CMS Has Made Limited Progress since July 2014 to Validate MA Encounter Data; Stakeholder Organizations Questioned the Effectiveness of CMS Efforts

Since our July 2014 report, CMS has taken additional steps across  several activities to ensure that MA encounter data are complete but has  yet to fully address data accuracy. 2)
The agency has taken the following steps, which address primarily the  completeness of encounter data and provide feedback to MAOs on data  submission:
Creating a report card with basic statistics on the completeness  of encounter data for MAOs. Developing an automated report for MAOs on diagnoses used for  risk adjustment. The stakeholder organizations we interviewed raised several issues with  CMS’s recent actions to ensure the completeness of MA encounter data. When asked  about this concern, CMS officials noted that they publicly announced  how the agency intends to implement the risk adjustment transition in  December 2015, and the methodology has not changed. CMS officials told us that its response  time for emailed questions on MA encounter data largely depends on  the complexity of the issue. Without medical record reviews, CMS cannot  substantiate the information in MAO encounter data submissions and  lacks evidence for determining the accuracy of encounter data. To the extent that CMS is making payments based on data that have not  been fully validated for completeness and accuracy, the soundness of  billions of dollars in Medicare expenditures remains unsubstantiated. Given the limited progress CMS has made, we continue to believe that  the agency should complete all the steps necessary to validate the data  before using them to risk adjust payments or for other intended purposes,  as we recommended in our July 2014 report. CMS Has Detailed Plans for Using MA Encounter Data for Risk Adjustment but Not for Other Purposes, Creating Unease among Some Stakeholder Organizations

		CMS Plans to Fully Transition to Using MA Encounter Data for Risk Adjustment Purposes by 2020, Generating Mixed Reactions from Some Stakeholder Organizations

Since our July 2014 report, CMS has made progress in defining its  objectives for using MA encounter data for risk adjustment purposes and  in communicating its plans and time frames to MAOs. However, representatives  from several health insurance and provider trade associations we  interviewed said that many MAOs and providers are apprehensive about  CMS’s time frame because it does not allow sufficient time for a  successful transition. The agency noted that it has  worked with MAOs to correct issues with how the agency applies the  methodology for identifying diagnoses for risk adjustment is applied. CMS’s Plans and Time Frames for Using MA Encounter Data for Other Authorized Purposes Remain Undeveloped, Creating Unease among Some Stakeholder Organizations

Although the agency has formulated general ideas of how to use MA  encounter data for some purposes besides risk adjustment, CMS has not  determined specific plans and time frames for most of the additional  purposes for which the data may be used, namely (1) to update risk  adjustment models; (2) to calculate Medicare disproportionate share  hospital percentages; (3) to conduct quality review and improvement  activities; (4) for Medicare coverage purposes; (5) to conduct evaluations  and other analysis to support the Medicare program (including  demonstrations) and to support public health initiatives and other health  care-related research; (6) for activities to support the administration of the  Medicare program; (7) for activities to support program integrity; and (8)  for purposes authorized by other applicable laws. However, this is inconsistent with federal  internal control standards relating to risk assessment and information and  communication that call for clearly defining objectives and communicating  those objectives to key external organizations. CMS officials told us they anticipate  including MA encounter data in the Fraud Prevention System to help  identify abusive billing practices, but have yet to fully develop plans for  this proposed use. To date, CMS officials reported that the Center for  Program Integrity has begun using encounter data to determine  improper payments to providers. Representatives from health insurance and  provider trade associations and research organizations emphasized  that CMS should implement appropriate safeguards for releasing MA  encounter data to external entities similar to those protections used  for Medicare FFS data. Furthermore, in the absence of planning for all  of the authorized uses, the agency cannot be assured that the amount  and types of data being collected are necessary and sufficient for specific  purposes. Given the agency’s limited progress on developing plans for  additional uses of encounter data, we continue to believe that CMS  should establish specific plans and time frames for using the data for all  intended purposes, in addition to risk adjusting payments to MAOs, as we  recommended in our July 2014 report. Agency Comments

We provided a draft of this report to the Department of Health and Human  Services (HHS) for comment. HHS provided technical comments, which  we incorporated as appropriate.
Why GAO Did This Study

CMS collects MA encounter data to help ensure the proper use of federal funds by improving risk adjustment in the MA program—the private health plan alternative to traditional Medicare—and for other potential purposes. CMS's ability to make proper payments depends on the completeness and accuracy of MA encounter data. In July 2014, GAO reported that CMS had taken some, but not all, appropriate actions to validate the completeness and accuracy of encounter data and had not fully developed plans for using them.
GAO was asked to provide an update on its July 2014 findings. In this report, GAO identifies (1) steps CMS has taken to validate MA encounter data, and (2) CMS's plans and time frames for using MA encounter data—as well as stakeholder perspectives on these steps and plans.
To do this work, GAO compared CMS activities with the agency's protocol for validating Medicaid encounter data—comparable data collected and submitted by entities similar to MAOs—and federal internal control standards. In addition, GAO reviewed relevant agency documents and interviewed CMS officials on MA encounter data collection and reporting. GAO also reviewed comments in response to CMS's 2014 proposed rule and reports from stakeholder organizations. GAO also interviewed a non-generalizable selection of 11 stakeholders including health insurance and provider trade associations and research organizations. HHS provided technical comments on this report that were incorporated as appropriate.

What GAO Found

Since GAO issued its July 2014 report, the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) has made limited progress to validate the completeness and accuracy of Medicare Advantage (MA) encounter data. CMS collects encounter data—detailed information about the care and health status of MA enrollees—to determine payments to MA organizations (MAO). These entities received approximately $170 billion to provide coverage to nearly one-third of all Medicare beneficiaries in 2015. The agency uses a risk adjustment process to account for differences in enrollees' expected health care costs relative to an average beneficiary. Without complete and accurate encounter data, CMS cannot appropriately risk adjust MAO payments. CMS has begun compiling basic statistics on the volume and consistency of data submissions and preparing automated summary reports for MAOs indicating diagnosis information used for risk adjustment. However, CMS has yet to undertake activities that fully address encounter data accuracy, such as reviewing medical records. (See figure.) Furthermore, some health insurance and provider trade associations GAO interviewed voiced concerns about CMS's ability to properly identify diagnoses used for risk adjustment. CMS officials noted that they are working with MAOs to refine how the methodology used to obtain diagnoses data is applied. To the extent that CMS is making payments based on data that have not been fully validated for completeness and accuracy, the soundness of billions of dollars in Medicare expenditures remains unsubstantiated. Given the agency's limited progress, GAO continues to believe that CMS should implement GAO's July 2014 recommendation that CMS fully assess data quality before use.
Since the July 2014 report, CMS has made progress in developing plans to use MA encounter data for risk adjustment, but has not specified plans and time frames for most other purposes, such as conducting program evaluations and supporting public health initiatives. CMS began phasing in patient diagnosis information from encounter data in its risk adjustment process in 2015 and intends to rely completely on those data by 2020. Because it has primarily focused on collecting comprehensive encounter information for risk adjustment purposes—which is key to ensuring proper payments—CMS officials told GAO that the agency has largely deferred planning for additional uses of the data. Some stakeholder organizations have objected to the risk adjustment transition time frame, asserting that it does not allow sufficient time for a successful transition. According to CMS, the multiyear transition time frame is reasonable. Some stakeholders also were concerned that releasing data to external entities could compromise the confidentiality of proprietary information, such as payments to providers. CMS officials said that they intend to use data protections similar to those used with other Medicare data. In the absence of planning for all of the authorized uses, the agency cannot be assured that the amount and types of data being collected are necessary and sufficient for specific purposes. Given the agency's limited progress, GAO continues to believe that CMS should implement GAO's July 2014 recommendation that CMS fully develop plans for the additional uses of encounter data.