CMS Releases 2021 Medicare Advantage Risk Adjustment Payment Changes

January 2020 ~

On January 6, CMS released Part I of its annual Advance Notice of Methodological Changes for the calendar year (CY) 2021. The proposed updates include changes to the Part C CMS Hierarchical Condition Categories (HCC) risk adjustment model and the use of encounter data. CMS is proposing to calculate risk scores for Medicare Advantage (MA) payment.

The 2021 Advance Notice is being published in two parts again this year due to requirements in the 21st Century Cures Act (Cure Act) which mandated certain changes to Part C risk adjustment and a 60-day comment period for these changes. The payment policies for 2021, proposed in both Part I and Part II of the Advance Notice, will be finalized in the annual Rate Announcement on or before April 6, 2020.

2021 CMS-HCC Risk Adjustment Model Changes

Under the Cures Act, CMS is required to phase in changes to risk adjustment payments over a 3-year period (beginning in 2019) with changes to be fully implemented for 2022 and subsequent years.

According to CMS, in order to phase in the model that meets the statutory requirements, the agency is proposing to calculate risk scores for CY 2021 payments using 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.

This is a change from the CY 2020 blend 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.

Using Encounter Data Changes

For CY 2021, CMS is proposing to calculate risk scores for payment to MA organizations and certain demonstrations by summing 75% of the encounter data-based risk score with 25% of the RAPS-based risk score. Specifically, CMS proposes 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, the agency is proposing 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).

CMS calculates risk scores using diagnoses submitted by MA organizations and from FFS claims. Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by MA organizations for the purpose of calculating risk scores for payment. In recent years, CMS began collecting encounter data from MA organizations, which also includes diagnostic information.

CMS began using diagnoses from encounter data to calculate risk scores in CY 2015 and, for CY 2016, CMS blended 10% of the encounter data-based risk scores with 90% of the RAPS-based risk scores. CMS continued to use a blend to calculate risk scores by calculating risk scores with 25% encounter data and 75% RAPS data for CY 2017, 15% encounter data and 85% RAPS data for CY 2018, and 25% encounter data and 75% RAPS data for CY 2019. For CY 2020, CMS is continuing to use a blend to calculate risk scores, by calculating risk scores with 50% encounter data and 50% RAPS data.

Source(s): CMS Fact Sheet; Healthcare Finance News; Policy Med; American Hospital Association; Becker’s Hospital Review; HealthcareDIVE;

 

 

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