“Benefits and Challenges of Payment Adjustments Based on Beneficiaries’ Ability to Perform Daily Tasks,” Government Accountability Office (GAO-18-588)
“GAO found that for the sample of beneficiaries analyzed, the MA [Medicare Advantage] risk adjustment model underestimated spending for those with functional limitations and overestimated spending for those without such limitations. These findings suggest that risk adjustment accuracy could be improved by accounting for functional status, which could in turn reduce any financial disadvantages plans may experience by enrolling beneficiaries with functional limitations. … If this incentive causes MA plans to identify functional limitations more completely than providers in fee-for-service (FFS) Medicare, the risk adjustment process would need to account for this to avoid inappropriately high payments to plans because the risk adjustment model is estimated based on FFS data.”
LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):
“Functional limitations” here mean ADLs such as help with bathing and dressing. Recently allowing MA plans to pay for traditional long-term services and supports was the camel’s nose under the tent. Basing reimbursement on level of functional limitation could let in most of the rest of the camel and be another factor keeping out private LTC insurance.