Spotlight on Risk Adjustment in 2019 Final Call Letter for Medicare Advantage & Part D

The Centers for Medicare & Medicaid Services (CMS) released the Final Call Letter on April 2, 2018. The Call Letter solidifies some of the proposed changes that were within the Part 1 Advance Notice released on December 27, 2017, and Part 2 released on February 1, 2018. The final 2019 risk adjustment changes were adjusted slightly in comparison to the proposed but are overall a step in the right direction for the healthcare industry.

The proposed rule included a significant amount of changes for risk adjustment and the methodology utilized for risk score calculation. Further consideration was given to the changes based on comments received from the industry and overall execution of all of the proposed changes. In an effort to still progress risk adjustment reimbursement accuracy, for Part C, CMS has chosen to use the updated risk adjustment model but will forgo utilizing either of the proposed Hierarchical Condition Category (HCC) counts methodology. The new model will be blended with the current risk adjustment model first established for the 2017 payment year.

As part of the final rule, the current risk adjustment model will have an increased normalization factor of 1.041, up from 1.017. The risk score attributed to this model will utilize the Risk Adjustment Processing System (RAPS) and Fee-for-Service (FFS) data to account for 75% of the overall blended calculation. CMS has started the decrease of RAPS dependency for the risk score calculation once again, down from 85% in 2018.

The CMS-HCC model without count variable will account for 25% of the blended risk score. The normalization factor associated with this model is 1.038. Since the 1.038 factor was originally proposed as part of the count model, CMS is finalizing this factor as proposed. This model will utilize Encounter Data Processing System (EDPS) and inpatient RAPS submission data along with FFS data for the overall calculation. CMS will use the updated CMS-HCC model without count variables for the blended risk score calculation.

There are added HCCs for 2019. Such HCCs include substance abuse, behavioral health, and moderate kidney disease. These additions are consistent with details included as part of the proposed rule and will assist in establishing a more comprehensive picture of the risk associated with these conditions. A more comprehensive picture of member conditions will allow health plans to offset costs to ultimately provide better coverage and treatment for members with these conditions.

The RxHCC model will utilize the 2018 risk adjustment model for 2019. The final normalization factor for this model increased from 1.005 to 1.019. Since the updated RxHCC model was not implemented, there will be an approximate decrease of 1.4% in RxHCC risk scores based on the normalization factor alone.

Additional Final Rule highlights:

  • ESRD model gets its first updates since 2012
  • Frailty factors for Fully Integrated Dual Eligible Special Needs Plan (FIDE-SNP)
  • Program of All-Inclusive Care for the Elderly (PACE) organizations will continue to have no weighting towards encounter data for the risk score calculation

Lots of changes coming our way for 2019. Continued diligence over the next few years will be critical to understand the true impacts year over year. Each year changes are going to occur that need to be tracked and measured to truly understand overall performance. Stay tuned for further Final Call Letter details.

Need more insight? Attend my workshop at the Gorman Health Group Forum in April.

My pre-conference risk adjustment workshop will highlight core components to establish a compliant program. This session will be a deep dive into the following:

  • Organizational structure and operational efficiencies
  • Models established and financial implications
  • Understanding and preparing for a Risk Adjustment Data Validation (RADV)
  • Basics around Risk Adjustment HCC Coding
  • Establishing compliant Coding practices

If you haven’t had a chance to review the new sessions we have added for this event, download our agenda here.




Registration is now open for the Gorman Health Group 2018 Forum, April 25-26, 2018, at the Red Rock Resort ideally located near the Red Rock Canyon in Las Vegas.

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