CMS published the Advance Notice on January 6th 2020
NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties
SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY) 2021 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies – Part I, CMS-HCC Risk Adjustment Model
Medicare Advantage has been successful in providing Medicare beneficiaries with options so
that they can choose the healthcare that best fits their individual health needs. The Medicare
Advantage program demonstrates bringing the value of private sector innovation and creativity
to a government program, and CMS is committed to continuing to strengthen Medicare
Advantage by promoting greater innovation, transparency, flexibility, and program
simplification.
A key element in the success of Medicare Advantage is ensuring that payments to plans reflect
the relative risk of the people who enroll. A critical tool that CMS uses to accomplish that goal is
the risk adjustment models that adjust payments based on the characteristics and health
conditions of each plan’s enrollees.
Summary of Proposal for CY 2021
For CY 2021 CMS is proposing to continue using the CMS-HCC model that was implemented in CY 2020 (i.e., 2020 CMS-HCC model). CMS is proposing to continue using the 2020 CMSHCC model to calculate encounter data-based scores and the 2017 CMS-HCC model to calculate RAPS-based scores. Under this proposal, 75% of the risk score would be calculated with the 2020 CMS-HCC model and 25% of the risk score would be calculated with the 2017 CMS-HCC model.
Proposal for 2021 and Three-year Phase-in 2019 - 2022
The 21st Century Cures Act requires that any changes to risk adjusted payments under section 1853(a)(1)(C)(i) resulting from the implementation of section 1853(a)(1)(I) must be phased in over a three-year period, beginning with 2019, with such changes being fully implemented for 2022 and subsequent years. The statute thus requires a three-year phase-in over a four-year period. In the CY 2019 Advance Notice, we explained how we interpreted the statute’s direction to mean that the proposed changes to the risk adjustment model under section 1853(a)(1)(C)(i) could be implemented in 2019 without all the required provisions from section 1853(a)(1)(I), and could be further modified and implemented fully consistent with provisions from section
1853(a)(1)(I) for 2020. The model finalized for 2020 included modifications to meet all of the provisions from section 1853(a)(1)(I), and will be phased in over three years such that 100% of risk adjusted payments to MA organizations and certain demonstrations for 2022 are based on a risk adjustment model that complies with the statutory requirements in section 1853(a)(1)(I) of the Act. In order to phase in a model that meets the statutory requirements, risk score calculation for payment to MA organizations and certain demonstrations during the phase-in period reflects the transtion as follows:
For Payment Year 2019, we are calculating risk scores using the sum of:
- 25% of the risk score calculated with the 2019 CMS-HCC model and
- 75% of the risk score calculated with the 2017 CMS-HCC model.
For Payment Year 2020, we are calculating risk scores using the sum 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.
For Payment Year 2021, we propose to continue the phase in of the changes to the model by calculating risk scores 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.
For PACE organizations, we propose to continue to use the 2017 CMS-HCC model to calculate risk scores in CY 2021, as described in the CY 2020 Advance Notice Part II and CY 2020 Rate Announcement.
Encounter Data as a Diagnosis Source for 2021
For CY 2020, CMS is calculating risk scores for payment to MA organizations and certain demonstrations by adding 50% of the risk score calculated using risk adjustment eligible diagnoses identified from encounter data, FFS claims, and RAPS inpatient records with 50% of the risk score calculated using risk adjustment eligible diagnoses identified from RAPS data and FFS claims.
For CY 2021, CMS proposes to calculate risk scores for payment to MA organizations and certain demonstrations by adding 75% of the risk score calculated using risk adjustment eligible diagnoses identified from encounter data, FFS claims, and RAPS inpatient records with 25% of the risk score calculated with risk adjustment eligible diagnoses identified from all RAPS data and FFS claims.
Specifically, we propose to calculate the encounter data-based risk scores as follows:
- With the 2020 CMS-HCC model,
- Using risk adjustment eligible diagnoses from encounter data, FFS claims, and RAPS inpatient records.
RAPS-based risk scores would be calculated as follows:
- With the 2017 CMS-HCC model,
- Using risk adjustment eligible diagnoses from RAPS data and FFS claims
Thus, as proposed, encounter data-based risk scores would only be calculated with the 2020 CMS-HCC model.
For PACE organizations for CY 2021, we propose to continue the same method of calculating risk scores that we have been using since CY 2015, which is to pool risk adjustment-eligible diagnoses from the following sources to calculate a single risk score (with no weighting): (1) encounter data, (2) RAPS data, and (3) FFS claims
Read the entire advance notice here
The Final Rate Announcement
For CY 2021, CMS will announce the Medicare Advantage capitation rates and final paymentpolicies no later than Monday, April 6, 2020, in accordance with the timetable established in
section 1853(b)(2), as amended by the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) and the Securing Fairness in Regulatory
Timing Act of 2015 (SFRTA) (Pub. L. 114-106).
'
