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CMS proposes using only encounter data for Medicare Advantage risk adjustment and payment

The proposal is being released early for plans to better address estimating 2022 costs, in light of the uncertainty with the COVID-19 pandemic.

Susan Morse, Managing Editor

For 2022, the Centers for Medicare and Medicaid Services is proposing to use only encounter data in calculating risk adjustment used to pay Medicare Advantage plans.

The Part C risk score would rely entirely on encounter data as the source of MA diagnoses, CMS said in releasing Part I of the 2022 Medicare Advantage Advance Notice.

This represents a change from the blend for 2021 of 75% of the risk score calculated using the 2020 CMS-HCC model and 25% of the risk score calculated using the older 2017 CMS-HCC model.

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WHY THIS MATTERS

The change is required by the 21st Century Cures Act. 

CMS calculates risk scores using diagnoses submitted by MA organizations and from Medicare fee-for-service 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 for CY 2015, and has since continued to use a blend of encounter and RAPS data-based scores.

Also, for CY 2022, CMS is proposing to discontinue the policy of supplementing diagnoses from encounter data with diagnoses from inpatient records submitted to RAPS for calculating beneficiary risk scores.

THE LARGER TREND

This announcement of Medicare Advantage and Part D payment methodologies is being made approximately three months earlier than usual to provide Medicare Advantage organizations and Part D sponsors more time to take this information into consideration as they prepare their bids for 2022.

The earlier release will help Medicare Advantage and Part D plans better address estimating 2022 plan costs, in light of the uncertainty associated with the COVID-19 pandemic.

The Advance Notice Part I includes information about Medicare Advantage risk adjustment for 2022 with a 60-day comment period. Other changes to payment methodologies for 2022 that are typically contained in the Advance Notice Part II only require a 30-day comment period and will be released at a later time. 

The Medicare Advantage and Part D payment policies for 2022, discussed in both Part I and Part II of the Advance Notice, will be finalized in the 2022 Rate Announcement published no later than April 5, 2021.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com