Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns

We undertook this study because of concerns that Medicare Advantage organizations (MAOs) may use chart reviews to increase risk adjusted payments inappropriately. Unsupported risk adjusted payments are a major driver of improper payments in the Medicare Advantage (MA) program, which provided coverage to 20 million beneficiaries in 2018 at a cost of $210 billion. CMS risk-adjusts payments using beneficiaries' diagnoses to pay higher capitated payments to MAOs for sicker beneficiaries?which may create financial incentives for MAOs to make beneficiaries appear as sick as possible. MAOs report these diagnoses via CMS's MA encounter data system based on services and chart reviews (i.e., MAO's reviews of a beneficiary's medical record to identify diagnoses that a provider did not submit or submitted in error). For a diagnosis to be eligible for risk adjustment, it must be documented in a medical record as a result of a face to face visit. Although CMS requires MAOs to identify chart reviews in the encounter data, CMS does not require MAOs to link these chart reviews to a specific service associated with the diagnoses. This may provide MAOs opportunities to circumvent CMS' face-to-face requirement and inflate risk adjusted payments inappropriately.