Report: CMS $2.6 Bln Off for Some Medicare Advantage Costs

The Centers for Medicare and Medicaid Services under-predicts costs for Medicare Advantage patients with multiple chronic illnesses by about $2.6 billion annually, according to a study by Avalere Health.

The report, published today and funded by the lobbying group America’s Health Insurance Plans, suggested Medicare Advantage’s risk-adjustment model is to blame for the cost discrepancies.

“Until CMS releases additional data or information on the actual coefficients for the HCCs, this analysis continues to inform stakeholders of the predictive accuracy of the 2014 model for high cost individuals with specific chronic conditions,” the report said, referring to hierarchical condition categories model.

CMS proposed changes to its risk-adjustment model in October that would consider dual-eligible and low-income subsidy eligible patients, as well as those with a disabled status, that the agency said will improve its predictive power.

Further cuts to Medicare Advantage “are fundamentally at odds with the goal of delivering better care and better value for beneficiaries,” Marilyn Tavenner, chief executive of AHIP and former head of CMS, said in a statement.

“Rather than relying on an antiquated fee-for-service approach as the model for care delivery, CMS should focus on strengthening Medicare Advantage and the innovative programs that improve seniors’ health,” she said.

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