The Honorable Chiquita Brooks-LaSure
Administrator
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244-1850

Submitted electronically via regulations.gov

Re: CMS-2024-0006, Advance Notice of Methodological Changes for Calendar Year (CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies

Dear Administrator Brooks-LaSure,  

The National Committee to Preserve Social Security and Medicare is a membership organization whose mission is to protect, preserve, promote, and ensure the financial security, health, and the well-being of current and future generations of maturing Americans.  With millions of members and supporters across America, we are the nation’s second-largest grassroots citizens organization devoted to the retirement future of all citizens.

We appreciate the opportunity to respond to the Advance Notice of Methodological Changes for Calendar Year (CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (i.e., 2025 Advance Rate Notice).  Most of our members and supporters are enrolled in either traditional Medicare or Medicare Advantage.

Medicare Advantage (MA) is a coverage option within the Medicare Program, which allows Medicare beneficiaries to receive Part A and Part B coverage benefits from private plans rather than from traditional Medicare. The MA program has rapidly increased its enrollment over time and now provides coverage for more than half (51%) of all eligible Medicare beneficiaries in 2023, compared to less than a quarter (19%) in 2007. Notably, this significant growth in MA enrollment is expected to continue, with the Congressional Budget Office projecting that 62% of all Medicare beneficiaries will be enrolled in a Medicare Advantage plan by 2033. 

As enrollment in MA continues to rapidly increase, it is critical that policymakers ensure the MA program is providing access to high-quality, affordable, and equitable care that Medicare beneficiaries deserve and can count on. Yet too often MA organizations and plans engage in harmful business practices and corporate abuses that negatively impact Medicare patients and taxpayers alike. These practices include predatory and deceptive marketing schemes to prospective enrollees, and systematic upcoding of patient diagnoses that do not reflect the actual care that enrollees are receiving, among other abuses. 

The National Committee applauds much of what the administration and the Centers for Medicare and Medicaid Services (CMS) have done to date – including in this Advance Rate Notice – to rein in the harmful business practices and corporate abuses in the MA program, such as strengthening protections against unfair and deceptive marking schemes and ensuring MA plans cover basic benefits to the same extent as traditional Medicare, among other critical reforms.  But we feel strongly that continued abuses in the MA program warrant that the administration and CMS to go further towards reining in the harmful practices of MA plans, particularly around systematic upcoding and overpayments. 

In the 2025 Advance Rate Notice, there are two CMS proposals that are particularly important and relevant to reining in systematic upcoding in the MA Program. They include two overlapping areas under Attachment II: Changes in the Payment Methodology for Medicare Advantage and PACE for CY 2025 – Section G. CMS-HCC Risk Adjustment Model for CY 2025 and Section J. Medicare Advantage Coding Pattern Difference Adjustment. These proposals are the focus of our comments and are outlined below.  

Attachment II. Changes in the Payment Methodology for Medicare Advantage and PACE for CY 2025: 

    1. Section G. CMS-HCC Risk Adjustment Model for CY 2025 

Under Attachment II. Section G., CMS proposes to continue to implement the 2024 updated risk adjustment model that helps calculate payments to MA organizations and plans, otherwise known as the 2024 CMS-HCC risk adjustment model, over a three-year phase in period, with full implementation of the updated model starting from CY 2026., This updated model was finalized as part of the 2024 Rate Announcement and includes a number of important changes that seek to promote more accurate payments to MA organizations and plans, helping to ensure that MA payments truly reflect and account for the expected costs of each enrolled patient. Ultimately, risk adjustment within the MA program is designed to help guarantee that MA plans are equally incentivized to enroll and cover both healthy and sick patients alike, including those with complex conditions and other characteristics associated with higher treatment costs. This approach is intended to prevent adverse or favorable selection of enrollees. Importantly, as part of these changes, CMS is taking the opportunity to make changes to the risk adjustment model that would help rein in systematic upcoding by MA plans. 

    1. Section J. Medicare Advantage Coding Pattern Difference Adjustment

Under Attachment II. Section J., CMS proposes to apply the statutory minimum MA coding pattern difference adjustment factor of 5.90 percent to beneficiary risk scores across all MA plans., Like the modifications to the CMS-HCC Risk Adjustment model outlined above, the MA coding pattern difference adjustment is designed to help rein in overpayments to MA plans by accounting for differences in coding intensity and upcoding between MA and traditional Medicare. Specifically, this adjustment factor decreases beneficiary risk scores across all MA plans by a set percentage after risk scores are initially calculated using the risk adjustment model.  The particular adjustment level of 5.9 percent was put into place by Congress starting in 2019; however, it is important to note that CMS has the statutory authority to implement a coding pattern adjustment above and beyond this minimally required percent, but has never done so. 

Recommended Changes to the 2025 Advance Rate Notice

Combined with the relatively modest improvements to the risk adjustment model, the coding pattern adjustment does not fully address nor rein in the differences in MA coding intensity and upcoding relative to traditional Medicare and the resulting harms to Medicare patients and taxpayers. According to the MedPAC, the updated risk model (i.e., 2024 CMS-HCC risk adjustment model) is estimated to reduce MA and traditional Medicare coding differences between approximately 2 and 2.5 percentage points per year. Combined with the 5.9 percent statutory minimum MA coding pattern difference adjustment, this is significantly less than the current and projected upcoding by MA plans. In fact, MedPAC estimates that coding intensity in MA will be 14.2 percentage points higher than traditional Medicare this year, resulting in $54 billion dollars in overpayments in 2024 alone.

Systematic upcoding reduces the accuracy of MA payments by making the MA enrollee population appear sicker and costlier despite those enrollees, in fact, tending to be healthier and less costly then patients in traditional Medicare. Particularly concerning is that MA plans have gone so far as to upcode and assign erroneous patient diagnoses — through sham chart reviews and health risk assessments (HRAs) — that are not even medically supported (i.e., not supported by the patient’s medical record) or do not result in any additional medically necessary treatment or care. Ultimately, these upcoding abuses lead to billions of dollars of overpayments and put at risk Medicare’s long term financial position. They also hurt the health and financial well-being of all Medicare beneficiaries by driving up Part B premiums and undermining the extent to which the MA payment system can hold MA plans accountable to delivering high quality and equitable care, such as through the MA quality bonus program. 

The National Committee therefore strongly urges the Administration and CMS to go further to protect patients and the integrity of the Medicare program by 1) applying a higher coding adjustment factor in the short term, and 2) enacting more fundamental changes to the CMS-HCC Risk Adjustment model that prevents industry gaming and helps to drive the delivery of high-quality and equitable health care in the long term.

Specifically, we recommend CMS enact the following changes in its 2025 Rate Announcement.  

  • Apply a higher coding adjustment factor above and beyond what is minimally required in statute to fully account for intensive coding by MA plans using a tiered approach that targets MA plans who engage in upcoding to the greatest extent.
  • Exclude information exclusively collected via in-home HRAs or chart reviews as a source of diagnoses for Medicare Advantage risk adjustment scores and payments, which are easily abused and represent a significant driver of coding intensity and upcoding as noted by MedPAC and HHS OIG. 
  • Use two years of traditional Medicare and MA diagnostic data for calculating MA risk adjusted payments to avoid allowing erroneous diagnoses, such as those due to errors or inappropriate coding from one particular year, drive upcoding and overpayments in MA.
  • Initiate longer term reforms of the CMS-HCC Risk Adjustment Model that further improve the accuracy of MA payments and holds MA plans accountable to delivering high quality and equitable care to healthier and sicker patients alike. For example, we encourage CMS to explore adding alternative sources of data to the risk adjustment model that cannot be easily gamed by industry.  

The National Committee applauds CMS and the Administration for taking meaningful steps towards reining in the harmful business practices and corporate abuses in the MA program. As the MA Program continues to experience record enrollment and now provides health care coverage to over half of all Medicare beneficiaries, it is critical CMS continues to hold MA plans accountable to delivering high quality, affordable, and equitable care. We stand ready to work with you to ensure our nation’s seniors and all those who rely on Medicare for their health care have access to the high-quality care and coverage options they deserve.

Thank you again for the opportunity to provide comment. Please contact Anne Montgomery at [email protected] with any questions.

Sincerely,
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Max Richtman
President and CEO