The Centers for Medicare & Medicaid Services (CMS) has released Part 1 of the 2021 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. Here’s what you need to know about proposed updates to the Hierarchical Condition Categories (HCC) risk adjustment model and the use of encounter data.
The notice is published in two parts as required in the 21st Century Cures Act, which mandated specific changes to Part C risk adjustment and a 60-day comment period. CMS intends to finalize the payment policies for 2021 by April 6.
CMS will continue to phase in changes to risk adjustment payments as part of the 2020 Alternative Payment Condition Count CMS-HCC Risk Adjustment Model with the goal of full implementation in 2022. For calendar year (CY) 2020, CMS used a mix of 50 percent of the risk score calculated with the 2020 CMS-HCC model and 50 percent of the risk score calculated with the 2017 CMS-HCC model.
For CY 2021, CMS plans to calculate risk scores by increasing the mix and using 75 percent of the risk score calculated with the 2020 CMS-HCC model and 25 percent of the risk score calculated with the 2017 CMS-HCC model.
The agency also plans to increase its use of encounter data to calculate MA risk scores. CMS proposes to determine risk scores for MA payment in CY 2021 by using 75 percent of the encounter data-based risk score and 25 percent of the risk-adjustment processing system (RAPS)-based risk score. For 2020, CMS used a 50-50 blend of the encounter data and RAPS.
Impact on MA risk scores
CMS said that the 2021 impact on MA risk scores based on the transition to the CMS-HCC model is 0.25 percent, which represents a $565.5 million net cost to the Medicare Trust Fund in 2021.
The agency also said the impact on MA risk scores using the greater percent of the risk scores being calculated with encounter data, fee-for-service claims, and RAPS inpatient records is 0.00 percent. That’s because CMS projects that the differential between the RAPS-based risk score and the encounter data-based risk score, calculated using the risk adjustment models proposed for 2021, is 0.00 percent.
CMS will accept comments on the proposal through 6 p.m. EST on Friday, March 6. To submit comments, go to https://www.regulations.gov, enter the docket number “CMS-2020-0003” in the “Search” field, and follow the instructions for “submitting a comment."