A federal watchdog found major inaccuracies in Medicare’s race and ethnicity data, an obstacle for the Biden administration as it presses to close major gaps in health equity.

The Department of Health and Human Services’ Office of Inspector General (OIG) released a report Friday showing inaccuracies and limitations on Medicare’s enrollment data on race and ethnicity. The report comes as the Centers for Medicare & Medicaid Services (CMS) has sought to collect race and ethnicity data from providers and payers. 

OIG found that CMS may need access to new data. 

“Medicare’s enrollment race and ethnicity data are less accurate for some groups, particularly for beneficiaries identified as American Indian/Alaska Native, Asian/Pacific Islander or Hispanic,” OIG wrote. “Data that are not accurate limit the ability to assess health disparities.”

OIG compared self-reported data for a subset of beneficiaries that reside in nursing homes to Medicare’s data. It found that the self-reported data were the most accurate. 

Medicare currently collects race and ethnicity data from the Social Security Administration and then applies an algorithm to the data. It also gets the self-reported data from nursing homes. 

OIG found the enrollment data from Medicare sometimes will identify a beneficiary as a race or ethnicity that they don’t identify themselves as part of the self-reported data in a nursing home assessment.

“For example, 28% of the beneficiaries identified as Hispanic in the enrollment data do not identify themselves as Hispanic on their nursing home assessments,” the report said.

It also the same error for 46% of beneficiaries identified in Medicare’s data as Indian or Alaska Native. Another issue is 13% of beneficiaries that self-identified as Hispanic in their nursing home assessments aren’t identified that way in the Medicare data. 

The watchdog also found that Medicare’s collection of enrollment data for race and ethnicity was not consistent with federal data standards.

OIG is recommending that CMS create its own source of race and ethnicity data and not rely on the Social Security Administration. It also should rely on self-reported race and ethnicity information to help improve the current data it has. 

CMS also needs to create a new process for ensuring the data are more standardized and perform outreach to beneficiaries on the importance of the information, the agency added. The agency didn’t “explicitly concur” with the first recommendation but agreed with the other three. 

CMS has made improving health equity a massive priority under the Biden administration. It is exploring mandating collection of race and ethnicity data from providers and Medicare Advantage plans and is soliciting comments on other solutions, including new quality measures focused on equity.