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News: CMS underpays Medicare Advantage plans for treating chronic conditions

CDI Strategies, January 28, 2016

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CMS underpaid Medicare Advantage plans for the cost of treating patients with multiple chronic conditions, which the organization admitted to in November. However, a new report from healthcare consulting company, Avalere Health, shines a light on some of the specifics. 

CMS’ risk adjustment model—last updated in 2014— underestimates costs for individuals with multiple chronic conditions by $2.6 billion on an annual basis, according to the report. Among chronic conditions, rheumatoid arthritis (RA) and osteoarthritis have the largest percentage difference between predicted and actual expenditures: 15%, or $2.3 billion, for RA and 12%, or $4.4 billion, for osteoarthritis, the report says.

In addition, the model under-predicts costs for beneficiaries with specific chronic conditions, such as rheumatoid arthritis, dementia, and lower levels of chronic kidney disease, and substantially under-predicts costs for high utilizers within each chronic condition category, the report says.

Although CMS will make changes to the model to improve accuracy for certain Medicare-Medicaid dual-eligible individuals in 2017, these adjustments will not address underpayments for low-income beneficiaries with multiple chronic conditions, according to the report.

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