CMS Releases 2021 MA and Part D Advance Notice Part II

February 2020 ~

On February 5, CMS released Part II of the Calendar Year (CY) 2021 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. In the CY 2021 Advance Notice, the agency is proposing updates and changes to the methodologies used to pay MA plans, Programs of All-Inclusive Care for the Elderly (PACE) organizations, and Part D sponsors.

Along with the Advance Notice, CMS also issued a proposed rule (the Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly) that would update MA or Part C and the Part D program to give seniors more choices and lower out-of-pocket costs, and to encourage price transparency. According to the fact sheet, the proposal would implement several changes stemming from federal laws related to the Part C and D programs, addresses the opioid epidemic across CMS programs, and would continue implementation of the agency’s Patients Over Paperwork initiative. CMS states, that if finalized, the proposed changes could result in an estimated $4.4 billion savings in federal spending over ten years.

Summary of Proposed Changes

In the Advance Notice, the agency estimates the payment impact of the proposed policy changes on plan payments relative to last year, to be as follows:

• Effective Growth Rate – 2.99%
• Rebasing/Re-pricing – TBD¹
• Change in Star Ratings – 0.23%
• Medicare Advantage Coding Pattern Adjustment – 0%
• Risk Model Revision – 0.25%
• Encounter Data Transition – 0%
• Normalization – 2.54%
• Expected Average Change in Revenue² – 0.93%

¹Rebasing/re-pricing impact is dependent on finalization of the average geographic adjustment index and will be available with the publication of the CY 2021 Rate Announcement.

²The total does not include an adjustment for underlying coding trend. For 2021, CMS expects the underlying coding trend to increase risk scores, on average, by 3.56 percent.

2021 Part C Risk Adjustment Model

CMS is also proposing to continue the phase-in of the 2020 CMS-Hierarchical Condition Categories (HCC) model. In order to continue implementation of the model that meets the statutory requirements (2020 CMS-HCC model), the agency proposes changing the way risk scores are calculated for CY 2021 payment to MA organizations and certain demonstrations as the sum of:

• 75% of the risk score calculated with the 2020 CMS-HCC model and
• 25% of the risk score calculated with the 2017 CMS-HCC model.

According to the fact sheet, this proposal represents a change from the blend for CY 2020 of 50% of the risk score calculated with the 2020 CMS-HCC model and 50% of the risk score calculated with the 2017 CMS-HCC model.

Encounter Data

For CY 2021, CMS is proposing to calculate the encounter data-based risk scores with the 2020 CMS-HCC model and the RAPS-based risk scores with the 2017 CMS-HCC model.

For PACE organizations for CY 2021, CMS proposes to continue calculating risk scores by pooling risk adjustment-eligible diagnoses from encounter data, RAPS data, and FFS claims to calculate a single risk score (with no weighting) using the 2017 CMS-HCC model.

Medicare Advantage Coding Pattern Adjustment

As required by law, CMS makes an annual adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and FFS providers.

For CY 2021, CMS proposes to apply a coding pattern adjustment of 5.90 percent -the minimum adjustment for coding intensity required by the statute.

Exclusion of Kidney Organ Acquisition Costs from MA Benchmarks

Through the Advance Notice and effective January 1, 2021, MA organizations will no longer be responsible for organ acquisition costs for kidney transplants for MA beneficiaries, and such costs will be excluded from MA benchmarks and covered under the FFS program instead. PACE organizations will continue to cover organ acquisition costs for kidney transplants, and CMS will continue to include the costs for kidney acquisitions in PACE payment rates.

Part C and D Star Ratings

In the Advance Notice, the agency is also proposing several new measure concepts for potential incorporation into the Star ratings quality measurement program, including:

• Update regulations, published in April 2018 for the 2021 Star Ratings, which codified the methodology for the Part C and D Star Ratings program in the CY 2019 Medicare Part C and D Final Rule to require us to make through the process described for changes in, and adoption of, payment and risk adjustment policies in section 1853(b) of the Act.
• Information about the date by which plans must submit their requests for review of the appeals and complaints measures data, and lists the measures included in the Part C and D Improvement measures and the values for the Categorical Adjustment Index for the 2021 Star Ratings. The policy for adjustments to Star Ratings in the event of extreme and uncontrollable circumstances, such as major hurricanes, is the same as the one implemented for the 2020 Star Ratings and codified in regulation for the 2022 Star Ratings and beyond.
• Solicitation of feedback on a generic utilization Part D measurement concept through the 2021 Advance Notice. The agency is encouraging Part D sponsors to leverage favorable tier placement and effective formulary management tools to incentivize beneficiaries to fill generic alternatives over branded products.
• Other measurement concepts that CMS is soliciting feedback on include:
• End-Stage Renal Disease (ESRD) measures (Part C)
• Prior Authorizations (Part C)
• Physical Functioning Activities of Daily Living Patient-reported measure (Part C)
• Initial Opioid Prescribing (Part D)

CMS will be accepting comments on all proposals in the Advance Notice through Friday, March 6, 2020, before publishing the final Rate Announcement by April 6, 2020.

Source(s): CMS Fact Sheet; HealthcareDIVE; Modern Healthcare; Health Affairs; Fierce Healthcare;