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CMS pitches modest increase in 2018 Medicare Advantage rates

Payers are concerned about the use of encounter data to calculate risk scores and payment.

Susan Morse, Senior Editor

The Centers for Medicare and Medicaid Services is proposing what it called a modest payment increase of 0.25 percent for Medicare Advantage plans.

The 0.25 percent is the revenue change if Medicare Advantage plans have no alteration in risk scores, according to Wednesday's announcement. Factoring in changes in risk scores, the expected average change in revenue is 2.75 percent.

The sicker the patient population within a plan, the higher the payment.

However, America's Health Insurance Plans has voiced concern over the way CMS calculates risk scores.

"AHIP is carefully reviewing this advance rate notice to ensure that the program is protected from harmful cuts," said AHIP President and CEO Marilyn Tavenner. "We are committed to ensuring that seniors continue to have access to affordable, high-quality care, and that Medicare Advantage is positioned for long-term stability."

[Also: Insurers await Trump admin's Medicare Advantage payment rates]

CMS calculates the risk scores from information sent by plans on the diagnoses of beneficiaries. The agency uses a blend of encounter data from healthcare services and from patient records from the Risk Adjustment Processing System.

CMS has been increasing the amount of encounter data in the blend, which results in decreased payments to plans, according to Tom Kornfield, vice president of public programs policy, and Greg Berger, executive director of Medicare policy at AHIP.

In 2016, encounter data accounted for 10 percent of the risk score, was increased to 25 percent in 2017 and was supposed to increase to 50 percent in 2018.

Basing payment on the more comprehensive claims data in encounter data is similar to what hospitals and physicians submit for traditional Medicare, the blog said.

[Also: Medicare Advantage as an advanced payment model is in MACRA's distant future]

Two new studies suggest that encounter data hasn't proven to be complete or accurate enough to be a reliable gauge for MA payment, the blog said. A January 26 Avalere study of 2015 claims data found risk scores based on encounter data were 16 percent lower than scores using RAPS.

Using a blend of 10 percent encounter data, the average payment reduction is 1.6 percent, they said.

"A reduction in payments could lead plans to reduce benefits or raise premiums," the blog said.

CMS officials said Wednesday they would keep the encounter data to 25 percent in 2018 due to concerns raised.

"We've heard from plans concerned about transitioning to encounter data," CMS officials said. "For payment security, we're staying for an additional year to RAPS and encounter data."

CMS is soliciting comments on whether and how to apply a uniform industry-wide adjustment to the encounter data-based portion of the blended risk score under the Part C and end-stage renal disease models for payment to Medicare Advantage organizations in 2018.

CMS is also soliciting comment for 2018 on whether to continue with the blended approach.

The agency said its MA payment rate is consistent with last year's update and reflects a similar pattern in Medicare fee-for-service.

"Medicare Advantage is an essential, growing part of the Medicare program," said Patrick Conway, MD, who is now CMS acting administrator. "These proposals will continue to keep Medicare Advantage strong and stable and provide high quality, affordable care to seniors and people living with disabilities."

Comments on the proposed advance notice and draft call letter are due by March 3. The 2018 final rate announcement and call letter will be published on April 3.

Twitter: @SusanJMorse

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