A study published by Health Affairs has brought to light the significant financial implications of Health Risk Assessments (HRAs) within the Medicare Advantage (MA) program. The research investigated the impact of HRAs on Hierarchical Condition Categories (HCC) risk scores, the variation in this impact across contracts, and the aggregate payment impact of HRAs, using 2019 MA encounter data. The findings are crucial for payers and policymakers alike, as they raise important questions about payment accuracy and program integrity.
The study reveals that HRAs, in-home reviews of enrollees’ health status, can significantly inflate HCC risk scores, potentially leading to overpayments to MA plans. This inflation occurs as HRAs enable plans to capture additional diagnoses, sometimes inflating the measured health risk of enrollees.
Key findings from the Health Affairs study include:
- Prevalence of HRAs: 44.4 percent of MA beneficiaries had at least one HRA.
- Impact on HCC Scores: Among those with at least one HRA, HCC scores increased by an average of 12.8 percent as a direct result of HRAs.
- Additional Diagnoses: More than one in five enrollees had at least one additional HRA-captured diagnosis, which subsequently raised their HCC score.
- Potential Savings: Scenarios restricting the risk-score impact of HRAs correspond with $4.5–$12.3 billion in reduced Medicare in 2020.
Implications for Health Care Payers:
These findings have substantial implications for health insurance payers, particularly those operating within the MA landscape. Understanding the impact of HRAs on risk scores is essential for:
- Accurate Budgeting and Forecasting: Inflated risk scores can lead to inaccurate budget projections and financial planning.
- Contract Negotiations: Payers need to be aware of the potential for HRA-driven risk score inflation when negotiating contracts with MA plans.
- Quality Measurement: Inflated risk scores may distort quality metrics and make it difficult to accurately assess the true health status of enrollees.
- Program Integrity: Addressing increased coding intensity due to HRAs will ensure appropriate payment within the MA program and improve the value of Medicare spending.
Considerations for the Future:The Health Affairs study highlights the need for careful consideration of how HRAs are utilized within the MA program. Policymakers and payers may need to explore strategies to mitigate the potential for risk score inflation while still ensuring that plans are adequately compensated for caring for higher-risk individuals.