Medicare Advantage plans fight proposal to require confirmation of diagnoses

Molina Healthcare has roughly 40,000 Medicare Advantage customers, 20% of whom are severely disabled. Under new payment policies proposed by the CMS, the company fears that it would have to transport these patients to medical facilities in order to be fully compensated by the federal government.

“What's the point of taking someone who's disabled, perhaps wheelchair bound, and dragging them to a doctor's office if that's unnecessary?” asked Dr. J. Mario Molina, president and CEO of the Long Beach, Calif.-based company. “We don't really understand why the place where the diagnosis is made should matter.”

At issue is a proposal put forth by the CMS last month in its proposed payment policies for 2015. Insurers that participate in the Medicare Advantage program are compensated in part based on “risk adjustment” scores. These assessments, based on medical diagnoses, can change payments by as much as 25% in some cases.

In recent years, health plans have increasingly relied on home visits by medical professionals to provide diagnoses in order to adjust the risk scores for clients. But under the CMS' proposal, that would no longer be sufficient. For a diagnosis to be accepted–and the payment rate adjusted accordingly–it would need to be confirmed by a “clinical encounter.”

This change was first floated for 2014, but subsequently dropped. The CMS wants this change because of suspicion that insurers are simply using the visits to pump up their risk scores without actually ensuring that enrollees get treated for their newly identified ailments.

“There appears to be little evidence that beneficiaries' primary-care providers actually use the information collected in these assessments or that the care subsequently provided to beneficiaries is substantially changed or improved as a result of the assessments,” the CMS' proposal states.

But health plans–particularly those like Molina that deal with severely disabled clients–fear that the new requirement will prove extremely difficult to implement and add unnecessary cost to the healthcare delivery system.

America's Health Insurance Plans, the main industry group for insurers, criticized the proposed change in comments to the federal agency this month. “To date, CMS has not provided any evidence that diagnoses resulting from home-based clinical encounters are inappropriate or differ in any relevant way for risk adjustment purposes from clinical encounters in other settings,” AHIP wrote.

However, consumer advocacy groups support the change and question whether health plans are over-interpreting what it would mean. David Lipschutz, policy attorney with the Center for Medicare Advocacy, questions whether it would actually result in patients needing to leave their home to meet the definition of “clinical encounter.” Instead, he suggests providing documentation of medical care to meet the standard.

“If the plan's not providing any care for the condition that's identified, then why should the plan be paid?” Lipschutz asked. “I think the idea makes perfect sense.”

Likewise, AARP is backing the change. “It doesn't serve a beneficiary if it's just noted in a chart,” said Joyce Dubow, AARP's principal for health policy and strategy. “It certainly makes sense to us, but I know this is a very contentious issue.”

The proposal is far from set in stone. The CMS invited insurers to submit alternative proposals for how to ensure that patients are receiving care for diagnoses that result in additional payments to health plans. The final 2015 Advantage payment policies are scheduled to be released April 7.

John Gorman, a Washington-based consultant who works closely with insurers, points out that AHIP and its allies will devote the “full force and fury” of their lobbying clout to the issue in the coming days. “This is lobbying issue No. 1,” he said.

Follow Paul Demko on Twitter: @MHpdemko