A recent OIG report found that diagnoses reported in 2022 Medicare Advantage (MA) encounter data based only on health risk assessments (HRA) and HRA-linked chart reviews resulted in CMS making additional risk-adjusted payments of about $7.5 billion in 2023 (the Report). Of that $7.5 billion, OIG estimates that $4.8 billion was driven by in-home HRAs and HRA-linked chart reviews. The Report continues OIG’s recent work on risk adjustment encounter data supporting payments to MA organizations, including past reports on estimates of apparently disproportionate MA payments resulting from the use of HRAs (particularly in-home HRAs) and chart reviews.
Background on MA Risk-Adjusted Payments
CMS pays private MA organizations to administer MA plans on a capitated basis to pay for the expenses of caring for enrollees on a prospective basis. The payments are risk adjusted to pay MA organizations more for enrollees who are expected to have higher health costs, based on an enrollee’s demographics and diagnoses codes submitted by the MA organizations. As a result, inaccurate and/or inflated diagnoses can result in MA organizations receiving inflated MA payments.
Diagnoses supporting risk-adjusted payments are required to be documented in enrollees’ medical records. These medical records are generated from initial and annual HRAs. CMS encourages providers to use HRAs as a tool to collect information from enrollees about their health status, health risks, and daily activities so they can develop, reassess, and adjust plans of care as necessary. HRAs may occur at a facility during an annual visit to a provider, at a patient’s home, or via telehealth.
In-Home HRAs and HRA-Linked Chart Reviews Disproportionately Drove Risk-Adjusted Payments Arising Only from HRAs and HRA-Linked Chart Reviews
A prior OIG report in September 2020 raised questions as to whether MA organizations use HRAs or similar assessments to maximize risk-adjusted payments rather than improve patient care. For instance, OIG previously found that diagnoses reported only on HRAs generated $2.6 billion in risk adjusted payments based on the 2016 encounter data, and that $2.1 billion of those payments arose from in-home HRAs. In the prior report, OIG raised concerns that many of the in-home HRAs were conducted by third-party vendors that MA companies partnered with and that diagnoses from those HRAs may not be as accurate.
OIG’s Report found that diagnoses reported only on HRAs and HRA-linked chart reviews resulted in an estimated $7.5 billion in risk-adjusted payments for 2023. The fact that these diagnoses were not referenced in any other medical records raised questions for OIG of whether: (1) the diagnoses were inaccurate and thus the payment improper; or (2) the enrollees did not receive necessary medical care for the conditions documented only on the HRAs or HRA-linked chart reviews.
At the policy level, OIG made certain policy recommendations. CMS concurred in OIG’s recommendation that CMS determine whether certain diagnoses that drove payments from in-home RAs and HRA-linked chart reviews may be more susceptible to misuse. However, CMS did not concur in OIG’s recommendation that CMS impose additional restrictions on the use of diagnoses reported only on in-home HRAs or related chart reviews. CMS also did not concur with OIG’s recommendation that CMS conduct audits to validate diagnoses reported only on in-home HRAs and related chart reviews.