- CMS is proposing to change the methodology used to calculate risk adjustment payments for Medicare Advantage plans. The new model would factor in additional patient conditions such as pressure ulcers and dementia, the agency said in a statement.
- The agency said it will rely more heavily on data from the health plans, or encounter data, to calculate risk scores. CMS is proposing to calculate risk scores by adding 50% of the risk score that comes from the diagnoses of the encounter data.
- The agency is seeking comments or questions on the revision.
CMS pays Medicare Advantage plans a monthly payment for each beneficiary enrolled in that plan. The risk adjustment process helps assess the overall health of the beneficiary so the plan and CMS can know what to expect in terms of cost for that beneficiary.
"Without an adjustment for health status there is a strong incentive for Medicare Advantage plans to target the enrollment of beneficiaries who are healthier than average," CMS' December report states.
The wide-ranging 21st Century Cures Act mandates the agency make changes to the risk adjustment model by 2022. To comply, CMS wants to start using the new model in 2020.
The agency began collecting encounter data since 2012, according to insurer trade group AHIP, and ramping up the proportion of its use in calculating risk scores.
Sean Creighton, vice president with Avalere, said the new proposal could cause unintended consequences such as coding proliferation.
"What this is going to do is just increase the pressure on the industry and people working in the industry to find that additional documentable disease so they can get an incremental payment," he told Healthcare Dive.
Also, the change could have a negative impact on MA plans with a large number of dual-eligible enrollees, or in other words plans with more vulnerable populations, according to a previous report from Avalere.
The Medicare Advantage program has grown in popularity in recent years and has been a profit center for many payers. CMS says that MA enrollees now account for one-third of all Medicare beneficiaries.