U.S. Department of Health and Human Services Office of Inspector General Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on Health Risk Assessments Raise Concerns Christi A. Grimm OEI-03-17-00471 Principal Deputy September 2020 Inspector General oig.hhs.gov Report in Brief U.S. Department of Health and Human Services September 2020 OEI-03-17-00471 Office of Inspector General Billions in Estimated Medicare Advantage Why OIG Did This Review We undertook this study because of Payments From Diagnoses Reported Only on concerns that MAOs may use HRAs to Health Risk Assessments Raise Concerns increase risk-adjusted payments inappropriately. The MA program provided coverage to 23 million The risk adjustment program is an important payment Key Takeaway beneficiaries in 2019 at a cost of mechanism for Medicare Advantage (MA). It levels the Billions in estimated $264 billion. Unsupported playing field for MA organizations (MAOs) that enroll risk-adjusted risk-adjusted payments have been a beneficiaries who need a costlier level of care, which helps major driver of improper payments in to ensure these beneficiaries have continued access to MA payments supported the MA program. plans. Health risk assessments (HRAs) can be a tool for solely through HRAs early identification of health risks to improve beneficiaries’ raise concerns about CMS risk-adjusts payments by using care and health outcomes. However, some MAOs may be the completeness of beneficiaries’ diagnoses to pay higher initiating and using HRAs—often by hiring companies to payment data, capitated payments to MAOs for conduct HRAs in beneficiaries’ homes—to collect diagnoses validity of diagnoses beneficiaries expected to have greater and maximize risk-adjusted payments without improving on HRAs, and quality health care needs. This may create beneficiary care. of care coordination financial incentives for MAOs to make for beneficiaries. beneficiaries appear as sick as What OIG Found possible. For CMS to risk-adjust Our findings highlight concerns about the extent to which payments, MAOs report beneficiaries’ MAOs are using HRAs to improve care and health outcomes, as intended, and about diagnoses—based on services the sufficiency of the oversight by the Centers for Medicare & Medicaid Services (CMS). provided to beneficiaries—to CMS’s From our analysis of 2016 MA encounter data, we found that: MA encounter data system and the  Diagnoses that MAOs reported only on HRAs, and on no other encounter records, Risk Adjustment Processing System. resulted in an estimated $2.6 billion in risk-adjusted payments for 2017.  In-home HRAs generated 80 percent of these estimated payments. Most in-home HRAs are an allowable source of HRAs were conducted by companies that partner with or are hired by MAOs to diagnoses for risk adjustment. An conduct these assessments—and therefore are not likely conducted by the HRA occurs when a physician or other beneficiary’s own primary care provider. health care professional collects  Twenty MAOs generated millions in payments from in-home HRAs for information from beneficiaries about beneficiaries for whom there was not a single record of any other service being their health to diagnose and identify provided in 2016. gaps in care. However, CMS and the Medicare Payment Advisory These findings raise three types of concerns: (1) a data integrity concern that MAOs are Commission have raised concerns not submitting all service records as required; (2) a care coordination concern that that MAOs may use HRAs mainly as a beneficiaries are not receiving followup care to address diagnoses identified during tool to collect diagnoses and increase HRAs; and (3) a payment integrity concern that if diagnoses are inaccurate or payments to MAOs rather than to unsupported, the associated risk-adjusted payments would then be inappropriate. improve the health of beneficiaries. Despite potential issues regarding HRAs, CMS has not yet reviewed the impact of HRAs on risk-adjusted payments or quality of care. How OIG Did This Review We analyzed 2016 MA encounter data What OIG Recommends to determine the 2017 financial impact We recommend that CMS: (1) require MAOs to implement best practices to ensure care of diagnoses that were reported only coordination for HRAs; (2) provide targeted oversight of the 10 parent organizations on HRAs and not on any other service that drove most of the risk-adjusted payments resulting from in-home HRAs; (3) records in the encounter data that provide targeted oversight of the 20 MAOs that drove risk-adjusted payments resulting year. We also analyzed CMS from in-home HRAs for beneficiaries who had no other service records in the encounter responses to a structured data; (4) reassess the risks and benefits of allowing in-home HRAs to be used as sources questionnaire to identify actions taken of diagnoses for risk adjustment; and (5) require MAOs to flag any MAO-initiated HRAs by CMS to review the impact of HRAs in their MA encounter data. CMS concurred with recommendations two and three. on MA payments. Full report can be found at oig.hhs.gov/oei/reports/oei-03-17-00471.asp TABLE OF CONTENTS BACKGROUND 1 Methodology 8 FINDINGS Diagnoses that MAOs reported only on health risk assessments (HRAs), and not on any other 12 encounter records, resulted in an estimated $2.6 billion in risk-adjusted payments for 2017 In-home HRAs generated 80 percent of the estimated payments from diagnoses reported only 14 on HRAs, and most in-home HRAs were conducted by companies that partner with MAOs Twenty MAOs generated millions in payments from in-home HRAs for beneficiaries for whom 17 there was not a single record of any other service being provided in 2016 CMS has not reviewed the impact of HRAs on risk-adjusted payments or quality of care 18 CONCLUSION AND RECOMMENDATIONS Require MAOs to implement best practices to ensure care coordination for HRAs 20 Provide targeted oversight of the 10 parent organizations that drove most of the risk-adjusted 21 payments resulting from in-home HRAs Provide targeted oversight of the 20 MAOs that drove risk-adjusted payments resulting from 21 in-home HRAs for beneficiaries who had no other service records in the 2016 encounter data Reassess the risks and benefits of allowing in-home HRAs to be used as sources of diagnoses 22 for risk adjustment, and reconsider excluding such diagnoses from risk adjustment Require MAOs to flag any MAO-initiated HRAs in their MA encounter data 22 AGENCY COMMENTS AND OIG RESPONSE 24 APPENDICES A: Detailed Methodology 26 B: Estimated Payments Resulting From Diagnoses Reported on Health Risk Assessments, by 33 Hierarchical Condition Category C: Estimated Payments From Health Risk Assessments for Hierarchical Condition Categories at 37 High Risk for Improper Payments D: Agency Comments 38 ACKNOWLEDGMENTS 41 BACKGROUND Objectives 1. To determine the extent to which diagnoses reported only on health risk assessments (HRAs) increased risk-adjusted payments in the Medicare Advantage (MA) program. 2. To identify actions that the Centers for Medicare & Medicaid Services (CMS) has taken to review the impact of HRAs on MA risk-adjusted payments. Ensuring that MA organizations (MAOs) receive accurate payments to provide appropriate care to Medicare beneficiaries is critically important. Toward this end, CMS makes risk-adjusted payments using beneficiaries’ diagnoses to pay higher capitated rates to MAOs for beneficiaries with higher risk scores. However, this may create financial incentives for MAOs to make beneficiaries appear as sick as possible to obtain higher payments. CMS and the Medicare Payment Advisory Commission (MedPAC) have also identified vulnerabilities related to MAOs inflating their beneficiaries’ risk scores.1 This OIG evaluation analyzed data and trends related to HRAs, an allowable source of diagnoses that may provide MAOs with opportunities to inflate risk scores inappropriately. The Medicare Advantage Program Under MA, also known as Medicare Part C, CMS contracts with private companies, known as MAOs, to provide coverage of Parts A and B services through private health plan options.2 In 2019, one-third of Medicare beneficiaries—23 million—elected to enroll with approximately 733 MAOs rather than receive services through the Medicare fee-for-service program.3 1 CMS, Advanced Notice of Methodological Changes for Calendar Year (CY) 2014 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2014 Call Letter, February 2013 and CMS, Advanced Notice of Methodological Changes for Calendar Year (CY) 2015 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2015 Call Letter, February 2014. Accessed at https://www.cms.gov/Medicare/Health- Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents on November 21, 2019. MedPAC, Report to the Congress: Medicare Payment Policy, March 2016. Accessed at http://www.medpac.gov/docs/default-source/reports/march-2016-report-to-the-congress- medicare-payment-policy.pdf on July 9, 2019. 2 Each MAO may offer multiple plans. Medicare Parts A and B include hospital care, skilled nursing facility care, hospice care, home health care, physician services, and durable medical equipment, prosthetics, orthotics, and supplies. Many MA plans also offer prescription drug coverage under Medicare Part D. 3 We use the term MAO to refer to a unique MA contract. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 1 OEI-03-17-00471 MA program costs were $264 billion of the total $758 billion in Medicare program costs in fiscal year 2019.4 MA Risk-Adjusted Payments For each beneficiary enrolled, MAOs receive a capitated payment that reflects CMS’s predicted cost of providing care to an MA beneficiary. CMS risk-adjusts payments to pay MAOs more for beneficiaries with higher expected health-care costs. CMS bases risk adjustments on MA beneficiaries’ demographic information and diagnoses from the prior year. As outlined in Exhibit 1, CMS’s risk-adjustment process relies on diagnoses reported by MAOs. Exhibit 1: Risk-adjustment process for MA encounter data Beneficiary Provider submits MAO submits a receives a service information service record to the service. to the MAO. CMS encounter data system. CMS performs data CMS identifies CMS risk-adjusts integrity checks on the risk-adjustment-eligible payments and service record diagnoses from the pays the MAO. submitted by the MAO. submitted service record. MAOs Report Diagnoses to CMS. The risk-adjustment process begins when the beneficiary receives a service or medical item from a provider. The provider submits claims information, including diagnoses, to the MAO based on the service or medical item provided. The MAO submits a record of the service (hereafter service record) to CMS’s MA encounter data system 4CMS, CMS Financial Report Fiscal Year 2019, November 2019, p. 46. Accessed at https://www.cms.gov/files/document/cms-financial-report-fiscal-year-2019 on November 25, 2019. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 2 OEI-03-17-00471 that contains this claims information, including the diagnoses.5 MAOs also submit data on beneficiaries’ diagnoses to CMS through the Risk Adjustment Processing System (RAPS). The RAPS data include only select information for services provided by a limited set of provider types. For RAPS, MAOs submit only the beneficiary identifier (i.e., health insurance claim number or Medicare beneficiary identifier), diagnosis/diagnoses, provider type, and date(s) of service for services provided by hospital inpatient facilities, hospital outpatient facilities, and physicians. CMS began collecting the more comprehensive encounter data from MAOs in 2012 as part of an effort to improve MA payment accuracy and better perform MA quality reviews. CMS Performs Activities To Safeguard the Integrity of Reported Diagnoses. CMS requires MAOs to certify the accuracy, completeness, and truthfulness of their encounter data submissions.6 In addition, CMS performs activities to safeguard the integrity of the encounter data. During the data submission process, CMS performs automated checks, or edits, that reject service records containing incorrect information (e.g., service records with improperly formatted data or missing fields) that CMS deems key to MA program payment and data integrity. After records pass these edits, CMS conducts analyses to review the stored data. If these analyses identify data errors, CMS may perform outreach to MAOs or introduce new edits to prevent incorrect data from being included in the encounter data.7 CMS Identifies Eligible Diagnoses for Risk Adjustment. For CMS to permit a diagnosis to be eligible for risk-adjusted payment, it must be: (1) documented in a medical record from a hospital inpatient stay, hospital outpatient visit, or visit with a physician or other eligible health care professional during the prior year; and (2) documented as a result of a face-to-face visit between the beneficiary and the provider.8, 9 5 Encounter records include service records and chart reviews. In addition to reporting diagnoses to the MA encounter data system through service records, MAOs may also report diagnoses through chart reviews—retrospective reviews of beneficiaries’ medical record documentation. 6 42 CFR § 422.504(l). 7 CMS plans to implement additional compliance actions such as issuing notices of noncompliance, warning letters, and corrective action plans for MAOs that fail to satisfy certain performance thresholds related to the integrity of the encounter data. 8 CMS, Medicare Managed Care Manual, Pub. No. 100-16 (Rev.118, September 19, 2014), ch. 7, § 40. Accessed at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/ Downloads/mc86c07.pdf on December 17, 2018. 9 Diagnoses resulting from telehealth services can meet the risk adjustment face-to-face requirement when the services are provided using an interactive audio and video telecommunications system that permits real-time interactive communication. CMS, Applicability of Diagnoses from Telehealth Services for Risk Adjustment, April 2020. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 3 OEI-03-17-00471 To identify which diagnoses meet these eligibility criteria, CMS extracts, or filters, diagnoses in the encounter data based on whether the service record contains an acceptable procedure code (i.e., Current Procedural Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS) code) and/or type of bill code.10, 11 CMS Risk-Adjusts Payments. To risk-adjust payments to MAOs based on eligible diagnoses, CMS employs a health-based risk adjustment model known as the CMS hierarchical condition categories (CMS-HCC) model. The model groups certain medical conditions into HCCs that are categories of clinically related diagnoses.12 The model also ranks related groups of risk-adjustment-eligible diagnoses on the basis of disease severity and costs associated with treatment. Each HCC has relative numerical values (i.e., relative factors) that represent CMS’s predicted costs associated with treating the medical conditions in the category.13 A beneficiary may have multiple HCCs. A beneficiary’s risk score equals the sum of the relative factors that correspond with his or her HCCs and demographic characteristics.14 The total risk-adjusted payment to an MAO for an enrolled beneficiary equals the risk score multiplied by the MA plan’s base payment rate.15 In addition to diagnoses reported by MAOs in the RAPS data, CMS began incorporating diagnoses from the encounter data into risk scores in 2015. To determine risk-adjusted payments for 2017, CMS calculated a blended risk score for each beneficiary by combining 25 percent of the risk score calculated from diagnoses in the encounter data and 75 percent of the risk score calculated from diagnoses in the RAPS data. CMS requires MAOs to submit records to the encounter data system for all services provided to beneficiaries. Therefore, MAOs should report the same risk-adjustment-eligible diagnoses in both the RAPS and encounter data. 10 For institutional outpatient services, CMS uses type of bill and procedure codes to identify which diagnoses are eligible for risk-adjusted payment. For hospital inpatient services, CMS uses type of bill codes. For professional services, CMS uses procedure codes to identify which diagnoses are eligible for risk-adjusted payment. 11 CMS, Final Encounter Data Diagnosis Filtering Logic, December 22, 2015. Accessed at https://www.csscoperations.com/internet/cssc3.nsf/files/Final%20Industry%20Memo%20Medic are%20Filtering%20Logic%2012%2022%2015.pdf on November 26, 2019. 12 42 CFR § 422.2. 13 CMS uses the average expected costs in Medicare fee-for-service to determine the predicted costs associated with treating the medical conditions in the category. 14 The CMS-HCC model also includes relative factors for certain combinations of coexisting diagnoses (i.e., disease interactions) and interactions between certain diseases and a beneficiary’s disabled status (i.e., disabled interactions), which are added to a beneficiary’s risk score. For the purposes of this evaluation, we use the term HCCs to refer to all HCCs, disease interactions, and disabled interactions. 15 An MA plan’s base payment rate is the plan’s standardized bid adjusted by the county Intra-Service Area Rate factor for the beneficiary’s county of residence. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 4 OEI-03-17-00471 Ultimately, CMS plans to rely exclusively on encounter data to identify diagnoses for risk-adjusted payments. CMS Conducts Audits To Validate Diagnoses Used in Risk Adjustment. After making risk-adjusted payments to MAOs, CMS determines whether a sample of diagnoses reported by MAOs can be validated by supporting medical record documentation using contract-level and national risk-adjustment data validation (RADV) audits.16 CMS has conducted these audits of diagnoses submitted to CMS through RAPS since payment year 2007. When RADV audits cannot validate a diagnosis, CMS uses this information to recover overpayments from MAOs and calculate a payment error rate. As part of the RADV audit process, CMS identified the HCCs that had the highest rates of errors for that payment year. CMS estimates that from 2013 through 2017, Medicare paid $50 billion in overpayments that resulted from plan-submitted diagnoses that were not supported by beneficiaries’ medical records. (These were diagnoses submitted for all types of encounter records, not HRAs specifically.) Health Risk Assessments Physicians or other health care professionals administer HRAs to collect information from beneficiaries about their health status, health risks, and daily activities. In the Medicare fee-for-service program, HRAs are part of beneficiaries’ annual wellness visits, which typically occur in physician offices or other health care facilities.17 In the MA program, HRAs should be part of annual wellness visits,18 or they may also be conducted during other visits with beneficiaries―including visits to beneficiaries’ homes performed by 16 CMS, Contract-Level Risk Adjustment Data Validation Medical Record Reviewer Guidance, September 2017, p. 5. Accessed at https://www.cms.gov/Research-Statistics-Data-and- Systems/Monitoring-Programs/Medicare-Risk-Adjustment-Data-Validation-Program/Other- Content-Types/RADV-Docs/Coders-Guidance.pdf on November 23, 2017. CMS, Medicare Risk Adjustment Data Validation Program History, September 2017. Accessed at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs /Medicare-Risk-Adjustment-Data-Validation-Program/Program-History on June 28, 2019. 17 An annual wellness visit should incorporate reviews of a beneficiary’s health risks, medical history, and current providers, along with routine measurements and personalized health advice. CMS, Annual Wellness Visit, August 2018. Accessed at https://www.cms.gov /Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts /Downloads/AWV-Chart-ICN905706TextOnly.pdf on September 16, 2019. 18 CMS, Advanced Notice of Methodological Changes for Calendar Year (CY) 2014 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2014 Call Letter, February 2013. Accessed at https://www.cms.gov/Medicare/Health- Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2014.pdf on November 21, 2019, p. 22. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 5 OEI-03-17-00471 companies hired by MAOs.19, 20 Care coordination that results from assessing a beneficiary’s health risks may include developing a plan of care, arranging services, delivering interventions, and reassessing and adjusting the plan of care as needed. Concerns Raised About MAO-Initiated HRAs. CMS and MedPAC have questioned whether MAOs use HRAs primarily as a strategy to find and submit more diagnoses to increase payments rather than as a means to improve the care provided to beneficiaries. MAOs may receive financial benefits without improving beneficiaries’ health if MAOs initiate HRAs and use them to collect diagnoses without ensuring that beneficiaries receive needed followup care. In 2015, CMS stated that it had observed an increase in in-home visits to assess MA enrollees.21 According to CMS, non-physician practitioners working for companies hired by MAOs usually performed these in-home HRAs, and the resulting care coordination appeared to vary across plans. We use the term “MAO-initiated HRA” to refer to HRAs that are performed by health care professionals who are employed or contracted by the MAO for this purpose and are not the beneficiary’s provider. CMS Guidance on In-Home HRAs. In 2013 and 2014, CMS proposed excluding from risk adjustment any diagnoses that MAOs collected from in-home HRAs that were not confirmed by a subsequent clinical encounter.22 CMS did not finalize either proposal. Instead, beginning in 2014, CMS required MAOs to flag diagnoses submitted to the RAPS data that resulted from a home setting, including whether or not an annual wellness visit took place.23 However, this RAPS flag does not require MAOs to specify whether diagnoses resulted from HRAs. CMS stated that it would track and analyze care provision following in-home visits beginning in 2015. 19 HRAs performed in beneficiaries’ homes are also known as “enrollee risk assessments” or “home assessments.” In this report, we refer to HRAs performed in beneficiaries’ homes as “in-home HRAs.” 20 MAOs offering Special Needs Plans must conduct a comprehensive initial health risk assessment of the individual's physical, psychosocial, and functional needs as well as annual HRA, using a comprehensive risk assessment tool that CMS may review during oversight activities. Social Security Act, § 1859(f)(5)(B); 42 CFR § 422.101(f)(1)(i). 21 CMS, Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, April 2015, p. 144. Accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/ Downloads/Announcement2016.pdf on November 19, 2019. 22 CMS, Advanced Notice of Methodological Changes for Calendar Year (CY) 2014 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2014 Call Letter, February 2013 and CMS, Advanced Notice of Methodological Changes for Calendar Year (CY) 2015 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2015 Call Letter, February 2014. Accessed at https://www.cms.gov/Medicare/Health-Plans /MedicareAdvtgSpecRateStats/Announcements-and-Documents on November 21, 2019. 23 CMS did not require MAOs to flag diagnosis codes submitted to the encounter data that result from in-home visits. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 6 OEI-03-17-00471 In 2015, CMS provided guidance to MAOs on best practices that promote the primary use of in-home HRAs as tools for improving care for MA enrollees—not just as a process for collecting diagnoses to increase risk-adjusted payments.24 CMS encouraged MAOs to adopt best practices that support care coordination when implementing in-home HRA programs, including processes to:  schedule appointments with appropriate providers;  make referrals to appropriate community resources;  verify that needed followup care is provided;  verify that information obtained during the assessment was provided to the appropriate providers;  provide a summary to the beneficiary that includes their diagnoses, medications, scheduled followup appointments, plan for care coordination, and contact information for community resources; and  enroll the beneficiary in the MAO’s disease management or case management program, as appropriate. In 2016, CMS issued guidance to MAOs related to ensuring coordination of care for services provided to MA beneficiaries.25 This guidance states that MAOs must ensure continuity of services, including implementing procedures to make a “best effort” to conduct HRAs annually and to ensure an appropriate and timely exchange of clinical information among providers. MedPAC Recommendation To Exclude HRAs From Risk Adjustment. In 2016, MedPAC recommended that the Secretary eliminate HRAs as a source of diagnoses for MA risk adjustment because it contended that a small number of MAOs were using HRAs to increase Medicare payment without providing followup care.26 MedPAC stated that it recognized the value of HRAs that MAOs administer as part of a care plan that includes: (1) providing information to beneficiaries’ primary care providers; and (2) ensuring that beneficiaries receive needed treatment. However, MedPAC analyzed encounter data from 2012 and found that more than one-third of the health 24 CMS, Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, April 2015. Accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/ Announcement2016.pdf on November 19, 2019. 25 CMS, Medicare Managed Care Manual, Pub. No. 100-16 (Rev. 121, April 22, 2016), ch. 4, § 110.6. Accessed at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals /Downloads/mc86c04.pdf on November 29, 2019. 26 As part of this recommendation, MedPAC recommended that the Secretary develop a risk adjustment model that uses two years of Medicare fee-for-service and MA diagnostic data. MedPAC, Report to the Congress: Medicare Payment Policy, March 2016, p. 352. Accessed at http://www.medpac.gov/docs/default-source/reports/march-2016-report-to-the-congress- medicare-payment-policy.pdf on July 9, 2019. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 7 OEI-03-17-00471 conditions documented on HRAs had no other documentation showing that health care was provided.27 In addition, MedPAC questioned the accuracy of diagnoses identified only through in-home HRAs because these diagnoses are often based on beneficiary self-reporting or may require verification by diagnostic equipment not present during the visit. MedPAC also raised concerns about the tactics MAOs use to recruit beneficiaries for in-home HRAs, which some beneficiaries have reported to be uncomfortably aggressive. Prior OIG Work Prior OIG work analyzed data and trends related to chart reviews, which are another allowable source of diagnoses that may provide MAOs with opportunities to inflate risk scores inappropriately.28 This work found that diagnoses that MAOs reported only on chart reviews—and not on any service records—resulted in an estimated $6.7 billion in risk-adjusted payments for 2017. CMS based an estimated $2.7 billion of these risk-adjusted payments on chart review diagnoses that MAOs did not link to a specific service provided to the beneficiary. These findings raised potential concerns about the completeness of payment data submitted to CMS, the validity of diagnoses on chart reviews, and the quality of care provided to beneficiaries. CMS concurred with this report’s recommendations, which were to:  provide oversight of MAOs that had risk-adjusted payments resulting from unlinked chart reviews for beneficiaries who had no service records in 2016;  conduct audits that validate diagnoses reported on chart reviews in the encounter data; and  reassess the risks and benefits of allowing the use of unlinked chart reviews as sources of diagnoses for risk adjustment. Methodology We reviewed HRAs from the 2016 MA encounter data stored in CMS’s Integrated Data Repository (IDR) to determine the amount of 2017 MA risk-adjusted payments that would have resulted from diagnoses reported only on HRAs. Although CMS incorporates diagnoses from both RAPS and encounter data in actual risk-adjusted payments, we did not incorporate diagnoses stored in CMS’s RAPS data into our payment calculations. We did not include RAPS data because there is no mechanism in RAPS to 27 Because CMS does not require MAOs to flag diagnoses that resulted from HRAs in the encounter data, MedPAC identified HRAs as records with (1) procedure codes G0438, G0439, 99420, or (2) a procedure code for an evaluation and management visit and a place of service code of “home.” 28 OIG, Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns, OEI-03-17-00470, December 2019. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 8 OEI-03-17-00471 definitively identify diagnoses reported on HRAs. However, we found that 99.5 percent of the diagnoses included in our payment analysis were also reported in RAPS. In addition, among diagnoses that appeared in RAPS, almost all (96.3 percent) appeared only once. Appendix A contains a detailed description of our methodology. Because CMS does not require MAOs to flag diagnoses that resulted from HRAs in the encounter data, we identified diagnoses reported on HRAs using a two-fold process:  First, we aggregated records from the IDR that identify potential HRAs, including annual wellness visits, initial preventive physical exams, and evaluation and management home visits.29  Second, among these types of records, we excluded from our analysis any beneficiaries who had more than one procedure code in 2016 that met our criteria for a potential HRA. We included HRAs only for beneficiaries enrolled in the same MA plan for all 12 months of 2016 in our evaluation.30 In addition, we excluded cost plans, demonstration plans, programs of all-inclusive care for the elderly (PACE) organizations, and Medicare medical savings account plans. Using these criteria, we analyzed risk-adjustment-eligible diagnoses reported on 3.5 million HRAs submitted by 67 percent of MAOs (462 of 690) to calculate the impact of HRAs on risk-adjusted payments for 2017.31 Financial Impact of HRAs To estimate the amount of payments from HRAs, we identified beneficiaries who had risk-adjustment-eligible diagnoses reported on HRAs that were not reported on any other encounter records in 2016. We used the 2017 CMS-HCC model to identify the HCCs that would not have been generated if MAOs had not added these diagnoses. For each HCC, we calculated the risk-adjusted payment by multiplying the MA plan’s base payment rate by the HCC’s relative factor. 29 We identified annual wellness visits using procedure codes G0438 and G0439, initial preventive physical exams using procedure code G0402, and evaluation and management home visits using procedure codes 99341-99345 and 99347-99350. For evaluation and management home visits, we also ensured that the place of service was home. 30 We use the term “MA plan” to represent each unique combination of an MA contract number and plan number. 31 We use the term “MAO” to represent each unique MA contract number. As of January 2016, CMS contracted with 690 MAOs to provide Parts A and B services to MA beneficiaries. CMS, Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report -Monthly Summary Report (Data as of January 2016), January 2016. Accessed at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and- Reports/MCRAdvPartDEnrolData/Monthly-Contract-and-Enrollment-Summary-Report- Items/Contract-Summary-2016-01 on November 19, 2019. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 9 OEI-03-17-00471 We summarized the number and type of HCCs that increased payments and compared our list of HCCs to the high-risk HCCs that CMS identified for 2014. We checked for variation across MAOs and their parent organizations to see whether certain MAOs and parent organizations had higher or lower amounts of risk-adjusted payments due to diagnoses reported only on HRAs.32 We also performed these analyses by place of service (i.e., in-home HRAs versus facility-based HRAs).33 In addition, we identified the 10 providers (i.e., National Provider Identifiers) that billed for the most in-home HRAs. We determined whether these billing providers were companies that partnered with or were hired by MAOs to conduct in-home HRAs using information from company websites and other publicly available sources. CMS Oversight of the Financial Impact of HRAs To identify the actions taken by CMS to review the impact of HRAs on MA risk-adjusted payments, we analyzed CMS’s responses to a structured questionnaire and reviewed relevant documentation related to instructions, policies and/or procedures that CMS has in place to identify and address concerns related to the financial impact of HRAs. Limitations We estimated risk-adjusted payments that resulted from HRAs based solely on diagnoses contained in the MA encounter data. We did not estimate payments based on RAPS. CMS actual risk-adjusted payments to MAOs for 2017 incorporate diagnoses from both RAPS and encounter data.34 Because CMS requires MAOs to submit records of all services provided for beneficiaries to the encounter data system, MAOs should submit the same risk-adjustment-eligible diagnoses in both the RAPS and encounter data. When we conducted a review of the diagnoses included in RAPS, we found that 99.5 percent of the diagnoses included on our payment analysis were also reported in RAPS. Among diagnoses that appeared in RAPS, almost all (96.3 percent) appeared only once. However, our analysis underestimates the risk-adjusted payments from HRAs if MAOs reported in RAPS additional diagnoses from HRAs and did not submit corresponding encounter records for those HRAs in the encounter data. Because CMS does not require MAOs to flag in the encounter data that a diagnosis resulted from an HRA, we had to reasonably approximate our identification of these diagnoses. Our approximation may include 32 A parent organization is an entity that owns or has controlling interest in at least one MAO. 33 We considered the following places of service to be in-home HRAs: home, temporary lodging, custodial care facility, group home, and homeless shelter. We considered all other places of service—including a physician’s office, clinic, and hospital—to be facility-based HRAs. 34 For 2017, CMS calculated a blended risk score by combining 25 percent of the risk score calculated from encounter data and 75 percent of the risk score calculated from RAPS data. Ultimately, CMS plans to rely exclusively on encounter data to calculate risk scores. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 10 OEI-03-17-00471 diagnoses reported on home visits during which medical care was provided and an HRA was not administered. Alternatively, our approximation may have missed diagnoses that resulted from HRAs that MAOs reported on types of records that we did not include. CMS bases risk-adjusted payments for a given year on diagnoses from specified face-to-face visits provided to the beneficiary in the previous year. Thus, we estimated the potential impact of HRAs on the MA program for 2017 by using the encounter data submitted by MAOs for 2016. We did not review CMS’s final payment data to MAOs for 2017. CMS’s actual monthly payments to MAOs may change each month if there are changes in certain beneficiary characteristics, such as long-term institutional status, dual-eligibility status, and county of residence. For analytic efficiency, we calculated payment estimates for the entire year using 2016 encounter data and beneficiaries’ characteristics as of January 2016. We believe that selecting a point in time resulted in reasonable payment estimates because changes to these characteristics during the year can cause both payment increases and decreases, which could balance out across the population. We also assumed that 2016 MA beneficiaries remained enrolled in MA in 2017. We also did not determine whether diagnoses reported only on HRAs were supported by documentation in beneficiaries’ medical records. In addition, we did not determine whether each MAO had submitted all required encounter records. Finally, our review did not include any services provided to MA beneficiaries but not covered or paid under Medicare Part C by an MAO, such as services provided through the Veterans Health Administration. Standards We conducted this study in accordance with the Quality Standards for Inspection and Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 11 OEI-03-17-00471 FINDINGS Diagnoses that Diagnoses that MAOs reported only on HRAs in the encounter data totaled an estimated $2.6 billion in risk-adjusted payments for 2017. MAOs reported only on HRAs, and MAOs potentially received billions in payments for diagnoses not on any other collected on HRAs without evidence of these beneficiaries receiving any care to treat those conditions service records, MAOs reported diagnoses on HRAs for 3.5 million beneficiaries with no resulted in an other encounter records of visits, procedures, tests, or supplies that estimated contained the diagnosis reported on the HRA. This means that, for the $2.6 billion in entire year, these beneficiaries may not have received other services for the medical conditions indicated by the diagnoses. This raises questions about risk-adjusted whether these HRAs were administered as part of a care plan that included payments for 2017 care coordination. When HRAs lack care coordination—such as providing information to beneficiaries’ primary care providers and ensuring that beneficiaries receive needed treatment—they could become vehicles for MAOs to collect diagnoses rather than function as tools to improve beneficiary health. We estimated that MAOs received risk-adjusted payments for 617,652 beneficiaries (out of 3.5 million) based solely on HRA diagnoses. In an extreme case, a beneficiary had diagnoses reported only on an HRA that resulted in an estimated $51,804 in risk-adjusted payments to the MAO for 2017. This beneficiary’s diagnoses correspond to serious conditions including heart arrhythmias, severe hematological disorders, and major depression/bipolar/paranoid disorders that trigger risk-adjusted payments. However, these diagnoses did not appear on any other encounter record for this beneficiary in 2016. The HCCs generated by diagnoses reported only on HRAs included serious illnesses, such as diabetes and heart disease. Appendix B provides the amount of risk-adjusted payments for each HCC that resulted from diagnoses reported only on HRAs. The 10 HCCs that CMS identified as having the highest payment error rates for 2014 (the most recent year for which CMS identified high-risk HCCs) accounted for $152.3 million of the estimated risk-adjusted payments from HRAs for 2017. Appendix C lists the impact on risk-adjusted payments from HRAs for these HCCs. Ten MAOs had almost one-half of the payments resulting solely from HRAs Ten MAOs had an estimated $1.2 billion of the risk-adjusted payments that resulted from diagnoses only on HRAs, as shown in Exhibit 2. Overall, 462 MAOs reported diagnoses only on HRAs. Ninety-five percent of these MAOs (438 of 462) had a payment resulting solely from HRAs. For these 438 MAOs, risk-adjusted payments due solely to diagnoses reported on Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 12 OEI-03-17-00471 HRAs varied significantly, ranging from a high of $243.9 million to a low of $1,558 across MAOs. These 10 MAOs belonged to two parent organizations that had $2.1 billion in payments resulting solely from HRAs. These top two parent organizations had 81 percent of risk-adjusted payments from HRAs but enrolled just 40 percent of all MA beneficiaries, as shown in Exhibit 2.35 Exhibit 2: Almost all MAOs in our review had estimated risk-adjusted payments that resulted solely from HRAs, but a few drove a large portion of those payments 462 MAOs reported diagnoses only on HRAs 438 MAOs had $2.6B in payments resulting solely from HRAs These risk-adjusted payments varied significantly, ranging from $1,558 to $244M 10 MAOs drove almost half of these payments, totaling an estimated $1.2B These 10 MAOs belonged to 2 parent organizations that generated 81% of the $2.6B but enrolled only 40% of beneficiaries Source: OIG estimation of 2017 payments using 2016 MA encounter data from CMS’s IDR 35 For parent organizations, we determined their percentage of all MA beneficiaries enrolled, as of January 1, 2016, in the types of plans included in our analysis. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 13 OEI-03-17-00471 Although HRAs conducted in beneficiaries’ homes represented only In-home HRAs one-third of the HRAs we reviewed, they generated most of the estimated generated 80 payments that resulted from diagnoses only reported on HRAs. The percent of the number of in-home HRAs totaled 37 percent (1.3 million of 3.5 million) of estimated payments the total number of HRAs included in our review. However, these in-home HRAs resulted in 80 percent ($2.05 billion of $2.56 billion) of the estimated from diagnoses risk-adjusted payments to MAOs for diagnoses reported only on HRAs, as reported only on shown in Exhibit 3.36 HRAs, and most Exhibit 3: Most HRAs reviewed were conducted in health care in-home HRAs were facilities, but those conducted in beneficiaries’ homes generated conducted by most of the estimated risk-adjusted payments companies that partner with MAOs HRAs Conducted Estimated Payments From HRAs Facility Home 20% Facility 37% Home 63% 80% Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data Estimated payments to MAOs for diagnoses reported only on in-home HRAs were wide-ranging and driven by a few MAOs. These estimated payments ranged from a high of $235 million to a low of $747. Eight MAOs generated one-half of these payments, totaling an estimated $1.1 billion. Among parent organizations, 10 parent organizations enrolled 52 percent of MA beneficiaries but were responsible for 97 percent ($2 billion) of all estimated payments resulting from in home HRAs, as shown in Exhibit 4. 36 The remaining 20 percent of risk-adjusted payments resulted from diagnoses reported only on facility-based HRAs. These HRAs took place in health care facilities, such as physician offices, clinics, and hospitals. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 14 OEI-03-17-00471 Exhibit 4: Ten MA parent organizations drove almost all of the risk-adjusted payments from in-home HRAs but enrolled only 52 percent of MA beneficiaries Source: OIG estimation of 2017 payments using 2016 MA encounter data from CMS’s IDR Most of the in-home HRAs that resulted in risk-adjusted payments were conducted by companies that MAOs partner with or hire to conduct HRAs Of the top 10 providers that billed for in-home HRAs, 8 were companies that partner with or are hired by MAOs to conduct home assessments. (The remaining 2 of the top 10 providers that billed for in-home HRAs appear to be affiliated with one of the 8 companies that partner with MAOs to conduct home assessments.) These 8 companies conducted 89 percent (415,485 of 466,481) of the in-home HRAs that contained diagnoses that resulted in risk-adjustment payments, and yet these diagnoses were not reported on any other encounter record for the beneficiaries. Overall, $1.8 billion—or 90 percent—of the estimated $2 billion in risk-adjusted payments from in-home HRAs resulted from home visits conducted by these eight companies. The top company conducted in-home HRAs that generated $1.2 billion in risk-adjusted payments to 48 MAOs that are owned by 1 parent organization. For the 415,485 beneficiaries who received an in-home HRA from these companies, the assessment was likely conducted by a health care professional who was not their primary care provider. The lack of other encounter records that contain the diagnoses identified by the companies’ providers raises questions about whether MAOs ensured that (1) the results of these HRAs were forwarded to beneficiaries’ primary care providers; (2) beneficiaries received appropriate followup care and treatment; and (3) the diagnoses reported only on in-home HRAs were accurate. The diagnoses that MAOs reported only on in-home HRAs corresponded to some serious and chronic health conditions In-home HRAs have the potential to address the health care needs of beneficiaries with serious diagnoses. However, we found that among the 1.3 million beneficiaries who had an in-home HRA that added diagnoses to Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 15 OEI-03-17-00471 the encounter data, there were no other encounter records of visits, procedures, tests, or supplies that contained the diagnoses reported on the HRA. These in-home HRAs were associated with some serious and chronic medical conditions for beneficiaries. For 117,620 beneficiaries, diagnoses that MAOs reported only on in-home HRAs corresponded to having major depressive, bipolar, and paranoid disorders. However, there were no encounter records directly demonstrating that they received treatment for these serious health diagnoses. Almost 75 percent of risk-adjusted payments ($1.5 billion of $2 billion) from diagnoses reported only on in-home HRAs were concentrated among 10 of 101 possible HCCs, as shown in Exhibit 5. Exhibit 5: Almost three-quarters of the estimated MA risk-adjusted payments from in-home HRAs corresponded to 10 HCCs Estimated Number of Payments Percentage of Beneficiaries From In-Home HRA HCC HCC Description With HCC In-Home HRAs Payments HCC58 Major Depressive, Bipolar, and Paranoid Disorders 117,620 $353,868,747 17% HCC108 Vascular Disease 116,238 $307,397,936 15% HCC18 Diabetes With Chronic Complications 59,856 $173,205,866 8% HCC22 Morbid Obesity 58,760 $142,061,471 7% HCC111 Chronic Obstructive Pulmonary Disease 49,800 $141,810,708 7% HCC85 Congestive Heart Failure 39,422 $114,760,158 6% HCC75 Myasthenia Gravis/Myoneural Disorders and Guillain-Barré 26,521 $102,878,201 5% Syndrome/Inflammatory and Toxic Neuropathy HCC88 Angina Pectoris 55,500 $67,379,225 3% HCC21 Protein-Calorie Malnutrition 11,697 $61,723,441 3% HCC55 Drug/Alcohol Dependence 18,817 $59,412,704 3% Total 554,231 $1,524,498,457 74% Source: OIG estimation of 2017 payment amounts by using 2016 MA encounter data from CMS’s IDR Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 16 OEI-03-17-00471 Twenty MAOs accounted for almost three-quarters ($43.9 million of Twenty MAOs $60.9 million) of risk-adjusted payments based on diagnoses from in-home generated millions HRAs where not a single non-HRA item or service was provided to the in payments from beneficiary by the MAO in 2016. The top five MAOs accounted for $23.4 million in payments. One MAO received $6.7 million in risk-adjusted in-home HRAs for payments that resulted from diagnoses submitted only on in-home HRAs beneficiaries for for which there was not a single record of any other service being provided whom there was to 1,272 of its beneficiaries. In total, in-home HRAs submitted by not a single record 203 MAOs resulted in an estimated $60.9 million in risk-adjusted payments for 2017. These MAOs submitted only in-home HRAs and no other service of any other service records for 12,287 beneficiaries, which calls into question the treatment and being provided in followup care provided to these beneficiaries. The lack of any other record 2016 aside from an in-home HRA that triggered a risk-adjusted payment raises concerns that these MAOs:  may not have ensured that the MA encounter data contained all records of items and services provided to beneficiaries;  may not have coordinated care following the HRA, including verifying that information was provided to the beneficiary’s provider(s) and verifying that appropriate followup care was provided to the beneficiary; or  may have submitted diagnoses on the HRA that were not documented in the beneficiary’s medical record and, therefore, may have received inappropriate payments from CMS. The 8 companies that partner with or are hired by MAOs to conduct most of the in-home HRAs reviewed conducted 10,697 of the 12,287 in-home HRAs (87 percent) for which there was not a single record of any other service being provided to the beneficiary in all of 2016. In-home HRAs conducted by these 8 companies generated 88 percent ($53.8 million of $60.9 million) of the risk-adjusted payments to MAOs for beneficiaries with no other service records. For beneficiaries with an HRA and no other record of a service, risk-adjusted payments to MAOs from in-home HRAs totaled an estimated $60.9 million—whereas only $5.3 million in payments resulted from facility-based HRAs. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 17 OEI-03-17-00471 Although CMS raised concerns about MAOs’ use of in-home HRAs to CMS has not increase risk-adjusted payments in 2013 and 2014, it has not analyzed the reviewed the impact of HRAs on risk-adjusted payments or the quality of care provided impact of HRAs on to beneficiaries who received in-home HRA visits. However, CMS has stated that it plans to conduct analyses of 2014 MA overpayments resulting from risk-adjusted diagnoses reported on HRAs in RAPS. payments or quality of care CMS does not have a definitive mechanism within the RAPS or encounter data to identify diagnoses that result from MAO-initiated HRAs CMS raised concerns that MAOs were using in-home HRAs mainly as a tool to maximize risk-adjusted payments, and it created a flag in the RAPS data that required MAOs to identify diagnoses that result from a home visit during which an annual wellness visit was completed. CMS informed OIG that it has not used the RAPS flag to track and analyze the care provided to beneficiaries. In addition, this RAPS flag does not require MAOs to specify whether diagnoses resulted from in-home HRAs or HRAs initiated by an MAO.37 Despite its previous plans to assess the care provided to beneficiaries after receiving in-home HRAs, CMS has not created a RAPS flag that can determine which diagnoses resulted from in-home HRAs. In the encounter data, CMS does not require MAOs to flag diagnoses resulting from HRAs that MAOs initiate with the beneficiary. CMS has not used the encounter data to perform analyses related to HRAs. CMS stated that it does not believe it is possible to identify the universe of visits during which HRAs were conducted because MAOs may code an HRA in multiple ways in the encounter data.38 CMS has not assessed whether MAOs follow its recommended best practices for in-home HRAs Although CMS has provided MAOs with guidance on best practices for in-home HRAs, it has not assessed whether MAOs follow these best practices. In guidance for payment year 2016, CMS outlined best practices that it recommended but did not require MAOs to adopt for conducting in-home HRAs that support care coordination. These best practices include verifying that needed followup care is provided, verifying that information obtained during the assessment was provided to the appropriate providers, and enrolling beneficiaries in disease management or case management 37 We use the term “MAO-initiated HRA” to refer to HRAs that are performed by health care professionals who are employed or contracted by the MAO for this purpose and are not the beneficiary’s provider. 38 Because CMS does not require MAOs to flag in the encounter data that a diagnosis resulted from an HRA, we identified potential HRAs as services containing a procedure code for annual wellness visits, initial preventive physical exams, or evaluation and management home visits. For evaluation and management home visits, we also ensured that the place of service was home. For our analysis, we included only those beneficiaries with a one-time instance of a procedure code that identifies an HRA. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 18 OEI-03-17-00471 programs. Since communicating these best practices in 2015, CMS has not taken action to assess whether MAOs are following encouraged best practices. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 19 OEI-03-17-00471 CONCLUSION AND RECOMMENDATIONS HRAs can be a tool for early identification of health risks to improve beneficiaries’ care and health outcomes. However, in the MA program some MAOs may be initiating and using HRAs to collect diagnoses and thereby maximize risk-adjusted payments without improving beneficiary care. We found that diagnoses that MAOs reported only on HRAs—and on no other encounter records—resulted in an estimated $2.6 billion in risk-adjusted payments for 2017. Particular concerns surround the potential for MAOs to inappropriately use in-home HRAs, which may be administered by companies that partner with or are hired by MAOs. Although HRAs conducted in beneficiaries’ homes represented only one-third of the HRAs in our review, they generated $2 billion—or 80 percent—of the estimated payments that resulted from diagnoses reported only on HRAs. In addition, most of these in-home HRAs were conducted by companies that partner with MAOs—not by the beneficiary’s treating provider. Twenty MAOs drove millions in risk-adjusted payments from in-home HRAs for more than 8,000 beneficiaries for whom there was not a single record of any service being provided in all of 2016. These findings raise three types of concerns. First, there may be a data integrity concern that MAOs are not submitting all service records as required. Second, there may be a coordination of care concern that beneficiaries are not receiving followup care needed for potentially serious diagnoses reported only on HRAs. Third, there may be a payment integrity concern that if diagnoses are inaccurate or unsupported, the associated risk-adjusted payments would then be inappropriate. Despite prior concerns raised by CMS about in-home HRAs, CMS has not reviewed the financial impact of diagnoses reported on HRAs or assessed the care provided to beneficiaries after receiving in-home HRAs. Based on these findings we recommend that CMS: Require MAOs to implement best practices to ensure care coordination for HRAs CMS currently encourages—but does not require—MAOs to adopt best practices supporting care coordination for beneficiaries who receive in-home HRAs. This review identified 3.5 million beneficiaries with diagnoses reported only on HRAs yet with no other encounter records for visits, procedures, tests, or supplies that contained the diagnosis reported on the HRA. This calls into question how effectively the MAOs are using HRAs to help coordinate care for these beneficiaries, many of whom had serious conditions diagnosed through their HRAs. For all HRAs—both in-home and facility-based—CMS should require MAOs to develop and implement processes to verify that (1) information obtained during the HRA Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 20 OEI-03-17-00471 is provided to the beneficiary’s primary care provider and other appropriate providers; and (2) appropriate followup care is provided to the beneficiary after the HRA. By requiring that MAOs develop and implement these best practices that ensure care coordination, CMS can promote the use of HRAs by MAOs as tools for improving care and health outcomes for MA enrollees. Provide targeted oversight of the 10 parent organizations that drove most of the risk-adjusted payments resulting from in-home HRAs CMS should perform targeted oversight of the 10 MA parent organizations that drove 97 percent of the risk-adjusted payments from diagnoses reported only on in-home HRAs and yet enrolled only half of the beneficiaries. CMS could conduct reviews to determine the accuracy of diagnoses reported only on in-home HRAs submitted by the 10 parent organizations. CMS also could target for review diagnoses from in-home HRAs conducted by the eight companies that performed most of the in-home HRAs that resulted in risk-adjusted payments. If CMS determines that the diagnoses are in fact accurate, CMS should ensure that these MAOs are providing appropriate care coordination to their beneficiaries. OIG will provide CMS with a list of these 10 MA parent organizations and 8 companies, including the estimated risk-adjusted payments from in-home HRAs. Provide targeted oversight of the 20 MAOs that drove risk-adjusted payments resulting from in-home HRAs for beneficiaries who had no other service records in the 2016 encounter data CMS should perform ongoing oversight of the 20 MAOs that drove $60.9 million in risk-adjusted payments from in-home HRAs for beneficiaries who had no other service records in the 2016 encounter data. To this end, OIG will provide CMS with a list of the beneficiaries who had in-home HRAs and no records to show that any services were provided in all of 2016 for these MAOs. CMS should use this information to perform targeted reviews of the MAOs that had payments resulting from these beneficiaries’ in-home HRAs. These reviews could include outreach to the MAOs to determine whether they submitted records for all services, as required. CMS could also assess the MAOs’ requirements for care coordination after in-home HRAs. If CMS identifies problems with the completeness of these MAOs’ encounter data submissions, or if CMS identifies that an MAO submitted an in-home HRA with unsupported diagnoses, CMS should take action to remedy those problems. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 21 OEI-03-17-00471 Reassess the risks and benefits of allowing in-home HRAs to be used as sources of diagnoses for risk adjustment and reconsider excluding such diagnoses from risk adjustment Once CMS has completed targeted reviews of MAOs and conducted 2015 RADV audits, CMS should use data gathered during risk-adjustment data validation audits and targeted MAO reviews to determine the impact of in-home HRAs on MA data integrity and overpayments. If contract-level RADV audits do not include a sufficient number of beneficiaries with diagnoses reported only on in-home HRAs, CMS should conduct a separate review of in-home HRAs. These audits and/or reviews should identify the risks and benefits associated with in-home HRAs by: (1) determining the validity of diagnoses reported only on in-home HRAs; (2) analyzing the care provided to beneficiaries for diagnoses documented only on in-home HRAs; and (3) assessing the completeness of encounter data service records submitted by MAOs for beneficiaries with in-home HRAs and no other service records. If CMS determines that the risks of allowing in-home HRAs as sources of diagnoses outweigh the benefits, CMS should consider excluding diagnoses reported only on in-home HRAs from risk adjustment. Alternatively, CMS could require that the beneficiary’s medical record contain evidence that care coordination took place, including the transmission of information and provision of appropriate followup care, as a condition for the in-home HRA to be an allowable source for risk-adjusted payment. Due to the COVID-19 pandemic, there have been increased flexibilities and utilization of telehealth in the MA program. HRAs conducted remotely may introduce similar, and possibly additional, vulnerabilities as those associated with in-home HRAs. CMS should include HRAs furnished via telehealth in its assessment of the risks and benefits of allowing certain types of HRAs to be used as sources of diagnoses for risk adjustment. Require MAOs to flag any MAO-initiated HRAs in their MA encounter data CMS should develop a flag in the encounter data and require MAOs to indicate whether service records submitted to the encounter data contain HRAs administered as part of an MAO’s internal HRA program or by companies partnered with an MAO for this purpose (i.e., MAO-initiated HRAs). As a centralized repository of data for all services provided to MA beneficiaries, encounter data may be used to conduct reviews on program integrity and quality of care. As CMS moves to rely exclusively on the encounter data to calculate risk-adjusted payments, the absence of a mechanism to clearly identify MAO-initiated HRAs (regardless of the place of service) limits the ability of CMS and others to validate increases in risk-adjusted payments that may arise solely from these HRAs. Furthermore, the absence of such a flag limits CMS’s and other stakeholders’ ability to review the comprehensiveness of these assessments Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 22 OEI-03-17-00471 in ensuring care coordination and improving health outcomes for beneficiaries. Establishing an MAO-initiated HRA flag in the encounter data would allow CMS and other concerned stakeholders to better analyze subsequent care coordination for beneficiaries and assess the impact of HRAs on risk-adjusted payments. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 23 OEI-03-17-00471 AGENCY COMMENTS AND OIG RESPONSE In response to our draft report, CMS stated that it is committed to ensuring that diagnoses used in risk adjustment are accurate. CMS concurred with two of our five recommendations. CMS agreed that it will:  provide targeted oversight of the 10 parent organizations that drove most of the risk-adjusted payments resulting from in-home HRAs; and  provide targeted oversight of the 20 MAOs that drove risk-adjusted payments resulting from in-home HRAs for the beneficiaries who had no other service records in the 2016 encounter data. CMS did not concur with our recommendation to require MAOs to implement best practices to ensure care coordination for HRAs. CMS’s view is that MAOs are in the best position to decide what HRA information is most appropriate to share with specific providers. CMS also stated that implementing such requirements must be done through notice-and-comment rulemaking and there is not a regulatory medium available at this time. OIG’s identification of 3.5 million beneficiaries with diagnoses reported only on HRAs calls into question how effectively MAOs are using HRAs to help coordinate care for MA beneficiaries. Therefore, OIG continues to recommend that CMS require MAOs to implement best practices that promote their primary use of HRAs as tools for improving care and health outcomes for MA beneficiaries. CMS did not concur with our recommendation to reassess the risk and benefits of allowing in-home HRAs to be used as sources of diagnoses for risk adjustment and reconsider excluding such diagnoses from risk adjustment. CMS does not believe that there is a basis to reassess this policy because our analysis did not determine whether diagnoses reported only on HRAs were supported by documentation in beneficiaries’ medical records. However, CMS noted that it will reassess the use of HRAs as sources of diagnoses for risk adjustment if CMS’s own reviews indicate that these diagnoses reflect inaccuracies. OIG encourages CMS to conduct its own reviews and reassess whether the risks of allowing diagnoses reported on in-home HRAs outweigh the benefits. Finally, CMS did not concur with our recommendation to require MAOs to flag any MAO-initiated HRAs in their MA encounter data. The absence of a mechanism to clearly identify MAO-initiated HRAs in the encounter data limits the ability of CMS and others to validate increases in risk-adjusted payments that may arise solely from these HRAs. Therefore, OIG continues to recommend that CMS establish an MAO-initiated HRA flag in the encounter data that would allow CMS and other concerned stakeholders to Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 24 OEI-03-17-00471 better analyze subsequent care coordination for beneficiaries and assess the impact of these HRAs on risk-adjusted payments. The full text of CMS’s comments can be found in Appendix D. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 25 OEI-03-17-00471 APPENDIX A: Detailed Methodology This appendix provides a more detailed description of the methodology that we used to determine the amount of 2017 MA risk-adjusted payments that resulted from diagnoses reported only on HRAs with 2016 service dates. Because CMS bases risk-adjusted payments for a given year on diagnoses from services provided to the beneficiary in the previous year, we estimated the potential impact of HRAs on 2017 payments based on encounter data that MAOs submitted for 2016. We did not review CMS’s final 2017 risk-adjusted payments to MAOs. In addition, we estimated risk-adjusted payments that resulted from HRAs based solely on diagnoses contained in the MA encounter data. CMS’s actual risk-adjusted payments to MAOs incorporate diagnoses from both RAPS and encounter data. However, when we conducted a review of the diagnoses included in RAPS, we found that 99.5 percent of the diagnoses included in our payment analysis were also reported in RAPS. Analyses of HRAs Identification of HRAs We identified HRAs that contained risk-adjustment-eligible diagnoses in the 2016 MA encounter data, as described below. In October 2018, after the September deadline for MAOs to submit data for payment year 2017, we identified HRAs in the 2016 MA encounter data in CMS’s IDR as records containing:  a claim through date between January 1, 2016, and December 31, 2016;  a submission date between January 1, 2016, and September 14, 2018;  a claim final action indicator value of “Y,” indicating that the record is the most recently accepted version of the record;  a claim chart review switch value of “null,” indicating that the record is an encounter data record (i.e., not a chart review record); and  a procedure code that identifies a potential HRA, including a procedure code for an annual wellness visit (G0438 or G0439), an Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 26 OEI-03-17-00471 initial preventive physical exam (G0402), or an evaluation and management home visit (99341-99345 or 99347-99350).39, 40 We excluded certain beneficiaries and types of MAOs. We excluded beneficiaries who had end-stage renal disease, were receiving hospice care, or did not reside in a U.S. State based on information contained in the IDR’s MA prescription drug (MARx) data. We did this because CMS uses different methods to calculate these payments. We included only beneficiaries enrolled with the same MA plan for all 12 months of 2016.41 We excluded beneficiaries with inconsistencies between their MA encounter data, Medicare beneficiary data, and MARx data contained in the IDR to ensure data accuracy. For example, we did not include beneficiaries whose MAO contract number was not the same across all three IDR data sources. In addition, we excluded from our analysis any beneficiaries who had more than one procedure code in 2016 that met our criteria for an HRA. As such, we included only those beneficiaries with a one-time instance of a procedure code that identifies an HRA. Identification of Diagnoses Reported Only on HRAs For each beneficiary with a diagnosis reported on an HRA, we identified all of their other encounter records contained in the IDR’s 2016 MA encounter data. For beneficiaries with diagnoses reported on HRAs with a claim through date between October 1, 2016, and December 31, 2016, we also identified all encounter records that had a claim through date between January 1, 2017, and March 31, 2017. We then compared the diagnoses reported on the HRAs to the diagnoses reported on the other encounter records. We only kept the diagnoses reported on HRAs that were not reported on any other encounter record in 2016 and, if applicable, the first quarter of 2017.42 We identified diagnoses reported on 3.5 million HRAs that were not reported on any other encounter record. 39 Diagnoses reported on HRAs included in our analysis met CMS’s eligibility criteria for risk adjustment because these procedure codes are listed on CMS’s filtering list for 2016. CMS, 2016 Medicare Risk Adjustment Eligible CPT/HCPCS Codes. Accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors- Items/CPT-HCPCS on May 2, 2018. 40 For evaluation and management home visits, we also ensured that the place of service was at home (i.e., place of service codes for home (12), temporary lodging (16), custodial care facility (33), group home (14), and homeless shelter (04)). 41 We use the term MAO to represent each unique MA contract number. We use the term MA plan to represent each unique combination of an MA contract number and plan number. We excluded from our review all cost plans, demonstration plans, PACE organizations, and Medicare medical savings account plans. 42 For the encounter records where we identified an HRA, we included in our analyses all diagnoses reported on those encounter records. This is consistent with the CMS method for calculating risk-adjusted payments. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 27 OEI-03-17-00471 Identification of In-Home and Facility-Based HRAs We categorized records of diagnoses reported only on HRAs into two groups: in-home versus facility-based visits. We identified in-home HRAs as records containing a place of service code of “home” (12), “temporary lodging” (16), “custodial care facility” (33), “group home” (14), or “homeless shelter” (04). We considered records containing all other place of service codes—including codes for physician offices, clinics, and hospitals—to be facility-based HRAs. Using these criteria, we identified that 1.3 million of 3.5 million HRAs were delivered to beneficiaries at home, as shown in Exhibit A-1. Exhibit A-1: Number of HRAs containing diagnoses that were not reported on any other encounter record in 2016, by procedure code and place of service code Procedure In-Home Facility-Based All Code Description of Procedure Code HRAs HRAs HRAs G0439 Annual wellness visit; includes a personalized 133,764 1,759,433 1,893,197 prevention plan of service, subsequent visit G0438 Annual wellness visit; includes a personalized 555,231 393,574 948,805 prevention plan of service, initial visit 99343 Evaluation and management, new patient 402,969 n/a 402,969 home visit; typically 45 minutes 99345 Evaluation and management, new patient 98,795 n/a 98,795 home visit; typically 75 minutes G0402 Initial preventive physical exam 40 39,213 39,253 99342 Evaluation and management, new patient 36,135 n/a 36,135 home visit; typically 30 minutes 99350 Evaluation and management, established 27,297 n/a 27,297 patient home visit; typically 60 minutes 99347 Evaluation and management, established 15,874 n/a 15,874 patient home visit; typically 15 minutes 99344 Evaluation and management, new patient 13,447 n/a 13,447 home visit; typically 60 minutes 99349 Evaluation and management, established 8,047 n/a 8,047 patient home visit; typically 40 minutes 99348 Evaluation and management, established 5,310 n/a 5,310 patient home visit; typically 25 minutes 99341 Evaluation and management, new patient 4,986 n/a 4,986 home visit; typically 20 minutes TOTAL 1,301,895 2,192,220 3,494,115 Source: OIG analysis of 2016 MA encounter data from CMS’s IDR Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 28 OEI-03-17-00471 Of the HRAs categorized as in-home, almost all contained a place of service code of “home” (12), as shown in Exhibit A-2. Exhibit A-2: Place of service codes used to identify HRAs delivered in the beneficiary’s home Place of Description of Place of Service Code Number of HRAs Service Code 12 Home 1,299,454 16 Temporary Lodging 1,186 33 Custodial Care Facility 1,131 14 Group Home 124 04 Homeless Shelter 0 Total 1,301,895 Source: OIG analysis of 2016 MA encounter data from CMS’s IDR Identification of HCCs Generated by Diagnoses Reported on HRAs For beneficiaries who had risk-adjustment-eligible diagnoses reported only on an HRA, we used the 2017 CMS-HCC model and CMS’s CMS-HCC mapping software to identify the HCCs generated by the diagnoses reported only on HRAs.43 To identify these HCCs, we first mapped all of a beneficiary’s risk-adjustment-eligible diagnoses (i.e., diagnoses reported on HRAs and all other encounter records) to HCCs. Then we mapped just the risk-adjustment-eligible diagnoses reported on records not identified as HRAs to HCCs. Finally, we compared the two sets of HCCs to determine the HCCs generated from mapping the diagnoses reported only on HRAs. Assignment of Relative Factors to HCCs We assigned relative factors to each HCC based on the segment of the 2017 CMS-HCC model that applied to each beneficiary based on their characteristics as of January 2016. These characteristics included the beneficiaries’ long-term institutional status, age, original reason for Medicare entitlement, and dual-eligibility status. We used Medicare beneficiary data from the IDR to identify the beneficiaries’ age, original reason for Medicare entitlement, and dual-eligibility status. We used MARx data from the IDR to identify the beneficiaries’ long-term institutional status. We adjusted each HCC’s relative factor by CMS’s 43CMS, Announcement of Calendar Year (CY) 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, Table VI-1. 2017 CMS-HCC Model Relative Factors for Community and Institutional Beneficiaries, April 2016, pp. 78-84. Accessed at https://www.cms.gov/Medicare/Health-Plans/ MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf on December 19, 2018. CMS, 2017 Model Software/ICD-10 Mappings, V2217.79.O1. Accessed at https:// www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors. html on May 9, 2018. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 29 OEI-03-17-00471 normalization and coding adjustment factors for 2017 prior to calculating payment estimates.44 Calculation of Payment Estimates We calculated estimates of the amount of risk-adjusted payments associated with each HCC by multiplying the MA plan’s monthly base payment rate by the relative factor of the HCC. We then multiplied monthly amounts of payments by 12 to determine annual payment estimates. We determined the base payment rate for each beneficiary’s plan by using information gathered from several data sources. For MA plans that submit bids to CMS, we identified base payment rates for December 2017 in the Approved Bid Pricing Tool Extract from CMS’s Health Plan Management System. For Employer Group Waiver Plans (EGWPs), which do not submit bids to CMS, we identified base payment rates using CMS’s EGWP county level rate books for regional and local EGWPs and information on each EGWP’s star rating.45, 46 We then determined base payment rates for each beneficiary’s plan based on each beneficiary’s plan contract number, plan number, plan segment number, Part A and B entitlement status, and county of residence as of January 2016 in the MARx data. For a small percentage of beneficiaries, we used an alternative method to determine their plans’ base payment rates. For 14 percent of beneficiaries included in our analysis, we calculated payment estimates based on a median base payment rate for all non-EGWPs, instead of each plan’s actual base payment rate. For almost all of these beneficiaries, the MA plan enrollment information (i.e., the contract number, plan number, segment number, or county of residence) contained in the IDR for January 2016 did not match the 2017 MA plan information used in our analysis.47 The remaining 0.1 percent of beneficiaries were enrolled in an EGWP and were covered only by either Medicare Part A or Medicare Part B (and not covered by both Medicare Parts A and B). For these beneficiaries, we determined the median Part A and/or Part B base payment rate for December 2017 for all plans in the Approved Bid Pricing Tool Extract. 44 CMS adjusts the risk score by a normalization factor and a coding-adjustment factor. The normalization factor adjusts risk scores to ensure that the average beneficiary risk score in any given year remains 1.0 despite annual changes in risk scores. The coding adjustment factor reduces risk scores to account for differences in coding patterns between MA and Medicare fee-for-service. 45 CMS, 2017 Medicare Advantage Ratebook and Prescription Drug Rate Information, 2017. Accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/ Ratebooks-and-Supporting-Data.html on January 5, 2018. 46 We identified EGWPs’ 2017 star ratings using the Approved Bid Pricing Tool Extract and the MA Quality Bonus Payment Rating files from CMS’s Health Plan Management System. 47 The 2017 MA plan information used in our analysis included information from the Approved Bid Pricing Tool Extract and the Plan Benefit Package Extract in CMS’s Health Plan Management System, as well as CMS’s EGWP county level rate books. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 30 OEI-03-17-00471 We conducted a summary analysis of estimated payment amounts and HCCs from diagnoses reported only on HRAs. We summarized the number and type of HCCs that resulted in payments and compared our list of HCCs to the high risk HCCs that CMS identified as having the highest rates of errors for 2014. We checked for variation across MAOs (i.e., contract numbers) and their parent organizations to see whether certain organizations had higher or lower payments due to diagnoses reported on HRAs. We also performed these analyses by place of service (i.e., in-home HRAs versus facility-based HRAs). In addition, we identified the 10 providers that billed for the highest number of in-home HRAs. We determined whether these billing providers were companies that partnered with or were hired by MAOs to conduct in-home HRAs using information from company websites and other publicly available sources. Identification of Diagnoses Reported in RAPS We analyzed the 2016 RAPS data to determine whether diagnoses reported only on HRAs in the encounter data were also reported in the RAPS data. For each beneficiary with HRA-only diagnoses that resulted in risk-adjusted payments, we identified their HRA-only diagnoses that could map to an HCC based on the 2017 CMS-HCC model.48 We then identified whether these diagnoses were reported on a RAPS record that contained an ending date of service between January 1, 2016, and December 31, 2016. We calculated the percentage of diagnoses that were contained in the 2016 RAPS data. We determined that 99.5 percent of these diagnoses were also reported in RAPS. In addition, we identified whether each of these diagnoses appeared more than once in RAPS, which might indicate that the beneficiary received additional care for the diagnosis. We determined that 96.3 percent of these diagnoses appeared only once in RAPS. CMS Oversight of the Financial Impact of Health HRAs To identify the actions taken by CMS to review the impact of HRAs on MA risk-adjusted payments, we analyzed CMS’s responses to a structured questionnaire and reviewed relevant documentation related to: • instructions, procedures, and policies CMS has in place to review the financial impact of HRAs using MA encounter data, RADV audits, and/or any other data sources; • the use of encounter data, RADV audits, or any other data sources to track and analyze the care provided to MA beneficiaries for diagnoses added by HRAs; • the kinds of issues, if any, identified by CMS related to the financial impact of HRAs; and 48 CMS, 2017 Midyear Final ICD-10-Mappings. Accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors- Items/Risk2017 on November 19, 2019. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 31 OEI-03-17-00471 • descriptions of whether and how concerns regarding the financial impact of HRAs were addressed by CMS. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 32 OEI-03-17-00471 APPENDIX B: Estimated Payments Resulting From Diagnoses Reported on Health Risk Assessments, by Hierarchical Condition Category For beneficiaries who had diagnoses reported only on HRAs in the 2016 encounter data, we identified the HCCs generated by these diagnoses. As shown in Exhibit B-1, the estimated 2017 risk-adjusted payments for each HCC added by all HRAs ranged from $2,004 to $434.6 million. Exhibit B-1: Estimated 2017 risk-adjusted payments resulting from diagnoses reported on HRAs, by HCCa Risk-Adjusted Risk-Adjusted Risk-Adjusted Payments From Payment From Payments From HCC HCC Description In-Home HRAs Facility-Based HRAs All HRAs HCC58 Major Depressive, Bipolar, and Paranoid $353,868,747 $80,752,433 $434,621,180 Disorders HCC108 Vascular Disease $307,397,936 $73,541,303 $380,939,239 HCC18 Diabetes With Chronic Complications $173,205,866 $30,291,494 $203,497,360 HCC111 Chronic Obstructive Pulmonary Disease $141,810,708 $43,594,247 $185,404,955 HCC22 Morbid Obesity $142,061,471 $36,915,440 $178,976,911 HCC85 Congestive Heart Failure $114,760,158 $20,451,517 $135,211,675 HCC75 Myasthenia Gravis/Myoneural Disorders $102,878,201 $8,805,499 $111,683,700 and Guillain-Barré Syndrome/ Inflammatory and Toxic Neuropathy HCC55 Drug/Alcohol Dependence $59,412,704 $18,759,051 $78,171,755 HCC88 Angina Pectoris $67,379,225 $5,040,813 $72,420,038 HCC21 Protein-Calorie Malnutrition $61,723,441 $6,786,809 $68,510,250 HCC40 Rheumatoid Arthritis and Inflammatory $44,507,735 $23,191,850 $67,699,585 Connective Tissue Disease HCC96 Specified Heart Arrhythmias $39,136,202 $15,973,978 $55,110,180 HCC103 Hemiplegia/Hemiparesis $45,006,539 $6,192,377 $51,198,916 HCC48 Coagulation Defects and Other Specified $9,337,772 $17,065,472 $26,403,244 Hematological Disorders HCC189 Amputation Status, Lower $20,101,310 $2,175,599 $22,276,909 Limb/Amputation Complications HCC8 Metastatic Cancer and Acute Leukemia $16,033,573 $5,384,319 $21,417,892 HCC57 Schizophrenia $16,944,365 $1,746,064 $18,690,429 HCC79 Seizure Disorders and Convulsions $14,126,220 $3,986,296 $18,112,516 HCC84 Cardio-Respiratory Failure and Shock $13,096,117 $3,574,971 $16,671,088 HCC106 Atherosclerosis of the Extremities With $13,944,640 $1,930,652 $15,875,292 Ulceration or Gangrene continued on next page Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 33 OEI-03-17-00471 Exhibit B-1: Estimated 2017 risk-adjusted payments resulting from diagnoses reported on HRAs, by HCC (continued) Risk-Adjusted Risk-Adjusted Risk-Adjusted Payments From Payments From Payments From HCC HCC Description In-Home HRAs Facility-Based HRAs All HRAs HCC71 Paraplegia $13,323,974 $827,146 $14,151,120 HCC78 Parkinson's and Huntington's Diseases $10,934,930 $3,028,010 $13,962,940 HCC10 Lymphoma and Other Cancers $9,361,041 $3,860,192 $13,221,233 HCC104 Monoplegia, Other Paralytic Syndromes $12,405,999 $776,218 $13,182,217 HCC161 Chronic Ulcer of Skin, Except Pressure $9,818,306 $2,485,962 $12,304,268 HCC23 Other Significant Endocrine and Metabolic $4,309,366 $7,816,139 $12,125,505 Disorders HCC188 Artificial Openings for Feeding or $9,362,986 $1,338,691 $10,701,677 Elimination HCC9 Lung and Other Severe Cancers $6,145,930 $3,479,056 $9,624,986 HCC19 Diabetes Without Complication $5,623,527 $3,365,097 $8,988,624 HCC107 Vascular Disease With Complications $3,516,182 $4,632,180 $8,148,362 HCC29 Chronic Hepatitis $6,776,071 $1,308,717 $8,084,788 HCC35 Inflammatory Bowel Disease $4,878,832 $3,069,595 $7,948,427 HCC70 Quadriplegia $7,236,786 $507,943 $7,744,729 HCC11 Colorectal, Bladder, and Other Cancers $2,663,816 $5,050,660 $7,714,476 HCC124 Exudative Macular Degeneration $5,247,741 $1,984,683 $7,232,424 HCC72 Spinal Cord Disorders/Injuries $4,039,497 $3,074,128 $7,113,625 HCC47 Disorders of Immunity $1,205,292 $5,468,363 $6,673,655 HCC46 Severe Hematological Disorders $3,694,816 $2,840,478 $6,535,294 HCC122 Proliferative Diabetic Retinopathy and $5,709,862 $710,853 $6,420,715 Vitreous Hemorrhage HCC100 Ischemic or Unspecified Stroke $316,551 $5,477,506 $5,794,057 HCC39 Bone/Joint/Muscle Infections/Necrosis $4,059,432 $1,436,072 $5,495,504 HCC12 Breast, Prostate, and Other Cancers and $1,900,251 $3,399,249 $5,299,500 Tumors HCC158 Pressure Ulcer of Skin With Full Thickness $4,435,262 $466,371 $4,901,633 Skin Loss HCC28 Cirrhosis of Liver $3,482,110 $1,167,881 $4,649,991 HCC112 Fibrosis of Lung and Other Chronic Lung $1,631,709 $2,787,730 $4,419,439 Disorders HCC77 Multiple Sclerosis $2,209,468 $1,144,218 $3,353,686 HCC27 End-Stage Liver Disease $1,984,807 $1,286,525 $3,271,332 HCC169 Vertebral Fractures Without Spinal Cord $290,664 $2,462,743 $2,753,407 Injury HCC87 Unstable Angina and Other Acute $1,661,437 $1,005,786 $2,667,223 Ischemic Heart Disease HCC82 Respirator Dependence/Tracheostomy $2,249,000 $331,973 $2,580,973 Status HCC186 Major Organ Transplant or Replacement $2,045,476 $396,481 $2,441,957 Status continued on next page Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 34 OEI-03-17-00471 Exhibit B-1: Estimated 2017 risk-adjusted payments resulting from diagnoses reported on HRAs, by HCC (continued) Risk-Adjusted Risk-Adjusted Risk-Adjusted Payments From Payments From Payments From HCC HCC Description In-Home HRAs Facility-Based HRAs All HRAs HCC137 Chronic Kidney Disease, Severe (Stage 4) $888,753 $1,450,873 $2,339,626 HCC83 Respiratory Arrest $1,979,686 $36,757 $2,016,443 HCC34 Chronic Pancreatitis $1,389,565 $621,073 $2,010,638 HCC136 Chronic Kidney Disease, Stage 5 $1,071,463 $596,758 $1,668,221 HCC86 Acute Myocardial Infarction $226,739 $1,224,642 $1,451,381 HCC80 Coma, Brain Compression/Anoxic Damage $926,540 $309,897 $1,236,437 HCC33 Intestinal Obstruction/Perforation $188,966 $915,202 $1,104,168 HCC135 Acute Renal Failure $133,695 $940,093 $1,073,788 HCC134 Dialysis Status $971,864 $81,827 $1,053,691 HCC73 Amyotrophic Lateral Sclerosis and Other $709,507 $308,742 $1,018,249 Motor Neuron Disease HCC176 Complications of Specified Implanted $169,156 $776,370 $945,526 Device or Graft HCC157 Pressure Ulcer of Skin With Necrosis $857,757 $79,227 $936,984 Through to Muscle, Tendon, or Bone HCC76 Muscular Dystrophy $646,185 $252,039 $898,224 HCC170 Hip Fracture/Dislocation $411,918 $428,835 $840,753 HCC99 Cerebral Hemorrhage $40,799 $769,949 $810,748 HCC6 Opportunistic Infections $278,656 $483,306 $761,962 HCC17 Diabetes With Acute Complications $99,418 $632,241 $731,659 HCC167 Major Head Injury $394,733 $295,285 $690,018 HCC1 HIV/AIDS $592,740 $65,437 $658,177 HCC54 Drug/Alcohol Psychosis $456,813 $180,761 $637,574 HCC74 Cerebral Palsy $414,403 $218,892 $633,295 HCC114 Aspiration and Specified Bacterial $107,586 $198,491 $306,077 Pneumonias HCC110 Cystic Fibrosis $229,687 $65,393 $295,080 HCC2 Septicemia, Sepsis, Systemic Inflammatory $123,552 $151,839 $275,391 Response Syndrome/Shock HCC115 Pneumococcal Pneumonia, Empyema, $80,271 $174,772 $255,043 Lung Abscess HCC173 Traumatic Amputations and Complications $36,082 $121,905 $157,987 HCC162 Severe Skin Burn or Condition $41,946 $29,532 $71,478 HCC166 Severe Head Injury $0 $7,933 $7,933 continued on next page Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 35 OEI-03-17-00471 Exhibit B-1: Estimated 2017 risk-adjusted payments resulting from diagnoses reported on HRAs, by HCC (continued) Risk-Adjusted Risk-Adjusted Risk-Adjusted Payments From Payments From Payments From HCC  HCC Description  In-Home HRAs Facility-Based HRAs All HRAs  Disease Interactions HCC85_gCopdCF Congestive Heart Failure* $35,483,345 $5,440,420 $40,923,765 Chronic Obstructive Pulmonary Disease Group HCC85_gDiabetes Congestive Heart Failure* $31,147,286 $4,007,739 $35,155,025 Mellit Diabetes Group HCC85_HCC96 Congestive Heart Failure* $17,975,056 $2,744,374 $20,719,430 Specified Heart Arrhythmias gRespDepandArre Cardiorespiratory Failure Group* $17,357,185 $2,936,634 $20,293,819 _gCopdCF Chronic Obstructive Pulmonary Disease Group HCC85_gRenal Congestive Heart Failure* Renal $12,010,097 $1,675,394 $13,685,491 Group gSubstanceAbuse Substance Abuse Group* $9,712,974 $1,644,687 $11,357,661 _gPsychiatric Psychiatric Group HCC47_gCancer Immune Disorders* Cancer $1,021,149 $1,258,642 $2,279,791 Group SCHIZOPHRENIA_ Schizophrenia* Chronic $9,318 $3,310 $12,628 gCopdCF Obstructive Pulmonary Disease SCHIZOPHRENIA_ Schizophrenia* Congestive Heart $7,239 $2,960 $10,199 CHF Failure SCHIZOPHRENIA_ Schizophrenia* Seizure Disorders $8,282 $0 $8,282 SEIZURES and Convulsions SEPSIS_PRESSURE Sepsis* Pressure Ulcer $4,173 $0 $4,173 _ULCER ART_OPENINGS_P Artificial Openings for Feeding or $2,798 $0 $2,798 RESSURE_ULCER Elimination* Pressure Ulcer gCopdCF_ASP_SP Chronic Obstructive Pulmonary $2,004 $0 $2,004 EC_BACT_PNEUM Disease* Aspiration and Specified Bacterial Pneumonias Disabled/Disease Interactions Disabled, Congestive Heart $11,031 $2,577 $13,608 DISABLED_HCC85 Failure DISABLED_ Disabled, Pressure Ulcer $5,234 $0 $5,234 PRESSURE_ ULCER Total $2,047,479,702 $514,281,638 $2,561,761,340 Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data from CMS’s IDR a For 7 of the 101 HCCs from the 2017 CMS-HCC model, there were no risk-adjusted payments that resulted from diagnoses reported only on HRAs. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 36 OEI-03-17-00471 APPENDIX C: Estimated Payments From Health Risk Assessments for Hierarchical Condition Categories at High Risk for Improper Payments When conducting audits of a sample of risk-adjustment data submitted by MAOs, CMS determines whether the diagnoses that resulted in risk-adjusted payments can be validated by medical record documentation. When audits cannot validate diagnoses, CMS uses this information to recover overpayments from MAOs and calculate a payment error rate. The 2014 payment year is the most recent payment year that CMS identified HCCs at high risk for payment errors (including both overpayments and underpayments).49 The 10 HCCs that CMS identified as having the highest payment error rates for 2014 accounted for $152.3 million of the estimated payments solely from all HRAs for 2017.50 Exhibit C-1 outlines the estimated amount of 2017 risk-adjusted payments attributed to each of these high-risk HCCs. Exhibit C-1: For HCCs that CMS previously identified as at high risk for improper payments, estimated risk-adjusted payments from HRAs totaled $152 million for 2017 HCC Identified Risk-Adjusted Risk-Adjusted Risk-Adjusted by CMS as Payments From Payments From Payments From High-Risk HCC Description In-Home HRAs Facility-Based HRAs All HRAs HCC75 Myasthenia Gravis/Myoneural $102,878,201 $8,805,499 $111,683,700 Disorders and Guillain-Barré Syndrome/Inflammatory and Toxic Neuropathy HCC106 Atherosclerosis of the Extremities With $13,944,640 $1,930,652 $15,875,292 Ulceration or Gangrene HCC9 Lung and Other Severe Cancers $6,145,930 $3,479,056 $9,624,986 HCC100 Ischemic or Unspecified Stroke $316,551 $5,477,506 $5,794,057 HCC27 End-Stage Liver Disease $1,984,807 $1,286,525 $3,271,332 HCC87 Unstable Angina and Other Acute $1,661,437 $1,005,786 $2,667,223 Ischemic Heart Disease HCC136 Chronic Kidney Disease, Stage 5 $1,071,463 $596,758 $1,668,221 HCC99 Cerebral Hemorrhage $40,799 $769,949 $810,748 HCC54 Drug/Alcohol Psychosis $456,813 $180,761 $637,574 HCC114 Aspiration and Specified Bacterial $107,586 $198,491 $306,077 Pneumonias TOTAL $128,608,227 $23,730,983 $152,339,210 Source: OIG estimation of 2017 payment amounts using 2016 encounter data from CMS’s IDR and CMS’s list of HCCs at a high-risk for payment errors for 2014 49 CMS, High-Risk Hierarchal Condition Categories, November 2017. 50 We compared our list of HCCs from the 2017 CMS-HCC model that were added by HRAs to the HCCs that CMS identified as at high risk for payment errors from the 2014 CMS-HCC model. Across the 2014 and 2017 models, there may be differences in the relative factor assigned to each HCC. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 37 OEI-03-17-00471 APPENDIX D: Agency Comments Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 38 OEI-03-17-00471 Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 39 OEI-03-17-00471 Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 40 OEI-03-17-00471 ACKNOWLEDGMENTS Jacqualine Reid served as the team leader for this study. Others in the Office of Evaluation and Inspections who conducted the study include San Le and Rachel Seitz. Office of Evaluation and Inspections staff who provided support include Joe Chiarenzelli. We would also like to acknowledge the contributions of other Office of Inspector General staff, including Julie Brown, Rodney Brown, Logan Kingma, Berivan Demir Neubert, and Jessica Swanstrom. This report was prepared under the direction of Linda Ragone, Regional Inspector General for Evaluation and Inspections in the Philadelphia regional office, and Joanna Bisgaier, Deputy Regional Inspector General. To obtain additional information concerning this report or to obtain copies, contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov. Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on HRAs Raise Concerns 41 OEI-03-17-00471 ABOUT THE OFFICE OF INSPECTOR GENERAL The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the health and welfare of beneficiaries served by those programs. This statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by the following operating components: Office of Audit The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with its own audit resources or by overseeing audit Services work done by others. Audits examine the performance of HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are intended to provide independent assessments of HHS programs and operations. These audits help reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. Office of Evaluation The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, and the public with timely, useful, and reliable and Inspections information on significant issues. These evaluations focus on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI reports also present practical recommendations for improving program operations. Office of The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and misconduct related to HHS programs, Investigations operations, and beneficiaries. With investigators working in all 50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the Department of Justice and other Federal, State, and local law enforcement authorities. The investigative efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. Office of Counsel to The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering advice and opinions on HHS programs and the Inspector operations and providing all legal support for OIG’s internal operations. General OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement authorities.