[Congressional Record Volume 158, Number 48 (Thursday, March 22, 2012)]
[Extensions of Remarks]
[Page E430]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  ON THE INTRODUCTION OF THE MEDICARE ADVANTAGE PROGRAM INTEGRITY ACT

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Thursday, March 22, 2012

  Mr. STARK. Mr. Speaker, I rise today to introduce the Medicare 
Advantage Program Integrity Act. My legislation will make commonsense 
payment reforms to the Medicare Advantage (MA) program to ensure that 
taxpayers get the best bang for their buck. The Medicare Advantage 
Program Integrity Act requires that Medicare Advantage payments more 
accurately reflect the health status of their enrollees. In addition, 
the bill ends the ability for Medicare Advantage plans to game the 
system by retaining investment income from pre-payments. Taken 
together, these policies will save over $20 billion over ten years, 
protecting both taxpayers and beneficiaries.
  The MA program has grown substantially in recent years, increasing 
from $65.2 billion in plan payments in 2006 to $116.1 billion in 2010. 
Today, 25 percent of Medicare beneficiaries are enrolled in a private 
health insurance plan through MA. Congress took action through the 
Affordable Care Act (ACA) in 2010 to substantially reduce historical 
excessive base payment rates in MA. However, these plans continue to be 
overpaid relative to traditional Medicare, both in terms of base rates 
that exceed the cost of traditional Medicare in many geographic areas 
and because payments do not accurately reflect the health status of 
enrolled beneficiaries.
  Because plan payments are adjusted for health states such that plan 
payments are increased as anticipated service use increases, plans have 
an incentive to ``up code'' and report less healthy patients. In fact, 
documented independent evidence shows that Medicare Advantage plans do 
tend to report higher patient severity than is supported by medical 
records. The data also show that reported patient severity in MA plans 
increased faster than for comparable patients in traditional fee-for-
service Medicare (FFS) over the same time period.
  In an attempt to address this issue, CMS reduced MA beneficiary risk 
scores (which are used to adjust base payments) by 3.41 percent when 
calculating payment rates in 2010 and 2011. However, a Government 
Accountability Office (GAO) report, Medicare Advantage: CMS Should 
Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding 
Practices (January 12, 2012) found the Medicare program continues to 
overpay MA plans despite the Centers for Medicare and Medicaid 
Services' (CMS) effort to adjust payments to more accurately reflect 
the health status of plan enrollees. GAO estimated that in 2010, MA 
beneficiary risk scores were at least 4.8 percent, and perhaps as much 
as 7.1 percent higher than they would have been if the same 
beneficiaries had been continuously enrolled in traditional Medicare. 
GAO recommended that CMS take additional steps to improve the accuracy 
of these scores and estimated that the recommended methodological 
improvements would have saved the Medicare program $1.2 to $3.1 billion 
in MA plan payments in 2010 alone.
  My legislation implements the GAO recommendations by codifying and 
phasing in the higher coding intensity adjustment over several years to 
prevent disruption in the market. The policy in this legislation would 
culminate in a 7.1 percent downward adjustment by 2019. GAO's findings 
indicate that a coding adjustment of up to 7.1 percent is warranted now 
and would yield billions of dollars in federal savings.
  Under current law, CMS makes advanced capitated payments to Medicare 
Advantage plans at the beginning of every month for each beneficiary 
enrolled in their plan. MA plans often then invest these Medicare funds 
in interest-bearing accounts until the money is needed to pay for 
services. Current law does not prohibit Medicare Advantage plans from 
retaining the investment income on the prepayments. However, the HHS 
Office of Inspector General (OIG) points to the Federal Employees 
Health Benefits Program (FEHBP) as a model, noting that in contrast to 
Medicare Advantage, insurance companies' ability to earn investment 
income is limited under FEHBP. The HHS OIG conducted audits in 2000 and 
2011 and concluded that if Medicare delayed pre-payments to Medicare 
Advantage plans by 46 days (similar to FEHPB), the Medicare Part A and 
B trust funds would have earned $450 million in interest income in 
Calendar Year 2007--rather than allowing that interest income to go to 
private health insurance plans. The Inspector General recommended that 
the Medicare program follow the FEHBP policy of delaying pre-payments 
to Medicare Advantage plans.
  My legislation implements the Inspector General's recommendations by 
phasing-in a delay in the payments to Medicare Advantage plans. Taken 
together, these two policies will save federal taxpayers more than $20 
billion while protecting beneficiary access to Medicare Advantage 
plans.
  The Medicare Advantage Program Integrity Act has been endorsed by the 
Medicare Rights Center, the Center for Medicare Advocacy, AFL CIO, 
Families USA, the National Committee to Preserve Social Security and 
Medicare and the Alliance for Retired Americans. This is a commonsense 
piece of legislation that attacks waste at its source and improves the 
program without hurting real people. I urge all of my colleagues to 
support the bill.

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