Some proposed risk-adjustment changes threaten Medicare Advantage revenue
Health insurer and provider groups railed against the CMS' proposal to use more patient encounter data to determine Medicare Advantage plans' risk scores in 2019, saying the data could reduce payments for plans.
The CMS proposed moving ahead with the use of encounter data along with several other tweaks to the Medicare Advantage risk-adjustment model in early January. Comments were due this week.
In the notice, the agency said it plans to use a mix of 75% fee-for-service data and 25% encounter data—information about the care an enrollee received from a provider—when determining plans' risk scores. In 2018, the agency is using a risk score blend of 85% fee-for-service data and 15% encounter data.
Healthcare stakeholders have lobbied heavily against the use of encounter data, claiming it often is not accurate.
"AHIP continues to have very significant concerns about the expanded use of encounter data given the unresolved operational issues that prevent CMS from generating complete and accurate risk scores and CMS' open acknowledgment that expanding the use of encounter data will reduce payments," the major health insurance lobbying group wrote in a comment letter to the agency.
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.
Meanwhile, the groups supported the CMS' decision to account for certain diagnoses of mental health disorders, substance abuse disorders and chronic kidney disease in the plans' risk scores.
But they expressed concern over the CMS' decision to tweak the risk-adjustment model so that risk scores would reflect the total number of conditions for an individual beneficiary, in addition to viewing conditions individually.
The CMS said that by accounting for the number of conditions a beneficiary has among the conditions that are included in the Medicare Advantage payment model, plans' risk scores are projected to increase by 1.1%. It recommended rolling the change out in 2019.
AHIP and the Alliance of Community Health Plans, which represents not-for-profit regional health plans, recommended the agency slow down so plans could understand the implications of the changes.
"We suggest that CMS begin phased implementation in 2020 to provide time for additional analysis of the model's impact by CMS and plan sponsors and allow MA plans time to adjust to other changes in the EDS model and continued improvement in EDS-reported data," ACHP commented.
AHIP pointed out that changing risk scores to reflect the total number of conditions a patient has could lower risk scores for large numbers of dual-eligible patients, while also raising payments for people with no reported health conditions, according to a recent Oliver Wyman analysis.
However, in its comment letter, the American Hospital Association supported the proposal, saying the "model would better compensate (Medicare Advantage) plans for the real risk associated with beneficiaries, as well as reduce variation among plan contracts."
The CMS also proposed completing the transition to county benchmark rates for retiree plans in 2019. The agency in 2016 suggested terminating the bidding process for employers and unions that offer Medicare Advantage plans to their retirees, also known as "employer group waiver plans." Instead, those plans would receive a lump-sum payment based on county-level individual bids that would have lowered plan revenue. The move was delayed in the final 2017 and 2018 notices.
AHIP opposed the proposed change to retiree plans, claiming plans would need to reduce benefits or increase premiums for their members if implemented. ACHP supported the change, but asked the CMS to phase in the transition.
Medicare Advantage enrollment is projected to grow by 9% to 20.4 million in 2018. The CMS estimated that more than one-third of all Medicare enrollees, or 34%, will be in a Medicare Advantage plan in 2018.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.