2014 Medicare Advantage Final Call Letter

Announcement of Calendar Year (CY) 2014 Medicare Advantage Capitation 
Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter

4/1/13


Key Changes from the Advance Notice:

Growth Percentages: Attachment I provides the final estimates of the National MA Growth
Percentage and the FFS Growth Percentage and information on deductibles for MSAs.
Calculation of FFS Rates: In 2014, we will begin transitioning to a methodology in which the
historical claims data are adjusted to reflect the most current hospital wage index and physician
geographic practice cost index. More information on this methodology change is provided in
Attachment III, Section C. For CY 2014, the blend between the repriced and non-repriced AGAs
will be done based on a 50-50 split.
CMS-HCC Risk Adjustment Model: We will implement the updated, clinically revised CMS-HCC
risk adjustment model proposed in the Advance Notice with the following differences: (1) we will
not adjust the denominator and (2) we will blend the risk scores calculated using this model with the
risk scores calculated using the 2013 CMS-HCC model, weighting the risk scores from the 2013
CMS-HCC model by 25 percent and the risk scores from the 2014 CMS-HCC model by 75 percent.
We include in this Announcement the final version of the updated, clinically revised model,
including community, institutional, new enrollee, and C-SNP new enrollee segments. The
relative factors for 2013 CMS-HCC model can be found in the 2013 Announcement.
PACE Model: We will continue to use the same risk adjustment model for PACE paymentsthat
we have used in 2012 and 2013.
Normalization Factor for the CMS-HCC Model: Because the normalized risk scores from the
2014 and 2013CMS-HCC models will be blended, there are two normalization factors for 2014.
They are:
• 2013 CMS-HCC model: 1.041.
• 2014 CMS-HCC model: 1.026.
Normalization Factor for the PACE Model: The final normalization factor for the PACE
model is 1.085.
Normalization Factor for the RxHCC Model: The final normalization factor for the RxHCC
model is 1.030. 3
Frailty Adjustment: The 2014 frailty factors for PACE organizations are the same frailty factors
posted in the 2013 Advance Notice. There are two sets of FIDE SNP frailty factors for 2014; we
will calculate frailty scores using the frailty factors associated with the 2014 CMS-HCC model
and using the frailty factors associated with the 2013 CMS-HCC model. The FIDE SNP frailty
factors associated with the 2014 CMS-HCC model are finalized in this Announcement. The
FIDE SNP frailty factors associated with the 2013 CMS-HCC model are posted in the 2013
Advance Notice. CMS will separately calculate frailty scores for FIDE SNPs using each set of
factors and blend the two frailty scores in the same manner as the 2014 risk scores. These
blended frailty scores will be used both to determine a FIDE SNP’s eligibility for frailty
payments and, if eligibility is met, for payment.
MA Enrollee Risk Assessments: In response to comments received on the proposed policy for
MA Enrollee Risk Assessments, CMS is delaying the collection of “flags” for these assessments
until 2014 dates of service. We will propose and finalize a policy on the extent to which
diagnoses from 2014 Enrollee Risk Assessments will be used to calculate risk scores for payment
year 2015 in the 2015 Advance Notice and Rate Announcement.

For more information, the entire notice can be viewed at: http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2014.pdf