MedPAC: Majority of Medicare beneficiaries to be on MA by 2023, but coding issues remain rampant

Medicare Advantage
Enrollment among beneficiaries in Medicare Parts A and B in Medicare Advantage plans was 46% this year. (Getty/designer491)

Most Medicare beneficiaries in Parts A and B are expected to be enrolled in Medicare Advantage plans by next year, but spending on the plans is going to continue to outpace traditional fee-for-service, a congressional advisory panel found.

The Medicare Payment Advisory Commission (MedPAC), a panel that makes recommendations to Congress on Medicare policy, released new findings Friday on the program, which has surged in popularity in recent years. It also continues to raise alarms over practices plans have done such as upcoding that have increased Medicare spending.

MedPAC found 46% of beneficiaries in Parts A and B were enrolled in MA plans, and that figure is expected to stretch past 50% in 2023.

“Despite a decrease in MA rates, the MA enrollment has continued to grow rapidly,” said Luis Serna, a MedPAC staff member, during the panel’s meeting Friday.

The panel also found that for this year, 99% of Medicare beneficiaries have access to at least one plan, and 98% of them can choose a plan with a Part D benefit.

But MedPAC found that the explosion of growth has not also led to more savings for traditional Medicare.

The panel discovered that this year spending in MA will be 4% higher than fee-for-service Medicare after considering coding practices such as upcoding, which leads to higher quality bonuses for plans.

"MA plans have a financial incentive to document more diagnoses than providers in fee-for-service Medicare, leading to larger MA risk scores and greater Medicare spending on the beneficiary that enrolls in MA,” said staff member Andy Johnson, Ph.D.

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In 2020, MedPAC found MA risk scores were 9.5% higher than fee-for-service beneficiaries that had a similar health status.

The Centers for Medicare & Medicaid Services reduces risk scores to compensate for any coding differences, but the adjustment was only 5.9%, Johnson said.

“The remaining difference caused MA risk scores to be 3.6% higher, generating about $12 billion in payments to MA plans in excess of what Medicare would have spent for the same beneficiaries in fee-for-service Medicare,” Johnson said.

It also calculated using data from the Department of Health and Human Services’ Office of Inspector General that nearly two-thirds of excess payments to MA plans are due to chart reviews and health risk assessments.

Curbing such practices could help reduce overpayments and improve quality, Johnson added.

MA has become a massively lucrative space for insurers, with more payers joining the program for the 2022 coverage year.

Advocates for the program lauded the findings that showed MA’s enrollment growth estimated for next year but slammed the portions of the analysis that highlight the coding practices.

The advocacy group Better Medicare Alliance tweeted a study it commissioned from Milliman that showed total fee-for-service payments per month are slightly higher than total MA payments.

“We will continue to insist on an accurate, holistic understanding of MA spending that accounts for its enhanced benefits, better health outcomes, [and] consumer savings to a proportionately more diverse, lower-income, [and] socially at-risk population than FFS Medicare,” the group tweeted.