Medicare Advantage (Part C) Department of Health and Human Services

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, beneficiaries can opt to receive their Medicare benefits through a private health plan. Currently, more than 19 million beneficiaries are enrolled in Medicare Advantage plans.

Agency Accountable Official: Jen Moughalian, Acting Assistant Secretary for Financial Resources

Program Accountable Official: Kimberly Brandt, Principal Deputy Administrator for Operations, Centers for Medicare & Medicaid Services

Total Payments
$172.8B
Improper Payments
$14.4B
Improper Payment Rate
8.31%

Supplemental Measures

Current Measure: 3.3%

Target: 3.3%

Description:

Payments to Medicare Advantage organizations are partly based on enrollee health status. This annual supplemental measure analyzes top CMS Hierarchical Condition Categories (CMS-HCCs) that have the highest rates of error. The FY 2017 Part C supplemental measure is based on calendar year 2014 payments. CMS-HCCs are the disease groups that determine the disease component of risk-adjustment payment. The measure aggregates the CMS-HCCs that have the highest percentage of error as compared to the entire sample of CMS-HCCs, and divides that number of discrepancies by the overall number of CMS-HCCs in the sample. Because two CMS-HCC models were used for payment, HHS ranks the top 10 CMS-HCCs with the highest rates of error for each model and then weights the aggregate discrepancy percentage according to the CMS-HCC’s proportion of the risk score from its respective model.

For FY 2017, the ten CMS-HCCs that make up this measure from the 2013 CMS-HCC Model are:

  • Ischemic or Unspecified Stroke
  • Cerebral Hemorrhage
  • Aspiration and Specified Bacterial Pneumonias
  • Unstable Angina and Other Acute Ischemic Heart Disease
  • End-Stage Liver Disease
  • Diabetes with Ophthalmologic or Unspecified Manifestation
  • Drug/Alcohol Psychosis
  • Lung, Upper Digestive Tract, and Other Severe Cancers
  • Vascular Disease with Complications
  • Major Complications of Medical Care and Trauma

The ten CMS-HCCs that make up this measure from the 2014 CMS-HCC Model are:

  • Chronic Kidney Disease (Stage 5)
  • Ischemic or Unspecified Stroke
  • Cerebral Hemorrhage
  • Aspiration and Specified Bacterial Pneumonias
  • Unstable Angina and Other Acute Ischemic Heart Disease
  • End-Stage Liver Disease
  • Atherosclerosis of the Extremities with Ulceration or Gangrene
  • Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome
  • Drug/Alcohol Psychosis
  • Lung and Other Severe Cancers

Update Frequency: Annually

Data Current as of: November 2017


Program Comments

The Department of Health and Human Services (HHS) reports an annual Medicare Advantage (Part C) program payment error rate, which represents the impact on payments from errors in risk scores used to adjust benefit payment amounts to Medicare Advantage plans. HHS pays Medicare Advantage plans on a risk-adjusted basis. In other words, private health plans are paid greater amounts for coverage of sicker beneficiaries. HHS uses a methodology that takes into account the varying costs associated with treating beneficiaries based on their health status. Risk scores are based on, among other factors, beneficiaries’ clinical diagnoses submitted by private health plans to HHS. Beneficiary risk scores are a key source of potential error in HHS’s payments to Medicare Advantage plans. The Fiscal Year (FY) 2017 Medicare Advantage payment error estimate is based on Calendar Year 2015 payments. There is a two-year lag between the payment year and the error rate reporting year because medical record reviews cannot begin until after completion of the risk score reconciliation for a payment year. This reconciliation occurs about eight months after the end of a payment year. Upon conclusion of this reconciliation, HHS can begin implementation of the risk adjustment data validation. A random sample of beneficiaries is selected and HHS’s contractors conduct medical record review to validate the accuracy of plan submitted diagnoses for each sampled beneficiary. The medical record review process is rigorous and thorough. HHS analyzes the resulting data to develop an error estimate.

HHS has an aggressive, comprehensive audit process based on a highly rigorous, statistically-valid protocol for review of medical records that will recover payments made in error.   Additional information on the program is also provided annually in the Department's Agency Financial Report (available at www.hhs.gov/afr).