THE EXECUTIVE DIRECTOR of the Massachusetts Health Policy Commission said there was no need to further investigate the proposed purchase of Atrius Health by Optum, but several members of the board of directors suggested the agency should dig deeper, particularly into Optum’s use of diagnostic coding to increase revenues.
In a presentation to the board on Thursday, commission staff said a preliminary review of the proposed acquisition indicated it would not significantly increase medical spending in Massachusetts or disrupt the market. The staffers said there was no need to launch a more in-depth investigation, called a cost and market impact review.
But commissioner Don Berwick said the agency was making a mistake. He said there is widespread speculation that Optum is gobbling up practices across the country and using sophisticated data-gathering techniques to mine the health background of patients to build up or inflate the seriousness of their diagnoses. The more serious the diagnosis, the more the health care provider is paid for the treatment provided.
Berwick said the practice, called up-coding, is already a problem in Massachusetts and the commission should investigate Optum’s behavior in other states before allowing its acquisition of Atrius to move forward.
“I think we’re flying blind and we don’t have to,” he said, calling for the more in-depth review.
Based in Newton, Atrius is the largest physician-led nonprofit health care organization in Massachusetts with 1,000 clinicians. Its four practice groups are Harvard Vanguard, Dedham Medical Associates, Granite Medical Group, and PMG Physician Associates. The nonprofit has a reputation for efficiency and relatively low cost; it sought out a merger partner because of persistent financial losses over the last few years.
Optum, based in Minnesota, is part of a large for-profit health care enterprise that includes the insurance carrier UnitedHealthcare. Optum in recent years has been acquiring physician practices in California, Texas, Connecticut, and Massachusetts (Reliant Medical Group in 2018). It currently employs 53,000 physicians with 19 million patients nationwide.
A number of the board members of the commission sided with Berwick, saying the coding issue was a concern.
But David Seltz, the executive director of the commission, argued against a longer review on procedural and practical grounds. Seltz said the commission did not have grounds to launch the more in-depth investigation and he said the pursuit of data on coding in other states was likely to be a dead-end. “The data is really quite limited,” he said.
Stuart Altman, the chair of the commission, agreed with Berwick that coding was a concern but sided with Seltz. “This is not the type of information you can easily find,” he said.
Ultimately, the board adjourned without taking any formal action on the matter. No final decision was announced, but Seltz gave no indication he was changing his mind about not needing a more in-depth investigation. He did seem amenable to raising coding and other concerns with the attorney general’s office, which must also sign off on the acquisition.
In 2019, the commission raised concerns about the practice of coding in Massachusetts. Agency officials reviewed five years of data and found a sharp increase in patients being discharged with high-acuity codes and patient risk scores. The researchers said it was implausible that the general population suddenly was getting sicker and concluded health care providers were massaging the diagnosis codes.
“An industry has formed around leveraging electronic health record systems to mine patient clinical history to increase the number and complexity of diagnoses coded to maximize reimbursement,” according to the presentation to the commission.
