The COVID-19 pandemic has suddenly presented payers with new and unexpected challenges.
It’s been nearly 25 years since the United States government first began using risk adjustment in the Medicaid program and more than 20 since the country started using it in Medicare Advantage. During the past couple of decades, the ways in which the health care industry has employed risk adjustment have noticeably changed. However, the COVID-19 pandemic has suddenly presented payers with new and unexpected challenges.
The U.S. Centers for Medicare & Medicaid Services (CMS) defines risk adjustment as a statistical process that takes into account the underlying health status and spending of the enrollees in an insurance plan when looking at their health care outcomes or costs. It’s the way insurance companies participating in specific programs get payment for managing the health care needs of members based on their diagnoses.
Quality and safety measures that incorporate risk adjustment and their approaches include the Agency for Healthcare Research and Quality’s (AHRQ) Quality Indicators, the American College of Surgeons’ National Surgical Quality Improvement Program, and the Society of Thoracic Surgeons Performance Measures. Shared-risk program models consist of Medicare Advantage, the Affordable Care Act Commercial Insurance Marketplace, Accountable Care Organizations (ACOs), the Merit-based Incentive Payment System (MIPS), CMS Innovation programs, and multiple Medicaid programs.
Decreased provider and payer revenue
Using health claims from July to June, payers calculate an initial risk score. From a full calendar year of claims data, they calculate a midyear score. Because of the coronavirus pandemic, though, the number of total claims decreased dramatically in 2020.
Hospitals and health care systems lost at least $323 billion last year, and physician net revenue was down 4.5 percent compared to 2019. About 40 percent of Americans delayed medical care during the height of the pandemic, resulting in a decrease in patient volume of approximately 60 percent. A survey conducted in July 2020 found that COVID-19 prompted the closing of more than 16,000 practices. Hospitals in the U.S experienced a drop in patient volume of an average of for CMS-defined shoppable services in the second quarter of 2020.
According to CMS data, 21 percent of Medicare beneficiaries reported forgoing non-COVID-19 health care due to the pandemic. Total Medicare Advantage claims dropped 66 percent in April 2020 from 2019 and remained 61 percent lower in May and June as compared to the same months one year earlier.
These statistics clearly indicate numerous challenges that payers face as a result of COVID-19. Even before the end of 2020, they encountered obstacles such as:
- Stay-at-home orders that prohibited routine care
- Limited time remaining in 2020 to close gaps
- Provider offices struggling to remain open
- High-risk patients uncomfortable with venturing to doctors’ offices for routine care
- Patients completing annual assessment telephonically (and thus ineligible for risk adjustment determination)
- The potential risk of a second COVID-19 wave
- Unknown impact of flu season
Some hospitals took strategic action to handle the influx of patients infected with the novel coronavirus by temporarily repurposing non-traditional areas into specialized COVID-19 units and changing admission thresholds. Moves like these may have a direct impact on hospitals’ National Healthcare Safety Network (NHSN) data submissions and their quality assessments, rankings, and pay-for-performance incentives.
Because some health plan members didn’t have an annual visit during 2020, delays in the identification of emerging conditions or in treating existing conditions have the potential to cause worse health outcomes and decreased member satisfaction and star ratings. Members with chronic illnesses that delayed care due to COVID-19 could experience a worsening of their disease state, increasing the need for otherwise unnecessary and costly interventions.
CMS moves for combatting COVID-19 risk adjustment obstacles
CMS took several actions to assist health care providers and payers in responding to the business problems brought on by the COVID-19 pandemic. For example, the agency:
- Added COVID-19 CPT/ICD 10 codes and terminology to support documentation and billing
- Expanded the Accelerated and Advance Payment Program to increase cash flow to health care providers affected by the pandemic
- Suspended risk adjustment data validation (RADV) audits for 2015
- Invoked the MSSP extreme and uncontrollable circumstances policy for the COVID-19 public health emergency
- Permitted the use of telehealth for risk adjustment diagnoses
- Provided regulatory flexibility and relief to risk adjustment programs
- Increased the 2021 Medicare Advantage payment growth rate by 4.07 percent
With a projected cost impact due to COVID-19 in the USPCC amounts, the adjustment factors for 2022 rates are based on a rolling average from 2015-2019. The rolling average will shift forward to include 2020 data for 2023 rates, which, according to America’s Health Insurance Plans (AHIP), could have a marked impact on these adjustments.
In its 2022 Medicare Advantage Advance Notice, CMS noted that the following COVID-related costs were considered in the projection of costs for 2020 and subsequent years:
- COVID-19 vaccine with no cost sharing allowed
- Utilization of services due to COVID-19
- Changes to MA coverage created by COVID-19 legislation, including
- Prohibition on charging cost sharing in excess of Medicare fee-for-service (FFS) for COVID-19 testing services during the public health emergency and vaccine cost and administration
- Prohibition on utilization management requirements related to COVID-19 lab testing and testing-related services
Predictions of the pandemic effect on risk scores
There have been multiple predictions on how COVID-19 could affect risk scores. Some experts foresee it resulting in inaccurate assessments of patient health statuses, projected health care needs, and predicted cost of care. AHIP anticipates that the 2021 FFS risk scores could be lacking diagnoses submissions due to implications caused by COVID-19 and that, with a decrease in utilization, members likely won’t be coded as frequently and accurately.
One report estimated the deferral of health care for seniors in the Medicare Advantage program as a result of COVID-19 would lead to a 3-7 percent reduction in MA risk scores and payment in 2021 compared with 2020. As routine medical services are canceled or postponed due to COVID-19, prospective risk scores used to pay Medicare Advantage (MA) health plans in 2021 are trending lower than forecasted. In 2023, the normalization factor will be determined using 2021 FFS risk scores.
The trending of telehealth during the pandemic
The use of telehealth by health care providers and the CMS expansion of reimbursement regulations for virtual care have certainly impacted payers because they can use these services to help soften the impact of COVID-19 on risk adjustment and quality measurement programs.
CMS announced in April 2020 that Medicare Advantage could submit diagnoses collected during telehealth visits, as long as those visits met the criteria for risk adjustment eligibility. The U.S. Department of Health and Human Services (HHS) noted that diagnoses resulting from telehealth services continue to meet the risk adjustment face-to-face requirement when the services are provided using interactive audio telecommunication simultaneously with video telecommunication to permit real-time interactive communication with the beneficiary.
An article published by McKinsey & Company reported that telehealth utilization has stabilized at levels 38 times higher than before the pandemic. Of Medicare beneficiaries with a usual source of care, 64 percent (33.6 million) say that their provider currently offers telehealth appointments, up from 18 percent who said so before the pandemic.
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