103 Iowa L. Rev. 841 (2018)

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Abstract

The Centers for Medicare and Medicaid Services (“CMS”) pays private organizations on a capitated payment rate to provide medical services to Medicare beneficiaries in the Medicare Advantage Program. To decrease the risk of the capitated payment model, CMS uses risk adjustment to increase payment for beneficiaries with a higher risk score. The risk adjustment data submission process is at great risk for mistake given the complex nature of risk adjustment and fraud because Medicare Advantage plans stand to increase profit margins with higher risk adjustment data scores. CMS has overpaid Medicare Advantage plans by millions of dollars in the risk adjustment process. The current CMS process to validate and recover overpaid funds is not sufficient given the volume of payment errors and the inefficient system. CMS should require Medicare Advantage plans to comprehensively audit diagnosis data before being submitted for risk adjustment to reduce the number of payment errors that lead to overpayment. CMS should also improve the data validation procedures to make recovery a more efficient process.