House Democrats are using a new Government Accountability Office report to bolster their argument that the Medicare program continues to overpay Medicare Advantage, Medicare's private-plan alternative to the traditional fee-for-service program.
The CMS pays plans in Medicare Advantage a predetermined amount per beneficiary that is adjusted for health status. For the adjustment, the agency calculates a risk score, which measures expected healthcare for each beneficiary. Those scores, the GAO said in the report (PDF)
, should be the same among beneficiaries with the same health conditions and demographic conditions. But differences in diagnostic coding have led to risk scores that are higher in Advantage plans than they would be for the same beneficiaries in traditional Medicare, the GAO said.
The CMS adjusted for coding differences in 2010. But in January 2012, the GAO reported that those adjustments weren't enough and the risk scores were leading to excess payments to Advantage plans. The GAO now estimates—after accounting for the agency's adjustments—that the disconnect has caused the government to pay between $3.2 billion and $5.1 billion too much from 2010-12.
“While CMS has continued to strengthen the Medicare Advantage program, today's GAO report provides evidence that there is yet more to do,” Rep. Henry Waxman, ranking member of the House Energy and Commerce Committee, said in a joint news release from Waxman and Rep. Sandy Levin (D-Mich.), the ranking member on the House Ways and Means Committee. “One of the best ways to protect Medicare for generations to come is to ensure that the program isn't overspending for care and services,” Waxman continued. “This GAO report provides Congress with more options for consideration.”
The GAO's report comes a few weeks after the CMS announced a drop in the Medicare Advantage growth percentage, a metric that is used to determine the payment benchmarks for Advantage plans. America's Health Insurance Plans President and CEO Karen Ignagni said
the proposed policy changes—which translate to reduced payment levels for Medicare Advantage plans—compound some $200 billion in Advantage cuts and a health insurance tax included in the 2010 health reform law.