Hospices Adjust to Encounter Data Under Medicare Advantage Carve-in

When Medicare Advantage begins to cover hospice under the 2021 carve-in, hospices and payers will have a new set of numbers to think about: Encounter data.

These detailed records of a patient’s health condition and health care services will likely affect the way hospices participating in Medicare Advantage will be reimbursed, but industry observers have raised concerns about the data’s accuracy.

The US Centers for Medicare & Medicaid Services (CMS) uses encounter data in the risk adjustment model that helps determine how much the agency pays Medicare Advantage plans.


Currently, hospice payments are determined using fee-for-service claims data. Under the Medicare Advantage carve-in, this would change for participating hospices.

“The hospice would be paid in full by the MA plan and, therefore, the MA plans would submit the data under the Encounter Data System (EDS) rather than as claims to the [fee-for-service] system,” Sean Creighton, managing director, Avalere Health, told Hospice News. Creighton co-authored a Feb. 25 blog for Health Affairs outlining research and public policy implications of CMS’ use of encounter data.

CMS seeks to use encounter data to make risk scores more accurately reflect the relative costs of providing patient care. The agency can also use the data to examine how Medicare Advantage plan processes may affect patient care delivery and the utilization of health care services.


In a 2017 study, the actuarial and consulting firm Milliman estimated that integrating EDS data into the risk-adjustment model could reduce payments to Medicare Advantage plans, with the revenue impact expected to grow as CMS increases the amount of EDS data factored into its risk adjustments.

Some have raised questions about the data collection and risk adjustment process, including the Medicare Payment Advisory Commission (MEDPAC) and the U.S. Government Accountability Office (GAO).

MEDPAC at its April 2018 meeting discussed three issues related to EDS data. They found that plans were not successfully submitting encounters for all settings, that about 1% of encounter records attribute enrollees to the wrong plan, and that encounter data differed substantially from data collected through other sources.

The GAO in a 2017 report indicated that health insurance companies and health care trade associations questioned CMS’s ability to properly identify diagnoses used for risk adjustment. GAO also cited concerns about data accuracy.

“CMS has yet to undertake activities that fully address encounter data accuracy, such as reviewing medical records,” the GAO said in its report. “To the extent that CMS is making payments based on data that have not been fully validated for completeness and accuracy, the soundness of billions of dollars in Medicare expenditures remains unsubstantiated.”

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