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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 and 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.
Open
HHS generally agreed with this recommendation. As of March 2021, CMS is using MA encounter data for purposes other than risk adjustment, such as quality measurement and program integrity, and continues to develop additional uses, but has not established specific plans and time frames for all uses. Quality measurement - CMS uses MA encounter data to obtain diagnoses for Part D Medicaid Adherence measures and reports using encounter data for other Part D 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. Public health - CMS uses MA encounter data to help identify beneficiaries at risk in areas affected by public health emergencies and disasters. CMS also reports that it has begun testing the use of MA encounter data for public health purposes, such as identifying beneficiaries with a history of opioid-related overdose, thereby identifying them as potentially at-risk for prescription drug abuse. CMS reports that its Office of the Actuary (OACT) has used MA encounter data to study the impact of emergencies including hurricanes and COVID-19 on utilization of services to inform projections of Medicare expenditures. Program management - CMS reports that OACT incorporates MA encounter data into multiple core responsibilities, including evaluation of MA bids, analysis of Medicare trends, comparison of FFS and MA experience, and the development of rates for demonstration programs. Program Integrity - CMS has begun using MA encounter data for program integrity purposes. For example, a program integrity contractor (MEDIC) utilizes MA encounter data to identify providers with patterns of encounters that may be indicative of fraud, waste, and abuse; conduct data analysis to develop investigations; and identify MA providers who also submit Medicare Parts A and B claims where administrative actions or law enforcement referrals have occurred. As another example, CMS reports using MA encounter data in Fraud Prevention System opioid-related models as an exclusion in identifying providers. Additionally, CMS states that the Part D quarterly reports include opioid-related analyses which use encounter data as an exclusion. Despite this progress in using MA encounter data, plans for comprehensive oversight purposes remain limited. For example, CMS has not established specific plans for using MA encounter data to monitor Medicare coverage or support more comprehensive program integrity efforts. We will continue to monitor CMS's progress in developing specific plans and time frames with dates for all intended purposes of MA encounter data.
Centers for Medicare and 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
HHS generally agreed with this recommendation, however, HHS did not commit to completing data validation before using MA encounter data for risk adjustment. As of March 2021, CMS has made additional progress in examining the completeness and accuracy of Medicare Advantage encounter data, but more work remains to fully validate these data. CMS has developed and is implementing a Medicare Advantage Encounter Data Integrity and Monitoring plan, which describes the key activities of evaluating and improving encounter data, including outreach, data analysis, and monitoring completeness and accuracy. As part of this plan, 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. CMS has not verified MA encounter data by reviewing medical records, however, the agency plans to begin verifying payment year 2016 data through Risk Adjustment Data Validation audits by Fall 2021. While these steps are important, 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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