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CMS releases 2021 Medicare Advantage risk adjustment payment changes

Risk scores will be calculated using 75% encounter data, an increase of 25% over this year.

Susan Morse, Senior Editor

The Centers for Medicare and Medicaid Services is continuing to phase in a greater percentage of encounter data in determining payments to Medicare Advantage plans.

CMS released Part I of the 2021 Advance Notice this week. Requirements in the 21st Century Cures Act mandate certain changes to risk adjustment and a 60-day comment period.

CMS is expected to finalize all changes to MA payments for 2020 in an annual rate announcement that will be released by April 1.

WHY THIS MATTERS

CMS uses the HCC (Hierarchical Condition Category) Risk Adjustment Model to determine risk scores. They are based, in part, on a patient's health, which is determined by the medical code. The sicker the patient, the higher the risk score and greater the payment to MA plans.

Encounter data uses patient information based on clinician visits. The industry has been against the use of encounter data, saying it is inaccurate and unreliable.

For CY 2021, CMS proposes to calculate risk scores for MA payment using 75% of the encounter data-based risk score with 25% of the risk-adjustment processing system, or RAPS-based risk score.

For 2020, CMS based 50% of the risk score on encounter data and 50% on RAPS. In 2019, this was 25% and 75%, respectively.

The agency said it would calculate encounter data-based risk scores based on the 2020 CMS-HCC model and the RAPS-based risk scores on the 2017 CMS-HCC model.

THE LARGER TREND

The 21st Century Cures Act requires CMS to phase in the proposed changes by 2022.

Historically, CMS used diagnoses submitted by Medicare Advantage organizations.

In recent years, CMS began collecting encounter data from the organizations.

Starting in 2016, CMS began using diagnoses from encounter data to calculate risk scores, by blending 10% of the encounter data-based risk scores with 90% of the risk-adjustment processing system, or RAPS-based risk scores.

In 2017, CMS continued to use a blend to calculate risk scores, by using 25% encounter data and 75% RAPS. In 2018, it scaled back to using 15% encounter data and 85% RAPS.

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

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