Dive Brief:
- Elevance continues to sidestep steep government sanctions after failing to correctly submit data to the CMS about its Medicare Advantage plans.
- In a letter sent to Elevance on Friday, the CMS said it “will not impose intermediate sanctions at this time” after Elevance resubmitted the data in question and refunded estimated overpayments to the government. The threatened sanctions — including forbidding Elevance’s MA plans to enroll new members, which poses a significant reputational and financial hit to the company — were set to kick in Saturday.
- Still, Elevance has more to do to fully come into compliance, otherwise the sanctions will take effect at the start of July, regulators said.
Dive Insight:
Earlier this year, the CMS alleged that Elevance, a major player in privatized MA plans, failed to submit data backing up its members’ risk adjustment scores through the CMS’ electronic systems for the past seven years.
That’s problematic because it made it harder for the CMS to ensure that Elevance’s risk scores — a key measure of Medicare beneficiaries’ health statuses that impact how much a plan gets paid for their care — were accurate, regulators said. It also made it more difficult for the agency to identify and claw back potential overpayments.
The CMS gave Elevance until the end of March to fix the issue before sanctions kicked in. Elevance denied any improper behavior, while asking regulators for more time to comply. The CMS granted the company’s request, and gave the company until the end of May.
Now, Elevance is making progress, according to CMS’ letter to Aimee Dailey, Elevance’s Medicare president.
Elevance has correctly resubmitted its risk adjustment data and sent a wire transfer to the CMS containing its best estimate of overpayments Elevance received as a result of incorrect data submissions, according to the letter.
Elevance declined to share how much it paid the CMS. But in financial documents published in April, Elevance sized its liability at around $935 million, give or take $500 million. That puts Elevance in a potential liability range of $350 million to $1.5 billion.
Still, Elevance has more to do, John Scott, the director of CMS’ MA enforcement group, wrote in the letter.
Elevance must resolve any errors identified in the CMS’ risk adjustment processing system by the end of June, and repay any additional overpayments the CMS discovers, Scott said. Otherwise, the sanctions could still take effect on July 1.
The threatened sanctions are severe. Along with preventing Elevance’s MA plans from enrolling new members, the CMS also plans to suspend certain communications to Medicare beneficiaries if the company fails to comply.
According to analysts, the penalties would ding Elevance’s reputation and standing among brokers, likely curtailing membership growth in the future. That’s not a major threat at the moment, given Elevance already planned to trim its MA membership this year to bolster margins in the privatized Medicare program.
But it could make it harder for Elevance to grow in the future after margins stabilize, analysts said.
An Elevance spokesperson said that the company continues to engage in constructive dialogue with regulators and remains optimistic that a resolution can be reached.
Despite the additional steps Elevance has to take to avoid the sanctions, Friday’s update makes it more likely that Elevance will soon put the matter in the rearview, analysts said.
“Barring an unforeseen issue, we see this as a positive indication [Elevance] will satisfy the remaining steps and avoid MA enrollment sanctions,” TD Cowen analyst Ryan Langston wrote in a note Sunday.
