The analysis by the Alliance of Community Health Plans (ACHP) finds that UnitedHealthcare, the largest Medicare Advantage insurer, collected up to $785 more per member than local, nonprofit plans in 2023 alone. That difference cost Medicare more than $6 billion.
ACHP based its analysis on data from the Centers for Medicare & Medicaid Services (CMS) Medicare Advantage Part C Plan Payment Data and CPSC (monthly enrollment at the contract/plan/state/county level) Enrollment Information Files from 2019-2023.
Researchers found that in 2023, UnitedHealthcare had average risk scores that were 36.2 percent higher than ACHP nonprofit health plans. Humana, the second-largest Medicare Advantage insurer, had average risk scores that were 19.2 percent higher than the ACHP plans. The higher the risk score, the more money insurers receive.
The gap isn’t a mistake, ACHP said in the study announcement. The association said it’s the result of coders capitalizing on complexities in the program for financial gain. “These wide variations stifle competition and leave tens of millions of consumers nationwide disadvantaged,” ACHP said.
Although the risk adjustment program was established to adequately compensate insurers for covering the sickest seniors, ACHP said as risk adjustment expanded and became more complicated, the program now rewards aggressive coding practices and not the delivery of high-quality care.
The organization called on the federal government to adopt sweeping reforms to simplify the complex risk adjustment program. It proposes changes to ease administrative burden on clinicians, reduce overpayments, and make Medicare Advantage a more competitive marketplace focused on rewarding care rather than codes.
The alliance advocates that the program should focus on demographics and a small set of substantiated health conditions to ensure Medicare payments reflect true patient care costs.
“Risk adjustment was a well-intentioned concept that has grown out of control and overrun with abuse,” said ACHP President and CEO Ceci Connolly in the announcement. “The current program presents thousands of ways for insurers and vendors to game the system, passing costs onto every Medicare consumer and American taxpayer.”
She called risk adjustment a “failing system” and asked the Department of Health and Human Services to make changes to simplify the risk adjustment model and root out waste and abuse.