The Alliance of Community Health Plans (ACHP) is making the case that risk adjustment in Medicare Advantage (MA) needs a significant overhaul.
The organization, which represents dozens of community-based health insurers, released new data Wednesday that show major national plans have far higher risk scores than its membership does. For example, risk scores for UnitedHealthcare—the largest player in MA—were 36.2% higher than for ACHP members.
In addition, risk scores at Humana, the second-largest MA insurer by membership, were 19.2% higher than ACHP insurers, according to the report.
These trends suggest these larger players are taking advantage of complexities in the system, leaders at the ACHP said during a briefing with media Wednesday.
"Our new analysis finds persistent and very troublesome inequities between the two largest MA insurers and regional nonprofit health plans across the country," Michael Bagel, vice president of policy for the ACHP, said during the briefing.
"This variation is not because they are getting a sicker batch of individuals," Bagel said. "It's because they're gaming the system, and they're gaming the system at the expense of taxpayers, and at the expense of seniors."
Bagel said the report is based on data from the Centers for Medicare & Medicaid Services (CMS), with information available through 2023. The trend goes back multiple years, with similar differences persisting as far back as 2019.
He said that UnitedHealthcare earned $785.64 more per customer in 2023 than the community plans, while Humana earned $423.24 more. Bagel argued that these funds are not being funneled back into patient care, but instead are being used to back "glitzy" marketing and administrative costs, as well as profits and other avenues.
"Our goal is to tighten this gap, remove the opportunities for gaming and to simplify the risk model," Bagel said.
Upcoding in MA has been an ongoing concern for policymakers and stakeholders, with multiple analyses suggesting that such behavior is fairly widespread in the industry. UnitedHealth and Humana, in particular, have been accused of using in-home risk assessments and chart reviews to add diagnoses.
In response, the CMS has sought to tighten oversight of the program and announced in May that it will begin conducting risk adjustment data validation audits of all companies participating in MA. ACHP President and CEO Ceci Connolly said during the briefing that this method may cast too wide of a net to identify bad behavior.
"We think it is a necessary government function, but we have a couple of concerns about the way that has been approached," she said. "The first is, if you are auditing everyone, you are not targeting the outliers."
Instead, the organization would like to see the risk adjustment process streamlined. The ACHP released its own policy proposals alongside the study, which suggest slashing the number of conditions involved to a small pool of key demographic categories and substantiated conditions.
There are currently 115 condition categories under MA risk adjustment, and Connolly said the ACHP's approach would cut that down to approximately 10 or 12. This model would make it far harder to game the system, the organization argued.
Connolly said the team at the ACHP has had multiple conversations with officials at the CMS and the response from the agency around the proposal has been promising, and they encouraged them to release it.
"It's been very positive," she said. "They've been very encouraging of the work that we're doing."