The Center for Medicare & Medicaid Services (CMS) released the Advance Notice of Methodological Changes for the Medicare Advantage (MA) CMS-HCC Risk Adjustment Model for 2019 on December 27, 2017. This notice reflects the requirements mandated by the 21st Century Cures Act which was enacted by Congress and signed into law in 2016. The proposed risk adjustment changes are an overall positive for the industry. CMS addressed required areas of focus from the Cures Act and the proposed changes will enhance Part C funding for chronic conditions that have been historically under-funded in the past. For example, proposed changes such as these allow health plans more options to provide substance abuse treatments to combat the opioid crisis seen across the nation.
The changes proposed, which are to be phased-in through 2022, are primarily intended to address underpayment by the current model for certain conditions – specifically, chronic kidney disease, mental health, and substance abuse. Additionally, the model will be modified to adjust payment for beneficiaries with multiple conditions by providing a distinct risk adjustment factor based on the number of a beneficiary’s conditions. CMS has proposed two alternatives for determining the factor for multiple conditions: (1) a payment condition count model which counts only those conditions that are included in the HCC payment model, which CMS estimates would increase overall payments to plans by 1.1%; or (2) an all condition count model which would encompass all conditions reported for a beneficiary and would decrease payments by -.28%, based on CMS estimates. CMS is proposing to begin phasing in the new risk adjustment model in 2019 with a blend of 75% attributed to the 2017 and 2018 payment models and 25% attributed to the new proposed risk adjustment model.
Amongst the model changes there is also a change related to the percentages for risk score calculation based on the method by which the data was submitted. The transition from Risk Adjustment Processing System (RAPS) to Encounter Data Processing System (EDPS) for submitting data utilized for risk adjustment purposes has been ongoing for many years. Last year, for Payment Year 2018, CMS retracted the percentage from previous years and finalized the risk score calculation to be based on 15% EDPS and 85% RAPS. For the 2019 Payment, CMS is proposing moving forward with further progression of utilizing EDPS for a larger percentage of the weight – EDPS 25% and RAPS 75%. It is increasingly important that health plans stay on top of understanding the differences between the results of these two submissions as the transition progresses – especially since there are other changing variables to take into account throughout the next few years.
The Advance Notice for 2019 is being issued in two parts, with a 60-day period for stakeholders to submit comments for this first release. This represents a departure from prior years where the Advance Notice was published in a single release in early February and allowed for a 30-day comment period and is due to requirements in the 21st Century Cures Act, which mandated changes to the Part C risk adjustment model and imposed a 60 day comment period for these changes. Other changes to Part C and Part D payment methodologies which CMS proposes for 2019 following calendar year that are typically contained in the Advance Notice will be released January 31, 2018 and only require a 30 day comment period. Comments for both parts of the Advance Notice are due to CMS by March 2, 2018. The payment policies for 2019, proposed in both parts of the Advance Notice will be finalized in the annual Rate Announcement and released on April 2, 2018.
These proposed changes will advance the evolution of the risk adjustment model for the better, but there is a trade-off in the beginning. The proposed 2019 model will include two “phase-in” approaches, one for the transition of RAPS to EDPS, and the other is a transition to a new risk adjustment model. Having two “phase-in” transitions and adding new Hierarchical Condition Category (HCC) groupings will make it much more complex to simply calculate an accurate risk score and compare year-over-year (YOY). Overall, the calculation complexity is a worthwhile trade-off for a more inclusive model.
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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