Article Impact Level: HIGH Data Quality: STRONG Summary of Annals of Internal Medicine. https://doi.org/10.7326/ANNALS-24-01345 Dr. Richard Kronick et al.
Points
- The study assessed differences in coding intensity between Medicare Advantage (MA) plans and traditional Medicare (TM), analyzing 697 MA contracts from 193 U.S. insurers to evaluate the impact on insurer revenue.
- In 2021, the average risk score for MA plans was 1.26, while the comparable score for TM was 1.07, showing a gap of 0.19, influencing the payments insurers receive.
- Significant variation in coding intensity was found, with UnitedHealth Group showing a 0.28 higher risk score than TM, while Kaiser Permanente exhibited only a slight increase compared to TM.
- The differential coding resulted in approximately $33 billion in additional payments to MA insurers in 2021, with UnitedHealth receiving $13.9 billion, accounting for 42% of the total additional payment.
- The study concludes that reforms targeting differential coding would impact insurers differently, with larger insurers like UnitedHealth benefiting more than smaller ones. However, beneficiary demographics and health status may influence these results.
Summary
This study aimed to assess how coding intensity differs between Medicare Advantage (MA) plans and the traditional Medicare (TM) program and the impact of these differences on insurer revenue. The researchers analyzed coding patterns across 697 MA contracts offered by 193 insurers in the U.S. Medicare program. The study focused on the effect of differential coding on contract-level risk scores, which influence payments to insurers. The results showed that 2021 the average risk score for MA plans was 1.26, while the comparable risk score for TM was 1.07, with a gap of 0.19 (95% CI, 0.17 to 0.21) between the two programs.
The analysis also revealed significant variation among insurers. UnitedHealth Group had a notably higher risk score, 0.28 (95% CI, 0.26 to 0.31), than the case under TM coding patterns. In contrast, Kaiser Permanente showed only a slight increase in coding intensity compared to TM. This difference in coding intensity resulted in a substantial financial impact, with MA insurers receiving approximately $33 billion (95% CI, $28 billion to $38.5 billion) in additional payment in 2021 due to differential coding. Of this total, UnitedHealth received $13.9 billion (95% CI, $12.4 billion to $15.5 billion), accounting for 42% of the total additional payments.
The study concludes that reforms targeting differential coding in MA plans would have a varied impact across insurers, with larger insurers like UnitedHealth benefiting more than smaller providers like Kaiser Permanente. However, these estimates may be influenced by differences in the demographic characteristics or health status of beneficiaries between the MA and TM groups, which could impact the accuracy of the findings.
Link to the article: https://www.acpjournals.org/doi/10.7326/ANNALS-24-01345
References Kronick, R., Chua, F. M., Krauss, R., Johnson, L., & Waldo, D. (2025). Insurer-Level Estimates of Revenue From Differential Coding in Medicare Advantage. Annals of Internal Medicine. https://doi.org/10.7326/ANNALS-24-01345
