A new KFF analysis reveals that retrospective chart reviews are a primary driver of risk-adjusted payments for Medicare Advantage insurers, often adding diagnoses, and revenue, without accompanying evidence of medical care.
Retrospective chart reviews have become a massive revenue generator for Medicare Advantage (MA) insurers, creating an estimated $24 billion in additional payments in 2023 alone. While these reviews are ostensibly intended to ensure accurate coding, they are often used to add diagnoses that increase risk scores rather than remove invalid ones.
An analysis of 2022 encounter data by KFF shows that 62% of all MA enrollees had at least one chart review record. More significantly, for one in six enrollees (17%), these reviews led to the addition of a diagnosis that did not appear in any other documentation submitted by providers.
This means that for millions of seniors, insurers were paid for conditions for which there is no evidence of active medical treatment or care delivery.
A "One-Way Street" for Revenue
The analysis highlights a stark asymmetry in how chart reviews are utilized. While these reviews can theoretically be used to correct errors by deleting invalid diagnoses, this rarely happens. Diagnoses were added to increase payments for 17% of enrollees, while diagnoses were removed for just 1%.
This disparity has drawn the attention of the Department of Justice, which is pursuing litigation against several insurers for allegedly using chart reviews as a one-way mechanism to inflate risk scores without deleting unsupported claims.
Top Conditions Driving the Revenue Spike
The added diagnoses are often high-value chronic conditions that trigger significant risk adjustment payments. According to the analysis, the most commonly added conditions include:
- Vascular disease
- Diabetes with chronic complications
- Chronic Obstructive Pulmonary Disease (COPD)
- Major depressive, bipolar, and paranoid disorders
- Morbid obesity
Variation Among Major Payers
The reliance on chart reviews varies significantly across the largest MA organizations. CVS Health (86%), Elevance Health (82%), and UnitedHealthcare (77%) had the highest share of enrollees with chart review records.
In terms of financial impact, Centene and UnitedHealthcare were the most aggressive, with diagnoses added for 26% and 23% of their respective enrollees. In contrast, integrated systems utilized the practice far less frequently, adding diagnoses for only 4% of enrollees.
Luke Gale is the revenue cycle editor for HealthLeaders.
KEY TAKEAWAYS
Chart reviews generated an estimated $24 billion in extra payments to MA plans in 2023.
For 17% of enrollees, chart reviews added diagnoses that did not appear in any other medical records.
Major insurers vary widely in their use of the tactic, with Centene and UnitedHealthcare adding diagnoses at significantly higher rates than competitors like Kaiser Permanente.