Medicare Advantage: CMS Should Fully Develop Plans for Encounter Data and Assess Data Quality before Use

GAO-14-571 Published: Jul 31, 2014. Publicly Released: Sep 02, 2014.
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Highlights

What GAO Found

The Centers for Medicare & Medicaid Services (CMS) is collecting Medicare Advantage (MA) encounter data—information on the services and items furnished to enrollees—that are more comprehensive than the beneficiary diagnosis data the agency currently uses to risk adjust capitated payments to MA organizations (MAO). CMS, an agency within the Department of Health and Human Services (HHS), makes these adjustments to reflect the expected health care costs of MA enrollees. Encounter data have many more elements—including procedure codes and provider payments—from a wider range of provider types—such as home health agencies and skilled nursing facilities—thus expanding the scope of sources for diagnosis and other information.

CMS has not fully developed plans for using MA encounter data. The agency announced that it will begin using diagnoses from both encounter data and the data it currently collects for risk adjustment to determine payments to MAOs in 2015. However, CMS has not established time frames or specific plans to use encounter data for other potential purposes.

CMS has taken some, but not yet all, appropriate actions to ensure that MA encounter data are complete and accurate. (See figure.) The agency has established timeliness and frequency requirements for data submission, but has not yet developed requirements for completeness and accuracy. Also, the agency has certified nearly all MAOs to transmit encounter data. Although CMS performs automated checks to determine whether key data elements are completed and values are reasonable, it has not yet performed statistical analyses that could detect more complex data validity issues. For example, CMS has not yet generated basic statistics from the data by demographic group or provider type to identify inconsistencies or gaps in the data. Also, it has not yet reviewed medical records to verify diagnoses and services listed in encounter data or reported what it has learned about data quality to MAOs. Agency officials told GAO they intend to perform these additional quality assurance activities but have not established time frames to do so.

Status of the Centers for Medicare & Medicaid Services' Activities to Validate Medicare Advantage (MA) Encounter Data, May 2014

Status of the Centers for Medicare & Medicaid Services' Activities to Validate Medicare Advantage (MA) Encounter Data, May 2014

Why GAO Did This Study

Medicare Advantage—the private plan alternative to the traditional Medicare program—provides health care for nearly 15.5 million enrollees, about 30 percent of all Medicare beneficiaries. After a multiyear rollout, CMS began collecting encounter data in January 2012. GAO was asked to review CMS's plans for using MA encounter data and its efforts to validate the data's quality.

This report examines (1) how the scope of MA encounter data compare with CMS's current risk adjustment data, (2) the extent to which CMS has specified plans and time frames to use encounter data for risk adjustment and other purposes, and (3) the extent to which CMS has taken appropriate steps to ensure MA encounter data's completeness and accuracy. In addition to reviewing laws, regulations, and guidance on MA encounter data collection and reporting, GAO interviewed CMS officials and representatives of MAOs. GAO also compared CMS's activities to the protocol CMS developed to validate Medicaid encounter data—comparable data collected and submitted by entities similar to MAOs.

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Recommendations

CMS should establish specific plans for using MA encounter data and thoroughly assess data completeness and accuracy before using the data to risk adjust payments or for other purposes. While in general agreement, HHS did not specify a date by which CMS will develop plans for all authorized uses of encounter data and did not commit to completing data validation before using the data for risk adjustment in 2015.

Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare & Medicaid Services
Priority Rec.
This is a priority recommendation.
To ensure that MA encounter data are of sufficient quality for their intended purposes, the Administrator of CMS should establish specific plans and time frames for using the data for all intended purposes in addition to risk adjusting payments to MAOs.
Closed – Implemented
HHS generally agreed with this recommendation. As of September 2022, CMS is using MA encounter data in various ways other than risk adjustment. For example, CMS uses MA encounter data to obtain diagnoses for Part D Medicaid Adherence measures. CMS has also used MA encounter data as part of evaluating the first 3 years of MA's Value-Based Insurance Design Model--health insurers' efforts to structure health plan elements to encourage enrollees with chronic conditions to use particularly beneficial services. In addition, CMS has begun using MA encounter data for program integrity purposes. For example, a program integrity contractor uses MA encounter data to identify providers with patterns of encounters that may be indicative of fraud, waste, and abuse. In light of these additional uses of MA encounter data, we are closing this recommendation as implemented.
Centers for Medicare & Medicaid Services
Priority Rec.
This is a priority recommendation.
To ensure that MA encounter data are of sufficient quality for their intended purposes, the Administrator of CMS should complete all the steps necessary to validate the data, including performing statistical analyses, reviewing medical records, and providing MAOs with summary reports on CMS's findings, before using the data to risk adjust payments or for other intended purposes.
Open – Partially Addressed
HHS generally agreed with this recommendation. As of January 2023, CMS has made some progress in examining the completeness and accuracy of Medicare Advantage encounter data, but more work remains to fully validate these data. CMS has established preliminary performance metrics for MA encounter data completeness and accuracy and is conducting associated analyses. Further, the agency has communicated findings from these analyses to MAOs, with the expectation that MAOs provide plans within 60 days to address identified concerns. Despite this progress, more work is required to fully validate these data. Specifically, CMS must establish more detailed and comprehensive standards for completeness and accuracy and compare MAOs' performance to such standards. As of January 2023, CMS has established a limited number of benchmarks on the number of encounter data records submitted but has not yet established standards on completeness and accuracy for all MA encounter data elements. CMS also has not conducted all analyses necessary to assess the completeness and accuracy of encounter data. For example, CMS's protocol for assessing the accuracy of Medicaid encounter data states that the data should examine, for example, the relationship between ancillary services, such as laboratory services and x-rays to outpatient visits; and have data checks for whether specific diagnoses and procedures reflect expected care of beneficiaries based on their age and sex. Further, the extent to which CMS has verified MA encounter data by reviewing medical records is uncertain, and the agency has not established plans to do so. CMS reports that the agency or its contractors may examine MA encounter data through medical reviews for investigations of certain providers. However, the agency reports that it has done such reviews on a limited, ad hoc basis. Without fully validating the completeness and accuracy of MA encounter data, CMS would be unable to confidently use these data for risk adjustment or other program management or policy purposes. We will continue to monitor CMS's progress in fully validating MA encounter data.

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