Home is where the money is for Medicare Advantage plans
Third in a three-part series.
Some of the senior citizens who called Arizona insurance agent Denise Early wondered why their Medicare Advantage health plans were eager to send a doctor to visit them at home.
A few worried that the offer might be a scam. After all, they asked, how many doctors make house calls these days?
More than people might think. Home visits have risen sharply at many private Medicare health plans, which treat close to 16 million elderly and disabled people under contracts with the federal government.
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The health plans tout the voluntary, free annual physicals as a major new benefit that can help selected members stay fit and in their homes as long as possible. While the doctors and nurses don’t offer any treatment during their visit, they report their exam findings to the patient’s primary care physician.
Yet there’s more to this spurt in home visits than the appearance of enhanced elder care. The house calls can be money makers for health plans when they help document medical problems — from complications of diabetes to a history of heart trouble that’s flared up.
Health plans can profit because Medicare pays them higher rates for sicker patients using a billing formula known as a “risk score.” So when a home visit unearths a medical condition, as it often does, health plans may be able to raise a person’s risk score and collect thousands of dollars in added Medicare revenue over a year — even if they don’t incur any added expenses caring for that person. That’s been allowed under the billing rules.
The home visits are the most visible segment of a burgeoning medical information and data analysis industry that is thriving behind the scenes, in some cases backed by formidable venture capital and other investment groups, including Google Ventures.
Related: In-Home Health Assessments, defined
The cottage industry is flourishing as federal officials struggle to prevent Medicare Advantage plans from overcharging the government by billions of dollars every year, a Center for Public Integrity investigation has found.
Medicare made nearly $70 billion in “improper” payments to Medicare Advantage plans from 2008 through 2013, mostly overbillings based on inflated risk scores, according to government estimates.
Federal officials last year suggested that home visits might play a role. They said they were concerned that some health plans may be turning to home visits and other strategies that drive up risk scores — and Medicare costs — without offering patients more actual medical services or tangible health benefits.
Officials didn’t say in the draft regulation how much the home visits have added to Medicare’s cost through higher risk scores. But two investor-backed companies together made a total of nearly half-a-million senior home visits in 2013.
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In April, though, officials bowed to industry pressure and backed off their earlier proposal to restrict these visits.
Officials at the Centers for Medicare and Medicaid Services in Washington refused numerous requests for comment and declined to answer questions posed in writing.
Limiting the house calls could have cut payments to Medicare Advantage plans by nearly $3 billion a year, according to a report prepared for the insurance industry’s trade association.
Health plans argue that home visits help them meet a patient’s total health care needs — and assure that the plans are paid fairly for taking on that responsibility.
Related: Zahedi on free home visits
Scott Weiner, a Virginia Medicare billing expert, said health plans that don’t bill aggressively “will lose out to competitors” that do. “It’s keeping up with the Joneses,” he said.
The accuracy of risk scores isn’t just a Medicare Advantage issue. The payment system also will be used in paying for health care for millions of Americans under the Affordable Care Act, which officials expect to contain costs.
Behind the curtain
The federal government pays Medicare Advantage plans a monthly fee for each patient to cover all their health-care needs, based largely on the risk scores. But the plans generally don’t tell patients how much, or how the sum is calculated — and neither do federal officials.
Related: How risk scores changed
Patients only hear about how much they owe for monthly premiums. Some plans have no premium, but premiums are expected to average about $40 a month this year depending on the type of plan, according to the Kaiser Family Foundation.
Still, those premiums are just a fraction of what Medicare pays health plans — on average $9,900 per person a year, more for people in poor health, including those with multiple chronic diseases.
The billing process is extremely complicated. More than 70 health conditions, depending on their severity, may push up the risk scores, and thus the payments.
Take depression as an example. Simply having feelings of sadness and hopelessness that limit activities doesn’t qualify. Yet if depression lingers for at least two weeks and is present with other symptoms it may be classified as “major depressive disorder.” That condition alone pays nearly $450 a month for a 75-year-old woman living in Miami-Dade County, Florida, according to the Coleman Consulting Group, based in neighboring Broward County.
Related: Get involved: Help Medicare Advantage investigation go further with donations and news tips
When it comes to benefits such as home visits, many patients are impressed their health plan took the trouble to look after them, supporters say.
“Who wouldn’t want a physician to sit across from them for an hour asking what is ailing them free of charge? Where is the downside in that?’’ said Sy Zahedi, president and CEO of MedXm, in Santa Ana, California, which does home assessments.
‘Paucity of evidence’
The downside, federal officials have argued, is the paucity of evidence showing that home visits make people any healthier, improve their care, or do much beyond driving up Medicare’s costs.
Related: Billing complexity spawns new industry
In February 2013, Centers for Medicare and Medicaid Services officials proposed flagging diagnoses written up from a home visit with an eye toward refusing to pay for any that didn’t prompt follow-up medical attention from a doctor. Officials reasoned that if an ailment wasn’t serious enough to merit any treatment, then taxpayers shouldn’t foot the bill. Billing guidelines require health plans to treat any disease they diagnose.
In late February of this year, CMS officials said in a draft regulation that they had seen “little evidence” that medical care “is substantially changed or improved as a result” of the home visits.
Officials wrote “we are concerned that the apparent significant increase in the prevalence of these assessments … contributes to increased risk scores.”
The proposal to restrict home visits didn’t sit well with health plans.
Related: More in the 'Medicare Advantage Money Grab' series
Karen Ignagni, president of the industry’s powerful trade group, America’s Health Insurance Plans, in a March 7, 2014 letter to CMS argued that the agency had shown no evidence that diagnoses made at home visits were “inappropriate.” “We strongly believe the proposal is misguided and should be withdrawn,” she wrote.
CMS changed its mind with a final order issued in early April that said simply that the agency was not “finalizing this policy.” Officials said they would continue to “analyze data” and “may reconsider” their decision in the future.
CMS officials have been trying to arrest the rise in risk scores for years.
There’s more to this story. Click here to read the rest at the Center for Public Integrity.
This story is part of Medicare Advantage Money Grab. Billing errors cost taxpayers billions. Click here to read more stories in this investigation.
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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
