Medicare Advantage Plan Loses Members, Responds with Plans to Raise Risk Adjustment Scores

Molly Knobler
Tim McCormack
By Tim McCormack and Molly Knobler of Constantine Cannon

Modern Healthcare recently reported that although enrollment in the Medicare Managed Care Program (also known as Medicare Advantage or Medicare Part C) has grown by 8% on average since 2010, several top Medicare Advantage Plans are losing membership.  Highmark, Blue Cross and Blue Shield of North Carolina, HealthNow New York, Wellcare Health Plans, Horizon Blue Cross and Blue Shield of New Jersey, Universal American Corp., MVP Health Care, and Hawaii Medical Service Association have all lost more than 10,000 members in the last year.  A major cause of these losses appears to be increased medical costs.  These increased costs led the plans to increase their prices and reduce benefits.  Not surprisingly, this made these plans less competitive in the market.

One plan openly acknowledged that it hopes to reverse its financial fortunes by taking an approach familiar to anyone who has been following the Medicare Advantage industry recently—increasing its risk adjustment scores.  The Medicare Advantage program pays health plans more if their members require treatment for certain high cost diseases or health conditions—such as cancer, diabetes, or congestive heart failure—through a mechanism called “risk adjustment” or “risk scoring.”

Steve Swift, chief financial officer at HealthNow, the parent of two Blue Cross and Blue Shield companies, said that HealthNow “is investing in more home-care providers and is encouraging physicians to be more thorough in how they code patient conditions.”  In other words, HealthNow is planning a push to increase the risk scores of its current members so that it can then bill Medicare more.  He is quick to note that the plan draws a “clear line” discouraging physicians from upcoding.  But will HealthNow reimburse physicians for coding more diagnoses?  And what steps is it taking to ensure physicians aren’t upcoding?

And as to those home-health workers, does Mr. Swift mean for them to perform home visits designed primarily to increase risk scores?  Recent reports from the Center for Public Integrity have chronicled the problem of fraudulent “upcoding” of risk scores in the Medicare Advantage market.  The most recent report specifically identified the use of home health visits as a high risk area, noting that “Federal officials as early as 2013 were concerned th[at] home visits could be a factor in jacking up risk scores improperly and wasting tax dollars.”

Whatever HealthNow does, will other plans follow suit?  Will these health insurers, facing increasing financial pressure, be able to resist the urge to engage in fraud to get their Medicare Advantage plans back on track?

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