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.