Medicare Advantage risk-adjustment proposal causes alarm
Concerned that changes could lead to lower Medicare Advantage (MA) reimbursements, payers spoke out against a CMS plan that would incorporate more patient encounter data when determining risk scores.
MA payments take into account a beneficiary’s health, so any change to that formula will affect what CMS pays insurers for the coverage they provide. Payers get reimbursed at a higher level for the unhealthiest beneficiaries because payers are taking on greater risk.
In its letter on the topic, the American Hospital Association backed parts of the proposal, but said it is concerned about “relying on encounter data to calculate risk scores” and asked the CMS reconsider the proposal until it resolves data quality issues.
CMS collected comments on the proposal it unveiled in December. A final rate announcement is planned by April 2.
CMS is proposing changing its risk adjustment model to take into account mental health, substance use disorder and chronic kidney disease. The agency also wants to “take into account the number of conditions an individual beneficiary may have.”
The move would make changes to MA capitation rates and Part D payment policies. The Payment Condition Count model would increase MA risk scores by 1.1%. However, CMS would also cut MA risk scores by 0.28% in the alternative All Condition Count model.
The proposal would phase-in the model in 2019 "starting with a blend of 75% of the risk adjustment model used for payment in 2017 and 2018 and 25% of the new risk adjustment model proposed."
Though concerned about parts of the proposal, AHA Executive Vice President Thomas Nickels said the organization supports the CMS proposal that would allow MA plans to provide additional supplemental benefits if they meet certain criteria, including compensating for physical impairments.
CMS offered two ways to account for a beneficiary’s multiple conditions in the risk model: the All Condition Count and the Payment Condition approach. The AHA said it supports the latter and added that “this model would better compensate MA plans for the real risk associated with beneficiaries, as well as reduce variation among plan contracts.”
However, the AHA is concerned about changes to risk score calculations.
The Alliance of Community Health Plans (ACHP), which represents nonprofit payers, is asking CMS to delay implementing more patient encounter data to determine risks scores until 2020. ACHP said pushing back the launch another year would allow payers to “analyze the model’s impact and allow MA plans to adjust to other changes.”
America’s Health Insurance Plans (AHIP), the largest payer organization, also remains concerned about the proposal. “Serious problems persist with the accuracy and reliability of encounter data. Because of these problems, CMS’s proposal will cut payments to the program,” AHIP said.
AHIP pointed to a recent Oliver Wyman report, which the payer organization funded, that found payments based on CMS’ proposal would increase by less than 2%, but healthcare costs are expected to grow between 2% and 4%.
MA remains popular for payers and Medicare beneficiaries. MA ended 2017 with nearly 21 million members, an 8% increase over the previous year. UnitedHealth Group, the largest MA payer, increased its membership 14% to 5.24 million members. Humana, the second largest MA payer, finished with 3.51 million members, a 7% increase.
Though much smaller in terms of total members, Aetna’s MA population jumped 21% to 1.71 million members in 2017.
One-third of all Medicare beneficiaries are in a MA plan.
- Healthcare Dive CMS proposes Medicare Advantage risk adjustment increase