Time-to-Event Estimation with Unreliably Reported Events in Medicare Health Plan Payment

Oana M. Enache and Sherri Rose

Papers from arXiv.org

Abstract: Time-to-event estimation (i.e., survival analysis) is common in health research, most often using methods that assume proportional hazards and no competing risks. Because both assumptions are frequently invalid, estimators more aligned with real-world settings have been proposed. An effect can be estimated as the difference in areas below the cumulative incidence functions of two groups up to a pre-specified time point. This approach, restricted mean time lost (RMTL), can be used in settings with competing risks as well. We extend RMTL estimation for use in an understudied health policy application in Medicare. Medicare currently supports healthcare payment for over 69 million beneficiaries, most of whom are enrolled in Medicare Advantage plans and receive insurance from private insurers. These insurers are prospectively paid by the federal government for each of their beneficiaries' anticipated health needs using an ordinary least squares linear regression algorithm. As all coefficients are positive and predictor variables are largely insurer-submitted health conditions, insurers are incentivized to upcode, or report more diagnoses than may be accurate. Such gaming is projected to cost the federal government $40 billion in 2025 alone without clear benefit to beneficiaries. We propose several novel estimators of coding intensity and possible upcoding in Medicare Advantage, including accounting for unreliable reporting. We demonstrate estimator performance in simulated data leveraging the National Institutes of Health's All of Us study and also develop an open source R package to simulate realistic labeled upcoding data, which were not previously available.

Date: 2026-02
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