OIG Report: HRA Use to Support Risk-Adjusted Payments is Concerning

Expanded Oversight of MAOs by CMS Recommended


The Centers for Medicare & Medicaid Services (CMS) risk-adjusts payments to Medicare Advantage Organizations (MAOs) as a way of leveling the playing field for those MAOs who enroll beneficiaries who require a costlier level of care, thus ensuring these beneficiaries have continued access to the Medicare Advantage (MA) program. To perform its risk-adjustments, CMS requires MAOs to report beneficiary diagnoses to CMS’ MA encounter data system and the Risk Adjustment Processing System.

Health risk assessments (HRAs) are a permissible source of diagnoses for risk adjustment purposes.

HRAs occur when a health care professional collects information from a beneficiary about his or her health for purposes of developing a diagnosis and identifying gaps in the beneficiary’s care. While HRAs are commonly completed during an annual physical in a provider’s office, many MAOs employ organizations to complete in home HRAs for risk adjustment reporting purposes.

CMS and the Medicare Payment Advisory Commission (MEDPAC) have raised concerns over the last few years that MAOs may be utilizing HRAs to collect diagnoses to increase their risk-adjusted payments rather than improve the care offered to beneficiaries. As a result of these concerns, the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) conducted a study of the impact of HRAs on risk-adjustment payments and released its formal report earlier this month.

The report’s detailed findings highlight the concerns with the extent to which HRAs are being used by MAOs to improve care and health outcomes of beneficiaries, and the adequacy of CMS’ oversight of risk-adjusted payments and HRAs.

Specifically, the OIG cited the following findings in their report:

      • Diagnoses that MAOs reported only on HRAs, and not on any other encounter records, resulted in an estimated $2.6 billion in risk-adjusted payments for 2017.
      • In-home HRAs generated 80% of the estimated payments from diagnoses reported only on HRAs, and companies that partner with MAOs conducted most in-home HRAs.
      • Twenty (20) MAOs generated millions in payments from in-home HRAs for beneficiaries for whom there was not a single record of any other service being provided in 2016.
      • CMS has not reviewed the impact of HRAs on risk-adjusted payments or quality of care.

The OIG’s findings raise numerous concerns that MAOs should closely monitor, including:

      • MAOs may not be submitting all service records as required, leading to concerns over data integrity.
      • Beneficiaries may not be receiving the follow-up care required to fully address the diagnoses developed through the HRAs, which presents concerns over the coordination of care provided by MAOs.
      • Should the diagnoses developed through the HRAs and reported to CMS be inaccurate, then risk-adjusted payments provided to the MAO would be inappropriate, leading to payment integrity concerns for the MAO.

To address these concerns and the study’s findings, the OIG developed a series of recommendations for CMS which include:

      • Require MAOs to implement best practices to ensure care coordination for HRAs.
      • Provide targeted oversight of the 10 parent organizations that drove most of the risk-adjusted payments resulting from in-home HRAs.
      • Provide targeted oversight of the 20 MAOs that drove risk-adjusted payments resulting from in-home HRAs for beneficiaries who had no other service records in the 2016 encounter.
      • Reassess the risks and benefits of allowing in-home HRAs to be used as sources of diagnoses for risk adjustment, and reconsider excluding such diagnoses from risk adjustment; and
      • Require MAOs to flag any MAO-initiated HRAs in their MA encounter data.

Given the vital importance of the risk-adjustment payment program, MAOs should rigorously evaluate their use of HRAs in light of the concerns raised by the OIG report and monitor future CMS guidance that may be issued in furtherance of this study.

You can obtain the complete report from the OIG here.