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. 2020 Mar;12(3):984-1026.
doi: 10.1086/704756. Epub 2020 Jan 29.

Upcoding: Evidence from Medicare on Squishy Risk Adjustment

Michael Geruso  1 , Timothy Layton  2
Affiliations

Upcoding: Evidence from Medicare on Squishy Risk Adjustment

Michael Geruso et al. J Polit Econ. 2020 Mar.

Abstract

In most US health insurance markets, plans face strong incentives to "upcode" the patient diagnoses they report to the regulator, as these affect the risk-adjusted payments plans receive. We show that enrollees in private Medicare plans generate 6% to 16% higher diagnosis-based risk scores than they would under fee-for-service Medicare, where diagnoses do not affect most provider payments. Our estimates imply that upcoding generates billions in excess public spending and significant distortions to firm and consumer behavior. We show that coding intensity increases with vertical integration, suggesting a principal-agent problem faced by insurers, who desire more intense coding from the providers with whom they contract.

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Figures

Figure A1:
Figure A1:
How Risk Scores are Influenced by Insurers
Figure A2:
Figure A2:
Identifying Coding Differences in Selection Markets: Alternative Forms of Selection
Figure A3:
Figure A3:
Geography of Growth in Medicare Advantage, 2006 to 2011
Figure A4:
Figure A4:
Identification: Coding Effects Plausibly Observed Only with a Lag in Medicare
Figure A5:
Figure A5:
Diff-in-Diff Event Study at Age 65: Counts of Coded Conditions
Figure A6:
Figure A6:
Identification when ρ+ϵ Varies with θ
Figure 1:
Figure 1:
Identifying Coding Differences in Selection Markets
Figure 2:
Figure 2:
Identification: Within-County Growth in Medicare Advantage Penetration
Figure 3:
Figure 3:
Alternative Identification: Diff-in-Diff Event Study at Age 65, MA versus FFS
See this image and copyright information in PMC

References

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