Tavenner slams CMS over Medicare Advantage underpayments


CMS’ previous administrator Marilyn Tavenner is criticizing her former agency after a new analysis shows the CMS is underpaying Medicare Advantage plans for the costs of treating individuals with multiple chronic conditions.

Key findings from an study (PDF) of federal data by Avalere Health, funded by America’s Health Insurance Plans (AHIP), found that the risk-adjustment model used by the CMS lowballs the cost of treating chronic pain by $14.3 billion, osteoarthritis by $13.4 billion, depression by $8.9 billion and rheumatoid arthritis by $5.3 billion.

“Rather than relying on an antiquated fee-for-service approach as the model for care delivery, the CMS should focus on strengthening Medicare Advantage and the innovative programs that improve seniors’ health,” Tavenner, who is now president and CEO of AHIP, said in a statement.

This is the first time Tavenner has publicly criticized her former agency, and it comes at a time when AHIP is facing scrutiny over losing two of its biggest members, Aetna and UnitedHealth Group.

The two insurers are founding members of Washington’s newest health insurance lobbying group, the Better Medicare Alliance, which focuses on Medicare Advantage. They and their colleagues in the insurance business have made it a priority to strengthen the increasingly profitable Medicare Advantage program by keeping payment rates stable.

The Avalere study comes months after the CMS admitted it underpaid health plans that enroll large numbers of beneficiaries who are dually eligible for Medicare and Medicaid. At the time, it announced plans to adjust its risk model to address the issue. The CMS implements a prospective model that uses individuals’ health status in a base year to predict costs for the following year. Critics say some insurers have bilked that system by exaggerating the conditions of their Medicare Advantage patients in order to get higher risk-adjustment payments.

AHIP said Medicare Advantage plans have provided “tailored care coordination and disease management programs that allow beneficiaries to better manage their chronic conditions.”

The insurance lobbying group pointed to research that shows the Advantage programs improve health outcomes. It also said Medicare Advantage beneficiaries consistently report high satisfaction with the program.

“While the CMS is considering changes to the risk model to address underpayments for low-income beneficiaries, the agency may also want to conduct research on methods to address underpayments for individuals with chronic conditions,” said Tom Kornfield, vice president at Avalere.

A CMS spokesperson did not immediately return a request for comment.


By Virgil Dickson | January 22, 2016