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NEW REPORT: Nonpartisan Government Watchdog Cautions CMS to Halt Phase-In of Encounter Data Program to Ensure Proper Medicare Advantage Payments

January 19, 2017

WASHINGTON, D.C. – The nonpartisan Government Accountability Office (GAO) released a new report highlighting the Center for Medicare and Medicaid Services’ (CMS) insufficient progress implementing the encounter data system, a critical component of administering proper Medicare Advantage payments. The report reveals that, despite GAO’s 2014 recommendations, CMS has yet to take critical steps to ensure the encounter data system accurately acquires diagnostic information, making the Medicare Advantage program vulnerable to improper payments and wasted Medicare dollars.

Based on the report’s findings, the GAO recommends that CMS validate the accuracy and completeness of the encounter data it receives before using it for Medicare payment purposes.

Following the release of the report, Ways and Means Committee Chairman Kevin Brady (R-TX) said:

“This new GAO study proves once again that the encounter data system is not ready for further implementation. While the system was created to ensure proper payments for the millions of seniors who rely on Medicare Advantage to receive health care, it will not work with incomplete and inaccurate data and could lead to higher premiums or reduced benefits down the road. CMS must ensure the data it receives is accurate to guarantee taxpayer dollars are being spent correctly.”

Energy and Commerce Committee Chairman Greg Walden (R-OR) said:

“This report raises more concerns about the encounter data system and whether it is ready to perform its duties. While some improvements have been made since GAO’s 2014 report, key recommendations from the government watchdog have yet to be implemented. I support the GAO’s urging that CMS should fully assess its data quality before implementing, so we can best serve beneficiaries in need of care.”

In 2004, CMS began using the encounter data system to calculate Medicare payments to Medicare Advantage plans. On March 4, 2016, leaders of the Ways and Means and Energy and Commerce Committees sent a letter to CMS expressing concerns with the encounter data system. Then-Ways and Means Committee Chairman Paul Ryan (R-WI), then-Energy and Commerce Committee Chairman Fred Upton (R-MI), and then-Ways and Means Committee Ranking Member Sander Levin (D-MI) requested the GAO report on September 22, 2015.

CLICK HERE to read the full GAO report.