Up-coding in MA greater than in trad Mcare. http://t.co/HBtRA9UUPs
— Ari Friedman (@AriBFriedman) August 14, 2014
This is massive abuse of the system. I’ll go into details shortly after the CMS study’s results:
The Results: Each year the average MA risk score increased faster than the average FFS score. Using the risk adjustment model in place in 2004, the average MA score as a ratio of the average FFS score would have increased from 90% in 2004 to 109% in 2013. Using the model partially implemented in 2014, the ratio would have increased from 88% to 102%. The increase in relative MA scores appears to largely reflect changes in diagnostic coding, not real increases in the morbidity of MA enrollees. In survey-based data for 2006–2011, the MA-FFS ratio of risk scores remained roughly constant at 96%. Intensity of coding varies widely by contract, with some contracts coding very similarly to FFS and others coding much more intensely than the MA average. Underpinning this relative growth in scores is particularly rapid relative growth in a subset of HCCs.
Now what does that mean?
One of the great problems with Medicare Advantage (besides that we as a society pay too much incremental costs for minimal extra benefits to the elderly … most of the extra money goes to marketing, cherry picking, hookers and blow) is that the basic structure of the privatized market encourages insurance companies to do their best to cherry pick only the healthier segments of the Medicare population. This is because they get paid a risk adjusted flat fee based on average Medicare costs per enrollee plus a kicker.