Medicare Advantage Revenue and Your Medical Practice

As of February 2013, more than 14 million or 28 percent of Medicare beneficiaries were enrolled in Medicare Advantage Plans. The Medicare Payment Advisory Commission reports that Medicare payments to private health plans in 2010 were between 9 percent and 13 percent higher, on average, than local fee-for-service costs. The Affordable Care Act changed payments to Medicare Advantage plans in multiple ways. The 2010 changes are intended to bring payment to plans closer to the costs of traditional fee-for-service Medicare, reward higher quality plans with bonuses, and protect beneficiaries enrolled in Medicare Advantage plans.

Medicare Advantage Plans currently get a capitated payment from CMS based on the plan's bid, a benchmark based on maximum CMS fee-for-service payment, severity of disease in the plan beneficiary population, quality of the plan based on quality measures, and yearly changes to adjustment factors.

Severity of disease in the plan beneficiary population is dependent on the plan reporting the diagnosis codes for each beneficiary to CMS on a yearly basis. If the codes are not reported, the plan is not compensated for the risk of caring for a "sicker" patient. Historically, plans hire companies to audit patient charts. The audits cannot capture codes that have not been documented. That is the reason those same audit companies have attempted to conduct "non-clinical" health risk assessments with the patients. These risk assessments are an attempt to capture codes without addressing clinical evaluation of the diagnoses.

A recent CMS call letter on Medicare Advantage (MA) capitation rates addresses this issue by stating: "To better ensure that our payments to plans reflect diagnoses for which there has been an associated treatment or that have been diagnosed by a treating provider, for payment year 2015, CMS is considering excluding, for risk adjustment payment purposes, the diagnosis data collected from MA enrollee risk assessments that are not confirmed by a subsequent clinical encounter by a provider type that has been approved for risk adjustment purposes." CMS also states, "These MA enrollee risk assessments are often referred to as Health Risk Assessments (HRAs), and they may be associated with an Annual Wellness Visit (AWV). MA organizations are also required to provide beneficiaries with AWVs, with an HRA component, as part of the benefit package." The implication is that the AWV is the opportune time to capture the ICD9-HCC codes.

Appropriate capture of these ICD-9 codes is very valuable to MA plans. Look for these plans to offer increased incentives for the primary-care physician to deliver AWVs and document all of the patient’s ICD-9 codes during this yearly face-to-face encounter. Primary-care physicians need to be prepared to deliver efficient Medicare AWVs.