News: CMS underpays Medicare Advantage plans for treating chronic conditions

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.