The Centers for Medicare & Medicaid Services (CMS) last week issued its final Affordable Care Act marketplace 2021 Notice of Benefit and Payment Parameters Rule, commonly known as the 2021 Payment Notice. The rule primarily includes technical changes to the risk adjustment program and risk adjustment data validation (RADV). Here are four things you need to know.
Risk adjustment user fees: CMS said in the final rule the risk adjustment user fee is set for $0.25 per member per month for the 2021 benefit year. This amount will ensure the HHS-operated risk adjustment program is fully funded for the year. CMS expects it will cost $60 million to operate the program.
Risk adjustment model recalibration: To improve the accuracy of risk adjustment models and maintain the stability in risk scores, CMS said it will recalibrate the model using a blend of the three most recent years’ claims experience EDGE data (2016, 2017, and 2018).
Hierarchical condition categories (HCC) updates: CMS is restructuring the HHS-HCC classification to incorporate ICD-10 diagnosis codes. You can find a complete summary of the changes in Table 2 of the preamble. Among the changes: renaming and renumbering mental health-related HCCs and regrouping two drug use disorders together (HCC 81 and 82) and two alcohol-use disorders together (HCC 83 and 84). It also made classification changes to the infant and child models.
RADV: As previously announced, CMS has suspended RADV audit activities related to the 2019 benefit year. HHS-RADV won’t initiate any additional contract-level audits until after the COVID-19 public health emergency is over. For the 2019 benefit year, CMS said it will amend its outlier identification process and won’t consider as an outlier when an insurer has fewer than 30 HCCs. Insurers that have fewer than 30 HCCs will have their data reflected in overall national metrics but not have their risk score adjusted for that group (even if the insurer had a large failure rate compared to other insurers). CMS will also use the 2019 benefit year RADV as a second pilot year of prescription drug data validation. Prescription drug errors identified during the 2019 benefit year process will not be used to adjust risk scores or transfers. However, the agency said it does intend to fully incorporate prescription drugs into the RADV process in the future.