CMS Finally Phases Out RAPS Data With Early Release of 2022 Advance Notice

by Lauren Flynn Kelly

In a surprise move aimed at giving some clarity to Medicare Advantage and Part D plans already thinking about their 2022 plan bids, CMS on Sept. 14 released Part 1 of the 2022 Advance Notice. But the items in the notice were largely expected — including the final phaseout of legacy Risk Adjustment Processing System (RAPS) data in determining risk scores — and key information is still forthcoming.

The second part of the notice, which contains planned changes to the MA capitation rate methodology and other risk adjustment methodologies and usually posts in early February, may come out in the fall in order to accommodate an early final rate notice release of mid-January 2021, CMS said in the Sept. 14 document. CMS is statutorily required to post the final rate notice for the coming calendar year by early April.

However, CMS this year is considering moving up the entire timeline given the uncertainty associated with the COVID-19 pandemic.

The 21st Century Cures Act required that CMS phase in changes to risk adjustment payments over a three-year period, starting in 2019 with full implementation by 2022. As such, CMS plans to fully phase in the 2020 CMS-Hierarchical Condition Categories (HCC) risk adjustment model, which means the expected discontinuation of RAPS data. To determine MA organizations' risk-adjusted payments for 2021, CMS used a blended calculation composed of 75% of risk scores based on the HCC model from 2020 and 25% of risk scores based on the 2017 model.

For 2022, CMS would cease using a blend of encounter and RAPS data and move to basing 100% of the risk score on diagnoses from MA encounter data and fee-for-service claims, according to the notice.

"There were no surprises in Part 1, which has only small impact on the net payment update for MA plans in 2022," observed securities analyst Michael Newshel in a research note from Evercore ISI. Part 2 "will have more important details to put together the full build-up of proposed payment change."

SVB Leerink viewed the early update as positive, "chiefly given CMS' projection of the net effect on payments to MAO," wrote securities analyst Stephen Tanal. "Although the transition to the newer risk model and 100% encounter data was expected, we do not believe that its impact was widely understood."

From RADAR on Medicare Advantage