A study by the Government Accountability Office finds differences in diagnostic coding between Medicare Advantage plans and traditional Medicare fee-for-service coverage.

These differences mean that Medicare Advantage beneficiary risk scores in 2010 were 4.8 percent to 7.1 percent higher than if those beneficiaries were continuously enrolled in fee-for-service, according to GAO, a congressional investigatory agency. And the higher scores translated in 2010 to $3.9 billion to $5.8 billion in higher payments to Medicare Advantage plans. Further, the coding differences increase over time, suggesting higher financial impacts in 2011 and 2012.

CMS estimates a lower level, 3.4 percent, of higher beneficiary risk scores in Medicare Advantage plans, translating to $2.7 billion in excess payments. GAO contends the CMS methodology does not include more current data, trending coding differences over time, or accounting for such characteristics as sex, health status, Medicaid enrollment status, beneficiary residential location, and disability.

“By continuing to implement the same 3.4 percent adjustment for coding differences in 2011 and 2012, CMS likely underestimated the impact of coding differences in 2011 and 2012, resulting in excess payments to MA plans,” GAO concludes.

GAO recommends specific steps that CMS should take to improve the accuracy of its risk score adjustments; CMS did not provide comment to the agency on its recommendations. The report, “CMS Should Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding Practices,” is available here.

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