What Is a Medicare Risk Assessment?

How Private Insurance Companies Take Money from the Government

Day Dreaming Elderly Senior Man Staring Through Hazy Window

You may not feel the pinch, but the federal government sure 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 your health information.

The Difference Between Original Medicare and Medicare Advantage

Original Medicare is what you have always known as Medicare. It came into existence with the Social Security Amendments of 1965 and offers both hospital insurance (Part A) and medical insurance (Part B). In 2006, Medicare Part D was added as an optional part of Medicare that provides prescription drug coverage.

That explains Parts A, B, and D, but what about Part C?

This is where Medicare Advantage comes into play. Medicare Part C, aka Medicare Advantage (formerly Medicare+Choice), is an alternative to Original Medicare. A Medicare Advantage plan may or may not include Part D coverage benefits.

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.

How The Federal Government Works with 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 to do it.

The government pays them a "per capita" amount each month to take care of you. This means there is a standard rate paid by the government for each person that signs up for a Medicare Advantage plan. The amount the insurance company is reimbursed, however, gets higher with every chronic medical condition you have. This is based on a calculated Medicare risk assessment score.

How Medicare Risk Assessments Work

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 a higher Medicare risk assessment score and more federal funding.

The question is whether or not they will actually use that extra money to take care of you or if they will choose to pocket those dollars instead.

In reality, 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 doctors 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 assessment scores, your insurer may want to send their own physician 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 Assessment

Your insurance company may reach out to you for an optional home visit. It may be labeled either 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, and many seniors love it. You get an hour of face time with a physician in the comfort of your own home when you often have limited time in a doctor's office.

The visiting physician 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 doctor will not 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 has rarely been found to be the case. 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 are still on the hook for paying Part A and Part B premiums to the government. Thankfully, most people can get their Part A premiums for free. If you choose a Medicare Advantage plan, you may also pay a monthly premium to the insurance company. Very few Medicare Advantages plans are available without a premium, though a few do exist.

Even if your Medicare risk score is higher, your Medicare Advantage plan will cost you exactly the same. Your insurance company gets a hold of the extra money but that money is not earmarked for you. The company banks it and ultimately decides how to spend it.

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 is expected to run out of funds by 2026.

The question remains: Is Medicare Advantage as a whole advantageous from a cost-analysis perspective? In 2012, The Commonwealth Fund found that 75 percent of Medicare Advantage plans spent more on care than Original Medicare. Medicare Advantage plans in some cities, however, were more successful in keeping costs lower than traditional Medicare.

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 health care. Insurers use these home visits as a way to boost company profits.

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Article Sources

  • Does Medicare Advantage Cost Less Than Traditional Medicare? The Commonwealth Fund. http://www.commonwealthfund.org/publications/issue-briefs/2016/jan/does-medicare-advantage-cost-less. Published January 28, 2016.

  • How do Medicare Advantage Plans work? Medicare.gov. https://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/how-medicare-advantage-plans-work.html.

  • Cubanski J, Neuman T. The Facts on Medicare Spending and Financing. The Henry J. Kaiser Family Foundation. https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/. Published June 22, 2018.

  • Understanding Risk Adjustment in Medicare Advantage. The Better Medicare Alliance. http://bettermedicarealliance.org/sites/default/files/Understanding_Risk_Adjustment_in_Medicare_Advantage_February_2016.pdf. Published February 2016.

  • Shulte F, Donald D, Durkin E. Why Medicare Advantage Costs Taxpayers Billions More Than It Should. The Center for Public Integrity website. https://www.publicintegrity.org/2014/06/04/14840/why-medicare-advantage-costs-taxpayers-billions-more-it-should. Published June 4, 2014.