The Centers for Medicare & Medicaid Services (CMS) on Wednesday released proposed payment policy changes for Medicare Advantage (MA) and Part D drug programs in 2023. Here’s a summary of the proposed changes to risk adjustment, Star Ratings, and the agency’s plans to advance health equity.

In addition to proposed payment rates and changes to risk adjustment, CMS said in the 2023 Medicare Advantage and Part D Advance Notice that it is seeking input on a potential change to the MA and Part D Star Ratings that would consider how well each plan advances health equity. It also is requesting feedback on including a quality measure in MA and Part D Star Ratings that would specifically assess how often plans are screening for common health-related social needs, such as food insecurity, housing insecurity, and transportation problems.

“Our goals for Medicare Advantage mirror our vision for CMS’ programs as a whole, which is to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program,” CMS Administrator Chiquita Brooks-LaSure said in an announcement. “Today’s Advance Notice is one tool to engage our Medicare Advantage and Part D plan partners, and the communities we serve, as we work toward these goals.”

CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani, M.D., Ph.D., added that the proposed Health Equity Index would enhance the Star Ratings program by “creating transparency on how Medicare Advantage plans care for our most disadvantaged beneficiaries, and providing an opportunity to encourage improvements in their care.”

Here are seven of the major changes listed in the Advance Notice. RISE will explore these changes in-depth at RISE National 2022, March 7-9, at the Gaylord Opryland, Nashville. 

RISE National 2022

Net Payment Impact: In a fact sheet, CMS said that it expects:

  • Medicare costs to grow by 4.75 percent in 2023 compared to 2022
  • MA plans will see a 7.98 percent change in revenue
  • The average increase in risk scores will be 3.50 percent

2023 Part C Risk Adjustment: CMS plans to continue its 2022 policy to calculate 100 percent of the risk score using the 2020 CMS-HCC model. It will continue to calculate risk scores using diagnoses exclusively from MA encounter data submissions and fee-for-service claims. However, CMS does want feedback on whether the CMS-HCC risk adjustment model can be improved by addressing the impacts of social determinants of health on beneficiary health status by incorporating additional factors that predict the relative costs of MA enrollees.

2023 End Stage Renal Disease (ESRD) Risk Adjustment: CMS uses a separate model to calculate the risk scores applied in payment for the Part A and Part B benefits provided to beneficiaries in ESRD status when enrolled in MA plans, Program of All-Inclusive Care for the Elderly (PACE) organizations, and certain demonstrations, including Medicare-Medicaid Plans (MMPs).

CMS proposes to implement a revised model for payment to MA organizations for enrollees in ESRD status and intends to use the revised model for additional organizations other than PACE. The revised model would be calibrated on more recent data, using CMS’ current approach to identify risk adjustment eligible diagnoses from encounter data records. The agency said the model also incorporates improvements previously made to the Part C CMS-HCC model, specifically the clinical updates and revised segmentation, which accounts for the differential cost patterns of dual eligible beneficiaries.

MA Coding Pattern Adjustment: Each year, CMS adjusts plan payments to reflect differences in diagnosis coding between MA organizations and fee-for-service (FFS) providers. For 2023, CMS plans to apply a coding pattern adjustment of 5.9 percent, which is the minimum adjustment for coding pattern differences required by statute.

MA Normalization Factor: Each year, CMS calculates normalization factors to keep the FFS risk score at the same average level over time. CMS plans to use the methodology it typically uses for calculating the normalization factor, which is to project the payment year risk score using five historical years of FFS risk scores under the payment year model. CMS typically uses the most recent years of available FFS risk scores to calculate the trend. However, CMS doesn’t plan to update the years in the trend for 2023 due to concerns that the changing use of services in 2020 because of the COVID-19 pandemic resulted in an irregular 2021 risk score, which will result in a projection that significantly underestimates what the 2023 risk score is likely to be. Instead, CMS plans to use the same years of FFS risk scores that were used to calculate the slope for the 2022 normalization factors, 2016 through 2020.

2023 Part D Risk Adjustment: CMS intends to implement an updated version of the RxHCC risk adjustment model used to adjust direct subsidy payments for Part D benefits offered by stand-alone prescription drug plans (PDPs) and MA prescription drug plans (MA-PDs). The recalibrated RxHCC model includes a clinical update to the RxHCCs based on ICD-10-CM diagnosis codes rather than ICD-9-CM codes used in the prior models. The recalibrated model also includes an update to the data years (2018 diagnoses to predict 2019 costs) using the same approach CMS uses to filter diagnoses from encounter data records for risk score calculation, including the risk adjustment allowable CPT/HCPCS codes.

Part C and D Star Ratings: CMS is seeking feedback on several potential measurement and methodological changes:

  • Plans to enhance current CMS efforts to report stratified Part C and D Star Ratings measures by social risk factors to help MA and Part D sponsors identify opportunities for improvement
  • The development of a Health Equity Index as an enhancement to the Part C and D Star Ratings program to summarize measure-level performance by social risk factors into a single score used in developing the overall or summary Star Rating for a contract
  • The development of a measure to assess whether plans are screening their enrollees for health-related social needs such as food, housing, and transportation
  • How MA organizations are transforming care and driving quality through value-based models with providers to use in the potential development of a Part C Star Ratings measure

RISE National 2022

Public comments on the Advance Notice must be submitted by March 4. CMS will finalize the MA and Part D payment policies for 2023 in the 2023 Rate Announcement, which will be published no later than April 4.

Regulatory experts will discuss these changes during RISE National 2022, March 7-9, at the Gaylord Opryland, Nashville. Speakers include representatives from CMS and the RISE Risk Adjustment Policy Committee. Click here for more information.