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WSJ Story Paints Flawed, Incomplete & Outdated Picture of Medicare Advantage Chart Reviews & Health Risk Assessments


Published Jul 8, 2024 • by AHIP

A story published by The Wall Street Journal paints a flawed, incomplete and outdated picture of Medicare Advantage (MA) chart reviews and health risk assessments (HRAs). Here are the facts:

HRAs are one of many tools MA plans use to support patients, identify chronic conditions early, and prevent these conditions from becoming more serious or costly in the future.

  • Whether they occur in the enrollee’s home or in a clinical office setting, the HRA offers an opportunity for the health plan and provider to obtain a complete evaluation of the enrollee’s physical, behavioral, and mental health needs, medications, health risks, and environmental factors that affect health.
  • The Centers for Medicare & Medicaid Services (CMS) considers HRAs a best practice for all MA plans and their enrollees. In many cases CMS requires MA plans to conduct HRAs – for example, for enrollees in Special Needs Plans or those enrolled in Financial Alignment Initiative demonstration plans. Accurate diagnosis information from patients enables plans to gain a more complete understanding of their medical conditions and improve health outcomes. 

Diagnoses from HRAs and chart reviews are subject to detailed CMS requirements.

  • MA plans have long been permitted to submit diagnosis codes identified by clinicians through HRAs, and to submit diagnoses documented in medical records that providers did not originally send to plans.
  • All of these diagnoses are subject to CMS risk adjustment requirements, including that diagnosis codes are documented in the medical record and are documented as a result of a face-to-face visit with a clinician.

As the story acknowledges, diagnoses codes do not necessarily translate into direct plan payments.

  • Not all diagnoses identified through an HRA or chart review are taken into account for risk adjustment purposes. As the story states, “[n]ot every diagnosis leads to a payment, and some cancel out others.”
  • For example, if an individual has multiple diagnoses within the same Hierarchical Condition Category (HCC), only the most severe condition is counted for risk adjustment payment.

MA risk adjustment payments tied to HRAs and chart reviews account for a miniscule part of MA spending.

  • A 2021 report from the HHS Office of Inspector General (OIG) found that diagnoses identified solely through HRAs accounted for about 1% of total MA payments in 2017.
  • A recent Health Affairs analysis on MA risk adjustment payments tied to HRAs found that fewer than one in 10 MA enrollees had a payment diagnosis identified only through an HRA in 2019.
  • The Medicare Payment Advisory Commission’s (MedPAC) 2023 March report estimated that HRAs and chart reviews combined accounted for 4.6% of total payments to MA plans in 2017.
  • Medical loss ratio (MLR) rules ensure at least 85% of plan revenue is used to pay claims or for quality improvement programs. Plans must return any excess funds to the government.  

The time period covered in the story predates substantial CMS reforms to MA risk adjustment and audits.

  • The Wall Street Journal story focuses on interpretations of data from 2018-2021.
  • Starting in 2024, CMS implemented a new risk adjustment model that ends or constrains risk adjustment payments for a number of diagnoses that CMS determined were more prevalent in the MA program, including major depressive disorder and diabetes with chronic conditions.
  • The story acknowledges that “Medicare administrators are overhauling” the risk model currently, and that “[s]ome of the most heavily used diagnoses, including diabetic cataracts, will pay less or nothing extra.”
  • In 2023, CMS finalized an MA audit regulation (RADV) that significantly changed the process regarding oversight of diagnoses submitted for risk adjustment purposes, with the potential for MA plans to incur large financial penalties if CMS finds cases in which it determines patients’ diagnoses are not supported by their medical records.  

Federal data consistently show MA payments are more accurate than in fee-for-service Medicare. 

  • MA continues to outperform fee-for-service Medicare when it comes to improper payments. HHS annually calculates improper payment rates in fee-for-service Medicare and MA programs based on a sample of claims in each program. The results of these analyses typically include both underpayments (how much more should have been paid) and overpayments.
  • HHS also found that a substantial portion of so-called improper payments in MA are underpayments, reflecting diagnoses that plans could have submitted for risk adjusted payment but did not. In FY2018-FY2021, the period covered by the Wall Street Journal story, HHS estimates of underpayments to MA plans ranged from 35% (FY2021) to 46% (FY2020). Underpayments in fee-for-service Medicare accounted for a far smaller share of identified improper payments (less than 5% in each year).

The MedPAC spending estimates referenced in the story are fundamentally flawed.

  • The story relies in part on MedPAC’s flawed March 2024 estimates on MA spending.
  • As AHIP has pointed out, the MedPAC estimates double down on speculative assumptions about MA and overlook basic facts about who MA serves and the value the program provides.

About AHIP

AHIP is the national association whose members provide health care coverage, services, and solutions to hundreds of millions of Americans every day. We are committed to market-based solutions and public-private partnerships that make health care better and coverage more affordable and accessible for everyone.