The CMS has proposed tweaking the way it pays Medicare Advantage health plans starting in 2019 by accounting for beneficiaries' mental health, substance abuse disorder and chronic kidney disease conditions in the risk-adjustment model.
Under the proposed changes, risk scores would reflect the total number of conditions for an individual beneficiary, in addition to viewing conditions individually. By taking into account the number of conditions a beneficiary has among the conditions that are included in the Medicare Advantage payment model, the CMS said plans' risk scores are projected to increase by 1.1%.
Plan members' risk scores also would take into account certain diagnoses of mental health disorders, substance abuse disorders and chronic kidney disease.
For instance, the CMS proposed adding psychosis and a variety of personality disorders to the payment model. It characterizes psychosis as a mix of acute and chronic conditions that cover a range of psychotic episodes but do not meet the full criteria for a schizophrenia diagnosis, which already is included.
The CMS also wants to tweak the payment model so it better accounts for costs related to an accidental drug or alcohol overdose. It proposed adding payment model codes for overdoses from several different drugs, including opioids. The CMS also proposed increasing patient risk scores for moderate Stage 3 chronic kidney disease. The current model already accounts for the more severe diagnosis of chronic kidney disease.
The proposed changes released last week are part of the 21st Century Cures Act passed in December 2016. That legislation required the CMS to improve the Medicare Advantage risk-adjustment methodology, which is used to pay for seniors and disabled people enrolled in private Advantage plans.
Federal payments to Medicare Advantage plans are adjusted to reflect the beneficiary's level of sickness. Insurers evaluate the health of their members and build "risk scores" based on medical coding. The sicker the person, the higher the risk score and, consequently, the higher the payment an Advantage plan receives from the federal government.
The risk-adjustment model is designed to reduce the incentive for insurers to cherry-pick the healthiest members. Government audits have found evidence that some plans inflate the severity of their members' diagnoses and their risk scores to obtain higher payments.
If put into place, the changes to the risk-adjustment model would be phased in over three years. In 2019, the CMS said payment would be determined based on 75% of the old risk adjustment model used for payment in 2017 and 2018, and 25% of the proposed new risk adjustment model. By 2022, the new payment model would be phased in fully.
Also in the proposed notice, the CMS said it plans to increase the amount of encounter data, or information about the care an enrollee received from a provider, to determine risk scores for plans. In 2018, the agency is using a risk score blend of 85% fee-for-service data and 15% encounter data. For 2019, the CMS proposed using a mix of 75% fee-for-service data and 25% encounter data. Health insurers have lobbied heavily against the use of encounter data, claiming it often is not accurate.
The CMS will collect comments on the proposed changes until March 2. The agency also said it will release the second part of the advance notice of Medicare Advantage payment policies before then. The final 2019 Medicare Advantage rate announcement will be posted by April 2.