Potentially Suspicious Link Uncovered

There has been a noticeable increase in payer actions regarding readmission denials, often justified as efforts to enhance quality of care and align with Medicare’s Hospital Readmissions Reduction Program (HRRP) for 30-day readmissions.

Many Medicare Advantage (MA) plans have adopted stricter policies, including Aetna’s recent update to deny readmissions across hospitals within the same healthcare system if they share the same Taxpayer Identification Number (TIN).

In an effort to hold MA plans accountable for quality, the Centers for Medicare & Medicaid Services (CMS) has tied 40 distinct quality and performance metrics to the Star Ratings methodology. These metrics influence member selection and determine quality bonus payments. Among the most heavily weighted measures is the Plan All-Cause Readmission (PACR) metric.

A higher rate of hospital readmissions can negatively affect a plan’s Star Rating, potentially jeopardizing its eligibility for quality bonuses, which require a rating of four stars or higher. To put this into perspective, the Kaiser Family Foundation (KFF) estimates that MA quality bonus payments will total at least $11.8 billion in 2024.

Based on this information, I was curious: if an MA payer denies a readmission, does this count towards their quality reporting?  If the encounter does not exist to the payer, or it is bundled by the payer to the index admission, how does this translate to a reportable encounter? 

To answer this question, I turned to the June 24 MedPAC Report to Congress – specifically, in Chapter 3, near the assessment of data sources, detailed findings are provided on the discrepancies in data reporting by MA plans, especially in relation to Healthcare Effectiveness Data and Information Set (HEDIS) measures and hospital readmissions. One significant issue highlighted is the misrepresentation of care quality, which creates a false impression of superior performance by MA plans compared to traditional Medicare.

MedPAC emphasized the incomplete and inaccurate nature of encounter data reported by MA plans. In several instances, encounter data were found to be inconsistent with Medicare Provider Analysis and Review (MedPAR) data, which tracks inpatient stays across the Medicare program. For example, the completeness of MA encounter data improved only slightly from 2020 to 2021, yet substantial variation remained across MA plans.

Some plans met only 80 percent of the data completeness thresholds set by MedPAC, indicating that significant gaps persist​.

The report also reveals that some MA plans underreport hospital readmissions, a key HEDIS measure related to care quality. Traditional Medicare data indicated a readmission rate of 15.3 percent for patients discharged after acute-care episodes, while MA plans reported readmission rates averaging around 12 percent. Further investigation would be needed as to why this is the case; however, data calculation is not unified between Traditional Medicare and MA plans. Analysis of beneficiaries found in both data sources show that the data included 11 percent more hospitalizations and 19 percent more readmissions than what was found in the HEDIS data submissions from MA plans.

When specifically linking concerns to denials, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) raised similar concerns in 2023.

“MA organizations (MAOs) are required to submit encounter data for all items and services provided to their members, including those for which the MA plan denied payment to the provider (e.g., out-of-network care or instances in which the plan acted as a secondary payer,” a 2022 CMS report read. “In contrast, MA bids reflect only the items and services for which the MA plan made payment. The encounter data do not include a reliable way to identify denied claims (Office of Inspector General, 2023).” 

The endnote went on to note that “MA encounter data do not include an indicator for identifying payment denials, and no standardized algorithm exists for identifying such claims.”

MedPAC has called for more stringent data validation measures, including enhanced audit protocols and penalties for plans that fail to meet data reporting standards. The report recommends that CMS require MA plans to align their reporting criteria more closely with those used in Traditional Medicare.

Furthermore, MedPAC suggests increasing the transparency of quality data, and incorporating more robust cross-references between HEDIS measures and real-world patient outcomes​.