In past Call Letters, CMS has proposed and finalized significant changes to the Medicare Advantage risk adjustment system including, recalibrations, deletions and additions of diagnoses codes, and questioning of the value of in-house health risk assessments. This year’s Call Letter did not include any major changes to risk adjustment, but nevertheless the Call Letter  includes important risk adjustment information for MA plans.

First, for 2016, CMS has proposed to fully transition to use of the clinically revised CMS-HCC model introduced in 2014. This could have a significant impact on some plans’ overall risk scores, but many plans have likely been tracking their data in the clinically revised model in anticipation of this change. Alongside this change, CMS proposes to calculate each risk score using two scores, one from RAPS accounting for 90% of the score and one from EDS accounting for 10% of the score.

Second, CMS is asking for comments on proposed methods for calculating the MA coding pattern adjustment. CMS believes that MA enrollees are on average no different than Medicare fee-for-services (“FFS”) beneficiaries and therefore, beginning in 2017, is considering establishing a method to ensure that aggregate payments to MA plans are no greater than those that would have been made under the adjusted average per capita costs payment system used prior to 2000, which was prior to risk adjustment. Plans should carefully consider how this proposed methodology would affect their aggregate reimbursement and consider submitting comments to CMS.

Continuing a conversation that it started many years ago, CMS again addressed health risk assessments and in-home assessments. CMS has previously questioned the reporting of diagnoses for risk adjustment purposes through MA health risk assessments, particularly those performed in the home, when those diagnoses are not then managed or treated throughout the year. As a result, starting in contract year 2014, MA plans were required to flag diagnoses that they reported through in-home health risk assessments to enable CMS to determine if the member received follow up care relating to the diagnosis. This year CMS published a model health risk assessment form developed by the Centers for Disease Control and encourages MA plans to begin using the model in 2016. CMS again cited to concerns that in-home assessments are merely a strategy by MA plans to find and report more diagnosis codes to CMS, generating higher levels of coding and therefore payment. Following this discussion, CMS published best practices relating to in-home assessments that it believes, along with its flagged diagnosis data, will provide some evidence that in-home assessments are a means to provide enrollees with appropriate care and not solely a means to collect diagnoses without providing follow up care.

Recent Enforcement

CMS’s concerns indicate that CMS expects to only receive data on diagnoses that a health plan is treating, evaluating, or managing or that affects the provider’s care of the member. MA plans and providers who bill MA plans should be careful not to submit diagnoses that they cannot substantiate, as evidenced by last month’s criminal charges filed against a Florida MA physician.

In early February, the U.S. Attorney for the Southern District of Florida, along with the FBI and HHS-OIG, filed criminal health care fraud allegations against Dr. Isaac Kojo Anakwah Thompson who provided services in Delray Beach and Boynton Beach Florida. Dr. Thompson’s clinics (Isaac K.A. Thompson, M.D., P.A. and IM Medical P.A.) provided primary care services to MA members and in return, received capitated payments from each member’s MA plan. The capitated payments were a percentage of the payment received by the member’s MA plan, which varied based upon the diagnoses submitted to CMS for each member.

The allegations claim that Dr. Thompson submitted fraudulent diagnoses to an MA plan, which once submitted to CMS’s MA risk adjustment system, resulted in approximately $2.1 million in excess capitated fees being paid out to the plan. Because of Dr. Thompson’s capitated compensation arrangement, he then received approximately 80% of the fraudulently increased capitated fees. If convicted, Dr. Thompson could face a maximum statutory sentence of 10 years in prison for each count.

Submitting fraudulent diagnoses to an MA plan that are then reported to CMS have long been considered similar to a physician fraudulently upcoding under Medicare FFS for services he or she did not perform. There have been many cases against providers and facilities under such conduct under Medicare FFS. This indictment in Florida marks one of the first criminal cases brought against a provider for “upcoding” diagnoses under MA, a trend that is expected to continue. MA plans, MA providers, and all plans and providers operating under risk adjustment systems, including the state and federal exchanges, would be wise to take notice.