Optum exec: Medicare Advantage advance notice rule will hurt care for dual eligibles

ARLINGTON, Virginia—A controversial proposed Medicare Advantage (MA) payment rule will make it harder to provide care for dual-eligible beneficiaries and people with low incomes, a top Optum executive said Thursday.

The proposed advance notice—which lays out 2024 payment rates and policies for MA and Part D—could impact care by pulling out roughly 2,000 diagnostic codes providers use to bill for care, said Patrick Conway, CEO of care solutions at UnitedHealth Group’s health services subsidiary.

The comments made during the Health Datapalooza event are the latest insurer pushback to the proposed rule. 

“They could set us back for some of our care for the most vulnerable patients,” said Conway, a former director of the Center for Medicare and Medicaid Innovation. 

Conway was referring to a change in the advance notice’s risk adjustment model for MA. It would restructure the model to shift the classification system from the International Classification of Diseases (ICD)-9 to the ICD-10 system that has been in place since 2015. 

Conway said the Centers for Medicare & Medicaid Services (CMS) has proposed to eliminate more than 2,000 codes from the code set. Some of the codes are highly associated with being a dual-eligible Medicare-Medicaid beneficiary as well as codes associated with people of color and patients with low incomes. 

Some of the codes being pulled out relate to conditions such as diabetes or mild depression, which Conway said can complicate care for patients. 

“These are clinically valid codes,” he said. “We are screening for this. It is part of our care model to treat people with depression.”

Conway added that he doubts the changes were “intentional” and hopes instead to work on a more thoughtful update to risk management.

CMS said in a release when the proposed rule was announced earlier this month that the change is to reflect “more current costs associated with various diseases, conditions and demographic characteristics.”

The change will also include revisions intended to reduce the “sensitivity of the model to coding variation,” the agency said. 

CMS told Fierce Healthcare that the change was part of a routine update to ensure accurate payments. 

"The ICD-10 coding system includes more codes than ICD-9 because this updated system is more granular and precise than ICD-9," the agency said. "Not all of these more granular codes, however, are predictive of increased health care costs."

The agency also reviewed each ICD-10 code to see if it was associated with higher healthcare costs. It then proposed excluding the codes "not associated with the need for more payment, such as diagnoses in remission."

It also removed codes that were not clear or did not predict costs well.

For instance, regarding the depression codes the agency foudn that some of the codes such as those for mild depression in remission didn't predict higher costs. 

"Consequently, CMS removed thsoe codes," the agency said. "However, many other depression codes (more than 350,  in total) still do and remain in the risk adjustment model."

UnitedHealth has become an increasingly dominant player in the MA market. A recent analysis from the Chartis Group found that 55% of new sign-ups for MA for 2023 came from the insurer. 

The coding changes aren’t the only proposal that has drawn the ire of insurers. 

CMS estimates that the rule will wind up giving MA plans a roughly 1% bump to payments for 2024, but insurers cite their own analyses that predict a cut of 2.27%. One analysis, paid for by the Better Medicare Alliance, said changes to the calculation of star ratings and other risk adjustment changes will lead to the cut, an assertion the Biden administration has called “categorically false.”

The proposed rule is open for comment until March 3, and CMS must finalize the rule in early April.