A new report out of the U.S. Senate is renewing scrutiny of how Medicare Advantage (MA) plans generate reimbursement.
In turn, the report raises further questions around MA practices that could ripple across outpatient care, including the ambulatory surgery center (ASC) landscape.
The report, led by Sen. Chuck Grassley (R-Iowa), focuses on UnitedHealth Group’s (NYSE: UNH) use of diagnosis coding, data analytics and vertically integrated provider networks to boost risk-adjusted payments – an issue with growing relevance for ASCs that increasingly rely on Medicare Advantage patients and contracts.
“Medicare Advantage is an important option for America’s seniors, but as the program adds more patients and spends billions in taxpayer dollars, Congress has a responsibility to conduct aggressive oversight,” Grassley said in a statement. “Bloated federal spending to UnitedHealth Group is not only hurting the Medicare Advantage program, it’s harming the American taxpayer. My investigation has shown UnitedHealth Group appears to be gaming the system and abusing the risk adjustment process to turn a steep profit.”
A core idea of MA – paying more for sicker patients and less for healthier ones – manifests in a system of risk scores that essentially rewards plans for documenting higher volumes of patient diagnoses, particularly for serious conditions.
As detailed in the report, this structure creates an incentive to aggressively seek out diagnoses that raise individual patient risk scores and, by extension, the plan’s reimbursement. For downstream ASCs, such behavior could shift case mix and volume based on payer financial considerations, or lead to site-of-care denials based on risk scores.
UnitedHealth Group pursues this aggressive diagnostic strategy largely by identifying diagnoses outside traditional physician encounters, according to the report.
Examples cited in the report include using home risk assessments, chart reviews, algorithms and pay-for-coding programs. Whatever the clinical reality, higher documented acuity can lead to additional testing, anesthesia limits and other burdens due to higher perceived clinical risk.
The report also paints UnitedHealth Group’s size and reach as key enablers of these practices.
Vertical integration – control of the MA plan, physician practices, in-home assessment staff, coding systems and even consulting services – allows UnitedHealth Group to define “acceptable” diagnostic criteria across the MA ecosystem, the report notes.
As a result, payer-aligned outpatient facilities are likely to have an edge in winning new cases.
Additionally, diagnostic criteria that raise risk scores can also justify higher-cost settings, even for procedures historically done safely in ASCs.
Payers that treat risk-adjustment as a revenue generator can impact individual surgeons as well.
According to the report, UnitedHealth Group’s MA plan provides “suspected condition” lists directly in EMRs, trains providers on diagnostic capture benchmarks, monitors those who under-diagnose, and uses audits and queries to push additional documentation. This puts pressure on surgeons to document diagnoses unrelated to the procedures they perform.
Beyond additional work for surgeons, over-documentation creates liability for the entire organization if it becomes fodder for audits or data requests tied to payer investigations by the Department of Justice (DOJ), the U.S. Centers for Medicare & Medicare Services (CMS), or other entities.
What’s more, the manipulation of MA economics on the part of UnitedHealth Group and other payers can make planning difficult for ASCs.
When CMS removes or reweights diagnostic codes, MA plans pivot to new diagnoses, the report explains. As a result, entire service lines could become more or less attractive for ASCs based not on patient need, but rather on which diagnoses are prioritized by the MA plan.
Analysis of payer behavior becomes more critical to future predictions, while historical patterns become less reliable.
The full report offers more detail on how Medicare Advantage economics are reshaping outpatient surgery.
