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What is the No Upcode Act?

Updated: Sep 11, 2023

A bipartisan bill has recently been introduced by Senators Bill Cassidy, MD (R-LA) and Jeff Merkley (D-OR) aimed at addressing risk scoring reimbursement methodology and preventing fraud, waste, and abuse in the Medicare Advantage program. Known as the No Unreasonable Payments, Coding or Diagnosis for the Elderly Act (NO UPCODE), the bill proposes revisions to the Social Security Act (42 U.S.C. 1395w-23(a)). Its primary objective is to establish guidelines for insurers and healthcare providers that ensure the accuracy and timeliness of medical coding and diagnoses while promoting reasonable payments for services.

Traditional Medicare is a fee-for-service system where health plans reimburse providers for the cost of treatments rendered. However, Medicare Advantage plans are paid a rate based on the health status of their patients. This bill seeks to address overpayments in Medicare Advantage by eliminating financial incentives to upcode, which involves making beneficiaries appear sicker than they may be in order to obtain higher Medicare reimbursements.

The proposed legislation encompasses several key proposals, including:

  • Utilization of two years of diagnostic data in the risk adjustment model to calculate risk adjustment payments, as opposed to the current use of only one year. Incorporating data from multiple years provides a more comprehensive and accurate representation of a patient’s health status. Multi-year data can mitigate variability due to factors such as coding practices and documentation inconsistencies as well as enhancing stability of risk scores caused by outliers or temporary spikes in healthcare utilization.

  • Exclusion of chart reviews and health assessments when adjusting risk payments for health status. Medical record reviews and health risk assessments have been an area of focus and concern for the Department of Health and Human Services Office of the Inspector General (OIG) over the past several years as a way to inflate risk adjustment payments. This proposal would seek to eliminate the use of these reviews as historically, health plans have been found to use them only for adding, not deleting diagnoses.

  • Conduct reviews of the coding pattern disparities between traditional Medicare and Medicare Advantage, and evaluate its impact on risk scores for Medicare Advantage beneficiaries. As increased risk scores result in higher payments to Medicare Advantage organizations, this methodology can create an incentive for over or “upcoding” of conditions.

The components of this legislation aim to enhance the accuracy and integrity of the Medicare Advantage Risk Adjustment program, reducing the potential for overpayment and ensuring that reimbursements align with the actual health status of beneficiaries. By implementing these measures, the NO UPCODE Act seeks to promote fairness, combat fraud, and protect the financial sustainability of the Medicare Advantage program.

Should the No UPCODE Act become law, it would reshape the existing standards that health plans and providers currently use relating to diagnosis documentation. There will be a greater onus on these entities to exercise caution in their coding practices, potentially leading to a reduction in risk-adjusted payments received. This could indirectly cause a decrease in the quality of patient care as the financial motivation for plans and providers to fully identify, document, and treat all conditions may lessen. However, health plans and providers who have been accurately and responsibly documenting patients’ conditions in compliance with CMS guidelines are likely to see a minimal impact to their Medicare Risk Adjustment reimbursements.

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