy of the U.S. House Energy & Commerce Committee)
Carolyn Yocoum (Photo courtesy of the U.S. House Energy & Commerce Committee)

The Centers for Medicare & Medicaid Services (CMS) should do a better job of adjusting for health risk grade inflation at Medicare Advantage plans, according to officials at the U.S. Government Accountability Office (GAO).

Carolyn Yocom, a GAO director, delivered that argument Wednesday at a hearing on the U.S. Department of Health and Human Services budget.

The House Energy & Commerce oversight subcommittee organized the hearing to review efforts to reduce the $941 billion in total HHS outlays and the $77 billion in HHS discretionary spending that the Obama administration has projected for fiscal year 2013.

Fiscal year 2013 will start Oct. 1.

The GAO has come up with ideas for many ways that CMS, a major arm of HHS, could cut spending, such as fighting fraud and making sure that Medicaid pilot projects do not increase federal spending, GAO officials say in a written report presented at the hearing.

GAO officials also have suggested steps for cutting spending on Medicare Advantage, a program that gives private insurers a chance to offer Medicare enrollees a substitute for the traditional Medicare health benefits package.

CMS is supposed to protect Medicare Advantage plans against the risk that some will attract sicker-than-average enrollees by providing risk-based subsidies.

Analyses suggest that Medicare Advantage plans are giving their enrollees risk scores that are about 4.8% to 7.1% too high, GAO officials say.

CMS has tried to compensate for risk grade inflation, but it has made a diagnostic coding gap adjustment of just 3.4%, officials say.

The adjustments CMS did make saved about $2.7 billion in 2010, and making the additional adjustments recommended by the GAO could save an additional $1.2 billion to $3.1 billion, officials say.

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