Oak Street Health: Medicare Advantage advance notice could divert resources from dual eligibles

A new analysis finds a change to Medicare Advantage (MA) risk adjustment could make it harder for providers to coordinate care for dual-eligible Medicare-Medicaid beneficiaries and people of color.

Primary care center company Oak Street Health released an analysis recently that charges the proposed 2024 advance notice—which lays out pay rates and policies for MA—moves resources away from treating dual eligibles and other underserved beneficiaries. The proposed rule has already come under fire by insurers over a change to the pay rates.

“By and large, many of the changes [the Centers for Medicare & Medicaid Services (CMS)] proposed to the risk adjustment model we support,” said Ali Khan, M.D., chief medical officer for Oak Street, in an interview with Fierce Healthcare. 

But he added that the proposed rule, which CMS must finalize by April 3, could disproportionately shift away resources needed to care for dual-eligibles. 

The issue centers on how CMS plans to change risk adjustment for MA plans. The advance notice proposes excluding more than 2,000 diagnosis codes, with the goal of cracking down on coding practices by MA plans that make patients appear sicker than they are to get higher risk adjustment payments. 

Oak Street Health, which has 42% of its patient population dually eligible and was recently acquired by CVS Health for $10 billion, wrote in comments to CMS that the proposed changes would reduce the demographic weight for duals. CMS can adjust plan payments based on a patient’s risk score, which takes into account demographic factors of the patient such as age and health history.

An analysis of Oak Street patients found that those who are both dual-eligible and African American will see a $480 per member, per year decline in risk-adjusted payments compared to those who are non-duals and white. For all Oak Street patients that are fully dual-eligible, the reduction would be $240 per member in risk-adjusted payments. 

Oak Street also found 39 codes that have a disease coefficient for dual-eligibles lower than non-duals. Sometimes these coefficients—which are the weights given to a beneficiary’s risk score—result in duals beneficiaries getting fewer resources.

For instance, non-dual patients with rheumatoid arthritis get $1,709 more in resources per member, per year than a full-benefit dual-eligible beneficiary, according to Oak Street’s comments. 

The provider also pointed to changes to coding for diabetes disease treatments. Oak Street expects that dual patients will see a $29 per member annual decline in resources and that such patients are more likely to have depression. 

Oak Street released some ways to ensure this shift doesn’t occur or is at least mitigated. For instance, CMS could increase the demographic coefficient for dual eligibles or add new codes into the risk adjustment model that are prevalent in underserved communities.

“There are a few ways in which there can be some small adjustments to ensure we are not unintentionally diverting resources,” Khan said.

CMS previously told Fierce Healthcare that the decision to remove the codes is to reflect more recent cost and utilization data. 

The agency also removed codes where a “diagnosis is ambiguous or there are not clear diagnosis or treatment guidelines associated with the diagnosis,” according to an earlier statement provided to Fierce Healthcare. “These kinds of codes do not predict costs well because there is discretion surrounding their use.”

Several other providers sounded the alarm over the coming coding changes in comments to CMS. 

The growing opposition comes as the agency is already in a heated battle with insurers over the extent of the rule’s payment changes. CMS proposed a 1% rate hike to plans for 2024, but plans say it will result in a 2.27% cut after taking into account risk adjustment changes and modifications to star ratings. 

Department of Health and Human Services Secretary Xavier Becerra recently lambasted the industry for running “deceptive” commercials looking to scare seniors.