In mid-January 2022, MedPAC held its public meeting virtually via GoToWebinar, where the Commission covered a multitude of topics, including the Medicare Advantage program.
Each year, MedPAC presents findings on the status of the Medicare Advantage (MA) program. The Commission is also required to periodically compare the performance of different types of dual-eligible special needs plans (D-SNPs) and other plans that serve beneficiaries who are eligible for both Medicare and Medicaid.
Medicare Advantage Strength
According to MedPAC, 99% of Medicare beneficiaries have access to at least one MA plan and 98% can choose a plan with a Part D benefit, with an average number of choices of 36. In 2021, 46% of eligible beneficiaries in Parts A and B were enrolled in MA plans (increased from 43% in 2020), with that figure expected to grow past 50% in 2023.
According to the report, while more than half of Medicare beneficiaries in Parts A and B are expected to be enrolled in Medicare Advantage plans by next year, spending on the plans is expected to continue to outpace traditional fee-for-service. In 2021, benchmarks relative to FFS were 108% of FFS spending while bids relative to FFS were 87%.
Coding
MedPAC noted that when it comes to differences in diagnostic coding between FFS and MA, there is little incentive to code diagnoses in FFS while with MA, there is a financial incentive to code more diagnoses. This leads to greater MA risk scores for equivalent health status. In 2020, MA risk scores were about 9.5% higher than FFS. After accounting for a CMS coding adjustment of 5.9%, MA risk scores were more than 3.6% higher than FFS due to coding differences, generating roughly $12 billion in excess payments to MA plans.
The Commission believes that chart reviews and health risk assessments are key drivers to coding intensity, accounting for nearly 2/3 of excess payments to MA plans.
In the presentation, it was noted that MA coding intensity undermines plan incentives to improve quality and reduce costs, with an illustrative example below.
In March 2016, the Commission recommended addressing the underlying causes of coding intensity, including removing health risk assessments from risk adjustment and using two years of MA and FFS Medicare diagnostic data.
COVID-19
As one might expect, the Commission also touched on the impact COVID-19 has had, including the tragic effects on beneficiaries and the health care workforce. In 2020, there was record low utilization, which increased plan profits. For 2021, prospectively set payment rates assumed utilization would be higher, likely boosting profits for the second year. However, those effects have been uneven, both geographically and over the course of the year.
There are still concerns about delayed care rebounding, but MedPAC notes that as of the time of the presentation, that had not yet played out.
Conclusion
The Commission concluded by saying the MA program is “extremely robust,” but there are policy reforms that are “urgently needed.”