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From Health Law Daily, January 20, 2017

GAO says CMS made limited progress validating MA encounter data

By Harold Bishop, J.D.

Medicare Advantage organizations (MAOs) received approximately $170 billion to provide coverage to nearly one-third of all Medicare beneficiaries in 2015. CMS collects detailed information about the care and health status MA enrollees, known as encounter data, to determine payments to MAOs. CMS’ ability to make proper payments to MAOs depends on the completeness and accuracy of this MA encounter data. In July 2014, the Government Accountability Office (GAO) reported (GAO-14-571) that CMS had taken some, but not all, appropriate actions to ensure the completeness and accuracy of this MA encounter data (see Encounter data must be verified before use in risk adjustment, September 3, 2014). In its latest report, the GAO concluded that CMS has made limited progress to validate the completeness and accuracy of its MA encounter data (GAO Report, GAO-17-223, January 19, 2017).

Risk adjustment process needs improvement. In making MAO payments, CMS uses a risk adjustment process to account for differences in enrollees’ expected health care costs relative to an average beneficiary. The risk adjustment process requires complete and accurate encounter data. The GAO found that since 2014 CMS has begun compiling basic statistics on the volume and consistency of data submissions and preparing automated summary reports for MAOs indicating diagnosis information used for risk adjustment. However, it found that CMS has yet to undertake activities that fully address encounter data accuracy, such as reviewing medical records.

In addition, some health insurance and provider trade associations the GAO interviewed expressed concerns about CMS’ inability to properly identify diagnoses used for risk adjustment. CMS officials responded to these concerns by noting that they are working with MAOs to refine how the methodology used to obtain diagnoses data is applied. The GAO concludes, however, to the extent that CMS is making payments based on data that have not been fully validated for completeness and accuracy, the soundness of billions of dollars in Medicare expenditures remains unsubstantiated.

Plans and timeframes should be specified. While CMS has made some progress in developing plans to use MA encounter data for risk adjustment, the GAO found that it has failed to specify plans and time frames for most other purposes, such as conducting program evaluations and supporting public health initiatives.

The GAO determined that CMS began phasing in patient diagnosis information from encounter data in its risk adjustment process in 2015 and intends to rely completely on those data by 2020. However, because CMS has primarily focused on collecting comprehensive encounter information for risk adjustment purposes, it has largely deferred planning for additional uses of the data.

The GAO noted that some stakeholder organizations have objected to the 2015 to 2020 risk adjustment transition time frame because it does not allow sufficient time for a successful transition. In addition, some stakeholders were concerned that releasing data to external entities could compromise the confidentiality of proprietary information, such as payments to providers. CMS officials told the GAO that they intend to use data protections similar to those used with other Medicare data. The GAO found that in the absence of planning for all of the authorized uses, CMS cannot be assured that the amount and types of data being collected are necessary and sufficient for specific purposes.

Conclusion. Given CMS’ limited progress, the GAO continues to believe that CMS should implement the GAO’s July 2014 recommendations that CMS (1) fully assess data quality before use; and (2) fully develop plans for the additional uses of encounter data.

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