TY  - JOUR
AU  - Geruso, Michael
AU  - Layton, Timothy
TI  - Upcoding: Evidence from Medicare on Squishy Risk Adjustment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 21222
PY  - 2015
Y2  - May 2015
DO  - 10.3386/w21222
UR  - http://www.nber.org/papers/w21222
L1  - http://www.nber.org/papers/w21222.pdf
N1  - Author contact info:
Michael Geruso
University of Texas at Austin
Department of Economics
1 University Station C3100
Austin, TX 78712
Tel: 512/475-8704
E-Mail: mike.geruso@austin.utexas.edu

Timothy Layton
Harvard Medical School
Department of Health Care Policy
180 Longwood Avenue
Boston, MA 02115
Tel: 617/432-4465
E-Mail: layton@hcp.med.harvard.edu
M2  - featured in NBER digest on 2015-09-01
AB  - 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 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.
ER  -