Medicare short shrifts insurers to the tune of $2 billion a year for treating seniors with chronic conditions, a problem that could impact plans for seniors, a new report finds.
The Center for Medicare and Medicaid Services routinely underpays insurers that offer Medicare Advantage plans for the cost of treating people with multiple chronic conditions, the research firm Avalere Health found in a report issued Friday.
Payment accuracy is very critical for Medicare Advantage, a popular program that allows seniors to buy private health plans, Avalere said.
If payments are too low, then it will affect the incentives for plans to treat chronically ill patients.
“Ensuring adequate payment levels encourages broader program participation and robust coverage options for seniors,” said Caroline Pearson, senior vice president at Avalere.
CMS uses a risk adjustment model to determine its payments to plans based on the expected healthcare costs of that plan’s enrollees, Avalere said. The problem is the risk model consistently under-predicts the costs for treating people with multiple conditions to the tune of $2.6 billion a year.
The agency last made adjustments to the model in 2014, and indicated it will make more adjustments for people who have Medicare and Medicaid in 2017.
“While CMS is considering changes to the risk model to address underpayments for low-income beneficiaries, the agency may also want to conduct research on methods to address underpayments for individuals with chronic conditions,” said Tom Kornfield, with Avalere, in a press release.
