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AIS's Health Business Daily
Featured Story March 5, 2010
President Obama’s Proposals for Medicare Advantage Draw Questions, Concerns About RADV Audits Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs. By James Gutman, Managing Editor (jgutman@aispub.com) President Obama’s health reform proposal, released Feb. 22, puts his administration closer to the House-passed provision moving Medicare Advantage plan payments toward 100% of fee-for-service levels than to the Senate-passed provision of going to competitive bidding. But industry consultants and executives found the proposal’s wording too vague to assess in detail and instead focused on another part of the proposal that they felt could spell trouble on risk adjustment data validation (RADV) audits.
The proposal, designed for use in the Feb. 25 “summit” with congressional leaders on health reform, includes only two paragraphs under the heading “Improve Medicare Advantage Payments.” The first paragraph asserts that MA plans are significantly overpaid.
The second paragraph states, “The president’s Proposal represents a compromise between the House and Senate bills, blending elements of both bills, while providing greater certainty of cost savings by linking to current fee-for-service costs. Specifically, the president’s Proposal creates a set of benchmark payments at different percentages of the current average fee-for-service costs in an area. It phases these benchmarks in gradually in order to avoid disruption to beneficiaries, taking into account the relative payments to fee-for-service costs in an area.”
The paragraph continues, “It provides bonuses for quality and enrollee satisfaction. It adjusts rebates of savings between the benchmark payment and actual plan bid to take into account the transition as well as a plan’s quality rating; plans with low quality scores receive lower rebates (i.e., can keep less of any savings they generate). Finally, the president’s Proposal requires a payment adjustment for unjustified coding patterns in Medicare Advantage plans that have raised payments more rapidly than the evidence of their enrollees’ health status and costs suggests is warranted, based on actuarial analysis. This is the primary source of additional savings compared to the Senate proposal.”
Industry consultants and executives were muted in their comments on that section because of the lack of details. Pat Dunks, a consulting actuary in the Milwaukee office of Milliman, for instance, says it is unclear how big a pay cut might result and where.
“Until we see more [details], it’s hard to comment,” says Gary Jacobs, senior vice president, corporate development at Universal American Corp. The methodology to be used is not yet known, for example, he explains.
The proposal is more consistent with the House version, which would represent a win for MA plans serving urban areas, Brian Weible, principal in Wakely Consulting Group, tells MAN.
RADV Audits Extrapolation Proposal Draws Ire
However, most of the consultants’ and executives’ concern was directed to a one-paragraph section of the proposal that “requires in statute that the HHS secretary extrapolate the error rate found in the [RADV] audits to the entire Medicare Advantage contract payment for a given year when recouping overpayments.”
One problem with this “vague” provision, says Dunks, is that auditors “tend to look where they expect to find something.” If RADV audits therefore aren’t random but instead are targeted, extrapolation doesn’t make sense, he contends.
Jacobs argues a similar point. Extrapolation of RADV audit results, he asserts, puts a lot of discretion in the hands of a regulator who would possess the authority to have a profound effect on an MA plan’s revenues.
Bill MacBain, senior vice president at Gorman Health Group, LLC, voices a different concern. If the goal in an RADV audit is to “ding” a health plan for how it reports diagnoses, that’s a problem, according to MacBain, because the plan is reporting what the physician states is the diagnosis. “Auditing health plans to hold them to a higher standard than is used in the initial risk adjustment” based on unaudited FFS claims is inconsistent, he maintains. |
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