What Is a Medicare Risk Assessment?

How Private Medicare Companies Get Funded

Medicare risk assessment

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You may not feel the pinch but the federal government does. Private insurance companies may be making a profit off the government when they offer you what seem to be "free" home care services. If you have ever had an in-home Medicare risk assessment, you may want to know how your insurance company could be using that health information.

Government Works With Private Insurers

Original Medicare is what you traditionally know as Medicare. It includes both hospital insurance (Part A) and medical insurance (Part B). Medicare Part C, aka Medicare Advantage, is an alternative to Original Medicare.

All Medicare Advantage plans cover what Part A and Part B do but they can, if they choose, offer you additional services. Why? Because instead of being run by the government, these plans are run by private insurance companies.

Why would a private insurance company want to sign up people on Medicare? By definition, beneficiaries will either be 65 years and older or if they are younger, they will have long-standing disabilities. No matter how you look at it, they are at higher risk for having chronic medical problems that are likely to require more healthcare spending.

For-profit companies got into the Medicare business because the federal government pays them a "per capita" amount each month to take care of you. The amount the insurance company is reimbursed gets higher with every chronic medical condition you have.

This is based on a calculated Medicare risk assessment score that estimates how much a patient on Original Medicare would have spent in health costs. This was estimated to be $11,545 per enrollee in 2019.

How the Medicare Risk Assessment Works

It is in an insurer's best interest to have access to a well-documented medical record that lists as many chronic medical conditions as possible. In this way, they can get the highest possible Medicare risk assessment score and more federal funding.

Private insurers do not have direct access to your medical records. The medical records are secured by your healthcare facility, not the insurance company. The insurer can only see the diagnoses that are billed for by your practitioners and other healthcare providers. Easily, there could be information noted on your medical chart that is not billed into the system.

In order to maximize their Medicare risk adjustment scores, your insurer may want to send their own healthcare provider to your home to get that information. They cannot rely on information given over the telephone. In order for information to count towards a Medicare risk assessment score, there must be a face-to-face encounter with a medical provider.

The In-Home Risk Assessment

Your insurance company may reach out to you for an optional home visit. They may call it an annual physical or a wellness visit. Either way, they promote the service as a way to assure that their clients are as healthy as possible and safe in their homes. Better yet, they offer it free of charge.

It is a great marketing technique. You get an hour of face time with a healthcare provider in the comfort of your own home when you often have limited time in a practitioner's office. The visiting practitioner reviews your medications, your medical history, your family history, your social history, and performs a simple physical exam including a blood pressure check.

Though this healthcare provider will not actually treat you or prescribe you medication, all information gathered will be shared with your primary care physician. More importantly, for the insurance company, the data collected can be used to boost your Medicare risk assessment score.

Do these visits actually improve the quality of care someone receives in the long run? That much is unclear. What they have been shown to do, however, is to improve member loyalty to a given insurance plan. More to the point, they have significantly increased federal spending on Medicare.

The True Cost of Medicare Advantage

Whether you go the Original Medicare or Medicare Advantage route, you still pay Part A and Part B premiums to the government. Thankfully, most people get their Part A premiums for free. If you choose a Medicare Advantage plan, you could also pay a monthly premium to the insurance company.

Regardless of your risk adjustment score, your Medicare Advantage plan will cost you exactly the same. Your insurance company, however, gets extra funding. The question is whether or not the insurer will use that extra money to take care of you or if they will pocket those dollars instead. Unfortunately, the federal government has found the latter to be true.

The U.S. Department of Justice recouped $30 million from Sutter Health in 2019 for inflating Medicare risk scores for profit. They also sued UnitedHealth Group Inc. in 2017, Anthem Inc. in March 2020, and Cigna in August 2020 for misusing Medicare risk adjustment scores to get higher payments.

It is estimated that Medicare Advantage plans overbilled the government nearly $70 billion from 2008 to 2013 based on improperly adjusted Medicare risk scores alone. If the trend continues, the solvency of Medicare (how long the Medicare Trust Fund will last) could be at risk.

As it stands, Medicare will not be solvent by 2026. At that time, it would only be able to afford to pay for 90% of the services it does in 2020. Can we afford to hand Medicare over to insurance companies if they continue to put profits before people?

A Word From Verywell

The federal government pays Medicare Advantage plans a "per capita" rate for each Medicare beneficiary. This rate is based on a risk assessment score. In order to boost those scores and to maximize the dollars they get from the federal government, insurers may offer you a free home visit with one of their medical providers.

While this sounds good on the surface, any increased funding the insurer receives does not necessarily go to your personal health care. Insurers use these home visits as a way to boost company profits.

By Tanya Feke, MD
Tanya Feke, MD, is a board-certified family physician, patient advocate and best-selling author of "Medicare Essentials: A Physician Insider Explains the Fine Print."