CMS
anticipates a bump in revenue of approximately 1.66 percent due to the rate
changes.
April
07, 2020 - CMS has finalized its
Medicare Advantage and Part D rates, including finalizing the disputed Medicare
Advantage end-stage renal disease (ESRD) payment rule without changes.
CMS
anticipates a slight uptick (1.66 percent) in revenue as a result of the new
rate announcement, based on its changes to the reimbursement methodologies for
Medicare Advantage organizations, PACE organizations, and Part D sponsors. The
uptick does not account for the adjustments related to the underlying coding
trend, which CMS anticipates will bump most risk scores by around 3.56 percent.
The
finalized Medicare Advantage risk adjustment model followed the process
outlined by the 2020 CMS-Hierarchical Condition Categories (HCC) model. Per the
21st Century Cures Act, CMS has to phase in the established risk adjustment
changes over three years.
For
contract year (CY) 2021, risk cores will be calculated as the sum of 75 percent
of the risk score calculated with the 2020 CMS-HCC model and 25 percent of the
risk score calculated with the 2017 model.
CMS has
been increasing its reliance on encounter data to calculate risk scores,
preferring encounter data over the former risk adjustment processing system.
Thus, since CY 2015, CMS has been requesting more encounter data from Medicare
Advantage plans.
For CY
2021, CMS will calculate risk scores using 75 percent encounter data and 25
percent risk adjustment processing system data.
To
signify the difference between Medicare Advantage diagnosis coding and
traditional Medicare coding, the agency made the minimal adjustment to Medicare
Advantage coding patterns, applying an adjustment of 5.9 percent. That is as
low an adjustment as regulations allow.
CMS
also finalized the requirement to announce alterations and adoption of new
payment and risk adjustment policies for the Medicare Advantage and Part D star
ratings program.
Potentially
the most controversial part of the finalized rule is the Medicare Advantage
ESRD payment section.
ESRD
affects nearly 750,000 Americans
every year. The disease demands aggressive
chronic disease management and invasive surgery.
The
2021 trend factor will be 4.04 percent for state-level reimbursement rates,
instead of 2.8 percent as stated in the Advance Notice.
The
finalized rule allows Medicare Advantage plans to side-step covering kidney
acquisition for a kidney transplant, which will instead be covered by Medicare.
“It is
disappointing that CMS did not make necessary changes to ensure adequate
payment for the care of beneficiaries with end-stage renal disease (ESRD),”
said Congresswoman Allyson Y. Schwartz, president and chief executive officer
of the Better Medicare Alliance, in a written statement. Congresswoman
Schwartz’s organization was outspoken against the continuation of old ESRD
policies when CMS released the Advance Notice.
“Our
advocacy work on behalf of this vulnerable patient community will continue,”
she assured. “We ask that CMS monitor the enrollment and cost of care for ESRD
patients in Medicare Advantage in 2021 and remain open to future changes to
ensure that plans and providers have the resources to care for these
medically-fragile beneficiaries.”
Although
the administration has taken steps to prioritize chronic
kidney disease care, payers were concerned that the payment to Medicare
Advantage plans would not be sufficient to properly cover the costly treatment
needs of this patient population.
The
payment model calculates reimbursement based on statewide data, as opposed to
county-level information, which causes significant problems. County-level
information causes wide variation in treatment costs based on county and
metropolis, a study published
in December 2019 found.
As a
result, 45 percent of city-dwelling Medicare beneficiaries with ESRD had costs
related to ESRD that exceeded what Medicare Advantage plans will be able to
cover.
The
fear is that, should the problem persist, the failure to account for
county-level variations will lead to significant out-of-pocket healthcare
spending on the part of Medicare Advantage beneficiaries.
“We
remain concerned with the methodology CMS proposes to exclude organ acquisition
costs for kidney transplant from MA benchmarks. The magnitude of the cost
carve-outs and the resulting impacts on premiums and benefits could be very
significant in many urban areas,” wrote Matthew Eyles, president and chief
executive officer of America’s Health Insurance Plans (AHIP) in the payer
organization’s comments on
the proposal.
The
comments also applauded CMS’s efforts to increase competition in dialysis care
delivery, the flexibilities for telehealth, the new specialty tier in Part D,
and the bolstering of supplemental benefits.
Apart
from the ESRD rule, AHIP indicated its reservations regarding the
announcement’s limitations for dual eligible enrollees, the decision to
eliminate “outliers” for star ratings, and what AHIP sees as an emphasis on
patient experience over clinical outcomes in calculating star ratings.
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