Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and
business strategies about Medicare Advantage plans, product design, marketing,
enrollment, market expansions, CMS audits, and countless federal initiatives in
MA and Medicaid managed care.
By Lauren
Flynn Kelly, Managing Editor
January 4, 2018Volume 24Issue 1
CMS late last month gave Medicare Advantage
organizations an early look at changes to the Part C risk adjustment model and
the use of encounter data in determining risk scores with the release of Part 1
of the 2019 Advance Notice of Methodological Changes for MA Capitation Rates and
Part D Payment Policies. In addition to proposing new codes to account for
mental health, substance use disorder and the severity of chronic kidney
disease conditions — which CMS was mandated to explore in the 21st Century
Cures Act — the Advance Notice proposed increasing the use of encounter data as
a diagnosis source for 2019.
Because
of requirements in the Cures Act, CMS is publishing the Advance Notice in two
parts this year, with the first component containing changes to the CMS
Hierarchical Condition Category (HCC) risk adjustment model that must have a
60-day comment period. The second part of the Advance Notice, which will
include changes to other payment methodologies proposed for 2019 that require
only 30 days for comment, will be released no later than the statutory deadline
of Jan. 31.
The
Cures Act required CMS to, among other things, allow beneficiaries with
end-stage renal disease to enter the MA program and assess the impact of
including in the risk adjustment model additional diagnosis codes related to
mental health and substance use disorders as well as the severity of chronic
kidney disease (MAN 12/15/16, p. 1). According to the Advance
Notice posted Dec. 27, 2017, CMS proposed to refine the CMS-HCC risk adjustment
model by incorporating several new HCCs pertaining to mental health, substance
use disorder and chronic kidney disease.
Additionally,
CMS proposed to add diagnoses to the existing Drug/Alcohol Dependence code (HCC
55) to “better account for the costs related to accidental (unintentional) or
undetermined overdose” and rename it “Drug/Alcohol Dependence, or Abuse/Use
with Complications.”
“The
new HCC codes incent MA plans to focus on HHS priorities — particularly
recognizing and treating substance abuse,” remarks Michael Adelberg, a
principal with FaegreBD Consulting and a former top CMS MA official. “While not
unexpected, this is good news for pretty much all stakeholders.”
CMS Considers Condition
Count Options
The Cures Act also required that CMS consider
the total number of diseases or conditions an enrollee has when making changes
to the risk adjustment model. As a result, CMS in the Advance Notice proposed
the “Payment Condition Count model,” which takes into account the number of
conditions that an individual beneficiary has, only among the conditions that
are included in the payment model. CMS in the document also discussed as an
alternative the “All Condition Count model,” which considers all conditions that
a beneficiary has, including both those in the payment model and those not in
the model. CMS said it welcomes comment on which model would be most
appropriate and the clinical considerations regarding the most appropriate
model.
In keeping with a requirement in the Cures Act
that CMS fully phase in the risk adjustment changes by 2022, CMS proposed
starting with a blend of 75% of the model used for payment in 2017 and 2018 and
25% of the proposed Payment Condition Count model for 2019. That mix would change
to 50/50 for 2020 and 25/75 for 2021 before reaching 100% of the Payment
Condition Count model for 2022, according to the document.
CMS estimated that the Payment Condition Count
model would raise MA risk scores by 1.1% on average, while the All Condition
Count model would lower MA risk scores by 0.28% (see charts, pp. 3 and 4).
Under the former, the change in MA contracts’ risk scores is generally positive
and less varied than the latter, added CMS.
Proposed Model Would
Boost Payments
“The immediate impact is minor in 2019, but the
adoption of the proposed [Payment Condition Count] model would be generally
positive for Medicare Advantage plans, as the average estimated impact is
positive on risk scores (boosting reimbursement) and there isn’t significant variation
in impact at the contract level (though some contracts could still see a
negative impact),” observed securities analyst Michael Newshel in a Dec. 28
research note from Evercore ISI.
Although not mandated by the Cures Act, CMS in
the Advance Notice also proposed for payment year 2019 calculating risk scores
using a blend of 25% of the risk score derived from encounter data and
fee-for-service diagnoses and 75% of the risk score calculated with diagnoses
from the old risk adjustment payment system (RAPS) and FFS diagnoses.
CMS in 2012 began collecting data from MAOs
through the encounter data system and in 2016 began phasing in EDS-based
payments, beginning with 10% of the payment based on EDS scoring, while the
other 90% came from RAPS, which relies on a much less complex set of data
elements. CMS’s intent was to advance to a 50/50 mix for 2017, but it revised
the blend to 25% EDS/75% RAPS after hearing the concerns of stakeholders about
plan readiness and the quality of the data coming from providers (MAN
4/3/16, p. 1). CMS in the 2018 Advance Notice proposed keeping that same
blend but in the final payment notice walked it back even further to 15%
EDS/85% RAPS (MAN 4/13/17, p. 1).
Comments on the proposed changes are due by
March 2.
View Part 1 of the 2019 Advance Notice under the
“Announcements and Documents” page at https://tinyurl.com/y7eg3hom.
Estimated Change in MA
Contract-Level Risk Scores Using the Payment Condition Count Model
The following chart displays the estimated
percent change in payment for 446 Medicare Advantage contracts if CMS were to
adopt the proposed Payment Condition Count model, which takes into account the
number of conditions that an individual beneficiary has, only among the
conditions that are included in the payment model.
SOURCE: Part 1 of the 2019 Advance Notice of
Methodological Changes for MA Capitation Rates and Part D Payment Policies,
released by CMS on Dec. 27, 2017.
Estimated Change in MA
Contract-Level Risk Scores Using the All Condition Count Model
The following chart displays the estimated
percent change in payment for 446 Medicare Advantage contracts if CMS were to
adopt the All Condition Count model, which takes into account all conditions
that a beneficiary has, including both those in the payment model and those not
in the model.
SOURCE: Part 1 of the 2019 Advance Notice of
Methodological Changes for MA Capitation Rates and Part D Payment Policies,
released by CMS on Dec. 27, 2017.
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