Medicare Advantage plans will see a 1.66 percent pay increase in 2021, according to the Centers for Medicare & Medicaid Services’ (CMS) rate announcement on Monday.

2021 rates
Although the 2021 Advance Notice projected payments to MA plans would increase by .93 percent in 2021 compared to 2020, the rate announcement said the expected average change in revenue would actually be 1.66 percent. However, that figure doesn’t include an adjustment for underlying coding trends. CMS expects those trends would increase risk scores, on average, by 3.56 percent.

2021 Part C risk adjustment model
As previously indicated in Part 1 of the 2021 Advance Notice, CMS will phase in changes to risk adjustment payments by 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. For 2020, CMS used a blend of 50 percent of the risk score calculated with the 2020 CMS-HCC model and 50 percent of the risk score calculated with the 2017CMS-HCC model.

Encounter data
CMS said it would calculate risk scores for payment to MA organizations by taking the sum of 75 percent of the encounter data-based risk score and 25 percent of the Risk Adjustment Processing System (RAPS)-based risk score. CMS will calculate the encounter data-based risk scores with the 2020 CMS-HCC model and the RAPS-based risk scores with the 2017 CMS_HCC model.

MA coding pattern adjustment
Every year CMS makes an adjustment to plan payment to reflect differences in diagnosis coding between MA organizations and fee-for-service (FFS) providers. For 2021, CMS will apply a coding pattern adjustment of 5.90 percent.

MA end-stage renal disease (ESRD) payment
ESRD rates will remain unchanged from the methodology used in previous years. The final trend factor that will apply to the MA ESRD state-level rates for 2021 is 4.04 percent, which is higher than the Advance Notice estimate of 2.8 percent.

Exclusion of kidney organ acquisition costs from MA benchmarks
Effective Jan. 1, 2021, MA organizations will no longer be responsible for organ acquisition costs for kidney transplants for MA beneficiaries, and the costs will be excluded from MA benchmarks and covered under the FFS program instead. It will also finalize the methodology it described in the 2021 Advance Notice to estimate the kidney organ acquisition costs to carve out from MA ESRD and non-ESRD benchmarks.

Part C and D Star ratings
As part of the COVID-19 Public Health Emergency Interim Final rule, CMS adopted several changes to the 2021 Star ratings due to the likely disruption of data collection and plan performance in 2020 due to the pandemic.

CMS also set June 30, 2020 as the date by which plans must submit their requests for review of the appeals and complaints measure data. The rate announcement also lists the measures included in the Part C and D improvement measures and the values for the categorical adjustment index for the 2021 star ratings.

CMS said it will schedule a call shortly to discuss the 2021 rate announcement and guidance related to the COVID-19 outbreak.