But many health policy commentators have advocated for increasing the adjustment to level out coding in MA, compared to fee-for-service. Because CMS risk-adjusts payments to MA plans, so that they're encouraged to develop systems to cover sicker patients, more aggressive coding can lead to higher payments.
AHIP said in comments that it supports the agency's decision to maintain the minimum adjustment that's required. Humana, which enrolls the second-largest share of MA enrollees among insurers, also commended CMS' decision to keep using the 5.9% coding pattern adjustment in a letter sent to the agency Friday. The American Medical Group Association supported the policy too.
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The Alliance of Community Health Plans supported CMS' decision but said even the 5.9% adjustment proves too high for its members. ACHP noted that law dictates the adjustment should be applied to risk scores until regulators implement risk adjustment, using diagnostic, cost and use data.
"ACHP strongly encourages CMS to study the use of MA data for recalibration so that CMS can eliminate the use of a coding intensity adjustment in the immediate future," the group's comment letter says.
But in its own comment letter, MedPAC reiterated its position that CMS needs to bump up the adjustment. While CMS' hesitancy to make big changes to Medicare payment is understandable, coding intensity has led to more than $91 billion in excess payments to MA insurers between 2007 and 2022, the commission's letter says.
MedPAC estimates high enrollment growth in MA, along with coding intensity, will lead to almost $15 billion in overspending in just 2022. If CMS goes through with its plan to leave the adjustment at 5.9% in 2023, MedPAC projects spending for coding intensity will increase by $16.2 billion.
"Failure to stem the excess spending, created by coding intensity, further jeopardizes the Medicare program's already challenging fiscal sustainability. We urge the secretary and CMS to increase the coding intensity adjustment to more fully reflect the magnitude of this excess spending," MedPAC's letter reads.
MedPAC proposed an alternative approach to the mandatory minimum coding intensity adjustment in 2016, which involves creating a model that uses two years of fee-for-service and MA diagnostic data, excluding diagnoses that are documented only on health risk assessments and applying an adjustment that fully accounts for remaining differences in coding between traditional Medicare and MA, which it reiterated in its comment letter to CMS.
Insurance and MA groups appreciated the overall attention to plans' financial stability in the advance notice—the proposal projects a 4.75% effective growth rate for MA plans in 2023, and patterns from recent years indicate that rate could climb even higher in the final notice.
But AHIP asked for more information on how CMS arrived at the cost projections to go along with the growth rate, and for details on how CMS arrived at its 3.5% risk score trend. That figure hasn't been included in recent projections, prior to the 2023 notice, and AHIP asked the agency to release the data, methods and assumptions that went into the figure so stakeholders can better understand the estimate.
AHIP also said CMS' benchmark calculation process doesn't adequately determine the cost of providing benefits to MA enrollees, because the calculation takes into account traditional Medicare beneficiaries who can't enroll in MA plans.
AHIP, along with the MA lobbying organization, Better Medicare Alliance, took issue with the way CMS calculates MA rates for end-stage renal disease beneficiaries, too. State-based benchmarks don't accurately represent costs in many regional areas, so CMS should pivot to using a sub-state rate, the organizations say.
The advance notice also included a slew of health equity-focused policies CMS said it may consider implementing in the future. MA stakeholders generally supported the attention to easing health disparities but urged CMS to move forward carefully. For example, AHIP said that if CMS eventually decides to account for social determinants of health in the risk adjustment model, it should make sure to use data captured administratively or at enrollment, rather than through claims or surveys.
On the other hand, ACHP said a gradual approach to any new data collection on health disparities will be necessary, and CMS should look at what the National Committee for Quality Assurance is already doing on this front.