The federal government may be underpaying for Medicare Advantage beneficiaries with functional limitations, a new analysis finds.
The Centers for Medicare & Medicaid Services pays a fixed amount for individuals covered by those health plans, but isn’t taking into account beneficiaries’ ability to perform routine tasks such as bathing, the Government Accountability Office noted.
Those limitations could be driving up care costs, while also resulting in inaccurate payments from CMS. About 40% of beneficiaries had functional limitations in 2016, the GAO estimates. Accurate risk adjustments related to functional status could, in turn, “reduce any financial disadvantages plans may experience” when enrolling beneficiaries with those limitations.
But executing on this idea may come with “substantial challenges” for stakeholders, as the required information is typically not readily available. About 75% of Medicare Advantage beneficiaries receive care in a setting where functional status is not collected, the analysis notes.
“Stakeholders told GAO that expanding the collection of such information could be resource intensive for CMS, plans and healthcare providers, and an imposition for some beneficiaries,” the accountability office wrote.