Medicare Advantage Chart Reviews Are Associated With Billions in Additional Payments for Some Plans

Background: In the Medicare Advantage (MA) program, private plans receive capitated payments that are adjusted based on their enrollees' number and type of clinical conditions. Plans have the ability to review charts to identify additional conditions that are not present in claims data, thereby increasing risk-adjusted payments. Recently the Government Accountability Office released a report raising concerns about the use of these chart reviews as a potential tool for upcoding.

Objectives: To measure the extent to which plans receive additional payments for chart reviews, and the variation in chart reviews across plans.

Research Design: In this cross-sectional study we use 2015 MA Encounter data to calculate how many additional diagnoses codes were added for each enrollee using chart reviews. We then calculate how these additional diagnosis codes translate to additional reimbursements across plans.

Subjects: A total of 14,021,692 beneficiaries enrolled in 510 MA contracts in 2015.

Measures: Individual and contract level hierarchical condition category codes, total plan reimbursement.

Results: Chart reviews were associated with a $2.3 billion increase in payments to plans, a 3.7% increase in Medicare spending to MA plans. Just 10% of plans accounted for 42% of the $2.3 billion in additional spending attributed to chart review. Among these plans, the relative increase in risk score from chart review was 17.2%. For-profit plans engaged in chart reviews substantially more frequently than nonprofit plans.

Conclusions: Given the substantial and highly variable increase in payments attributable to chart review, further investigation of the validity of this practice and its implications for Medicare spending is needed.