Net Payment Impact
The chart below indicates the expected impact of the proposed policy changes on MA plan payments relative to last year.
Year-to-Year Percentage Change in Payment
|
Impact |
2022 Advance Notice |
|
Effective Growth Rate |
4.55% |
|
Rebasing/Re-pricing |
TBD1 |
|
Change in Star Ratings |
-0.34% |
|
Medicare Advantage Coding Pattern Adjustment |
0% |
|
Risk Model Revision |
0.25% |
|
Encounter Data Transition |
0% |
|
Normalization |
-1.64% |
|
Expected Average Change in Revenue2 |
2.82% |
1Rebasing/re-pricing impact is dependent on finalization of the average geographic adjustment index and will be available with the publication of the CY 2022 Rate Announcement.
2The total does not include an adjustment for underlying coding trend.
2022 Part C Risk Adjustment
As discussed in Part I of the Advance Notice, CMS is proposing to fully phase in the CMS-HCC model first implemented for CY 2020 (i.e., the 2020 CMS-HCC model), as required by the 21st Century Cures Act. Specifically, per the 21st Century Cures Act, the 2020 model adds variables that count conditions in the risk adjustment model (“payment conditions”) and includes for payment additional conditions for mental health, substance use disorder, and chronic kidney disease. This represents a change from 2021 that used a blend of 75% of the risk score calculated using the 2020 CMS-HCC model and 25% of the risk score calculated using the 2017 CMS-HCC model.
Sources of Diagnoses for Part C Risk Adjustment
CMS calculates risk scores using diagnoses submitted by MA organizations and from Medicare fee-for-service (FFS) claims. Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by MA organizations for the purpose of calculating risk scores for payment. In recent years, CMS began collecting encounter data from MA organizations, which also includes diagnostic information. CMS began using diagnoses from encounter data to calculate risk scores in CY 2015, and has since continued to use a blend of encounter and RAPS data-based scores through 2021, when risk scores will be calculated with 75% encounter data and 25% RAPS data.
With the proposed full phase-in of the 2020 CMS-HCC model, which is designed to calculate risk scores using diagnoses from encounter data submissions, the Part C risk score used for payment for CY 2022 would rely entirely on encounter data as the source of MA diagnoses.
For CY 2022, CMS is also proposing to discontinue the policy (used for CY 2019, CY 2020, and CY 2021) of supplementing diagnoses from encounter data with diagnoses from inpatient records submitted to RAPS for calculating beneficiary risk scores.
In addition, for CY 2022, CMS intends to identify diagnoses for risk score calculation from FFS claims using HCPCS-based filtering logic, which would align the filtering of FFS claims with how CMS identifies risk adjustment eligible diagnoses from encounter data and the methodology used to identify diagnoses for model calibration. We intend to make this update for the Part C, Part C ESRD, and Part D risk scores that include FFS diagnoses.
Medicare Advantage Coding Pattern Adjustment
Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and FFS providers. For CY 2022, CMS proposes to apply a coding pattern adjustment of 5.9 percent, which is the minimum adjustment for coding pattern differences required by the statute.
2022 Part D Risk Adjustment
Recognizing that some stakeholders have continued to request that CMS implement a Part D risk adjustment (RxHCC) model based on more current cost data as soon as possible, for CY 2022, we propose to implement an updated version of the RxHCC risk adjustment model used to adjust direct subsidy payments for Part D benefits offered by stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs). For CY 2022, we calibrated an RxHCC model using 2017 diagnoses to predict 2018 costs using the same approach we use to filter diagnoses from encounter data records for risk score calculation, including the risk adjustment allowable CPT/HCPCS codes. The 2017/2018 model also includes an update to better simulate catastrophic threshold coverage and is calibrated based on ICD-10 diagnoses.
Sources of Diagnoses for Part D Risk Adjustment
The recalibrated RxHCC model is designed to calculate risk scores using diagnoses from encounter data submissions. Consistent with the proposal for Part C discussed in the Advance Notice Part I, we propose relying entirely on encounter data and diagnoses from FFS claims to calculate risk scores for CY 2022, instead of a blend of encounter data and RAPS data as has been the case every year from 2016 through 2021.
In addition, for CY 2022, we are proposing to discontinue the policy of supplementing diagnoses from encounter data with diagnoses from inpatient records submitted to RAPS for calculating the 2022 risk scores.
Puerto Rico
The proportion of Medicare beneficiaries who receive benefits through MA (as opposed to FFS) is far greater in Puerto Rico than in any other state or territory. The policies proposed and under consideration for 2022 would continue to provide stability for the MA program in the Commonwealth and to Puerto Ricans enrolled in MA plans. These policies include basing the MA county rates in Puerto Rico on the relatively higher costs of beneficiaries in FFS who have both Medicare Parts A and B, continuing the statutory interpretation that permits certain counties in Puerto Rico to qualify for an increased quality bonus adjusted benchmark, and applying an adjustment to reflect the nationwide propensity of beneficiaries with zero claims.
Program of All-Inclusive Care for the Elderly (PACE) Risk Adjustment
For CY 2022 payment to PACE organizations, we propose to continue to use the 2017 CMS-HCC model to calculate non-ESRD risk scores as we did for CY 2020 and CY 2021 payment and the 2019 ESRD models to calculate ESRD risk scores as we have done since CY 2019. The CY 2022 Advance Notice Part II also addresses other PACE payment provisions typically addressed annually through the Advance Notice/Rate Announcement process.
Part C and D Star Ratings
As part of the Administration’s effort to increase transparency and advance notice regarding enhancements to the Part C and D Star Ratings program, CMS codified the methodology for the Part C and D Star Ratings program for the 2021 and 2022 Star Ratings in the CY 2019 and CY 2020 Medicare Part C and D Final Rule published in April 2018 and 2019, respectively. In the COVID-19 interim final rule (IFC) (CMS-1744-IFC) issued on March 31, 2020 (the “March 31, 2020 COVID-19 IFC”), CMS adopted a series of changes for the 2022 Star Ratings in recognition of the impact on health plan and provider operations posed by the COVID-19 pandemic (85 FR 19269-19275). The COVID-19 IFC (CMS-3401-IFC) issued on August 25, 2020 (the “August 25, 2020 COVID-19 IFC”) modifies the application of the extreme and uncontrollable circumstances policy for calculation of the 2022 Part C and D Star Ratings to address the effects of the public health emergency (PHE) for COVID-19 (85 FR 54844-54847). The Advance Notice announces updates that the CY 2019 and CY 2020 Final Rules required us to make through the process described in section 1853(b) of the Act for changes in, and adoption of, payment and risk adjustment policies. In addition, we are soliciting input on future measures and concepts as we continue to enhance the Star Ratings over time.
The Advance Notice includes information about the date by which plans must submit their requests for review of the appeals and complaints measures data, lists the measures included in the Part C and D Improvement measures and the Categorical Adjustment Index for the 2022 Star Ratings, and lists the states and territories with Individual Assistance designations from the nationwide FEMA major disaster declarations used in the definition of an affected contract for the extreme and uncontrollable circumstances adjustment for the 2022 Star Ratings.
Additionally, CMS solicits feedback on a number of different measurement concepts including the following:
- Provider Directory Accuracy (Part C).
- COVID-19 Vaccination (Part C).
COVID-19 Outbreak
CMS is working around the clock to equip the American healthcare system with maximum flexibility to respond to the COVID-19 PHE. An overview of CMS’ actions taken in response to the PHE which relate to the waivers and flexibilities provided to MA organizations and Part D plans is described in the CMS fact sheet “Medicare Advantage and Part D Plans: CMS Flexibilities to Fight COVID-19,” posted on our website on April 29, 2020 (available at: https://www.cms.gov/files/document/covid-ma-and-part-d.pdf). The agency is also communicating with stakeholders and developing further guidance, as needed, on issues related to the COVID-19 PHE.[1]
Process
Comments on the proposals set forth in both Part I and Part II of the Advance Notice must be submitted by Monday, November 30, 2020. The final 2022 Rate Announcement will be published no later than Monday, April 5, 2021.
To submit comments or questions electronically, go to www.regulations.gov, enter the docket number “CMS-2020-0093” in the “search” field, and follow the instructions for ‘‘submitting a comment.’’
The 2022 Advance Notices (Part I and Part II) may viewed by going to: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and selecting “2022 Advance Notices.”
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[1] CMS issued the Health Plan Management System (HPMS) memo, “Information Related to Coronavirus Disease 2019 – COVID-19” on March 10, 2020. In response to subsequent requests for additional guidance on CMS’ expectations with respect to other MA and Part D sponsor policies, we issued updates of this memo on April 21 and May 22, 2020. See “Information Related to Coronavirus Disease 2019 – COVID-19” (March 10, 2020) (available at: https://www.cms.gov/files/document/hpms-memo-covid-information-plans.pdf); “Information Related to Coronavirus Disease 2019 – COVID-19” (rev. April 21, 2020) (available at: https://www.cms.gov/files/document/updated-guidance-ma-and-part-d-plan-sponsors-42120.pdf); “Information Related to Coronavirus Disease 2019 – COVID-19” (rev. May 22, 2020) (available at: https://www.cms.gov/files/document/covid-19-updated-guidance-ma-and-part-d-plan-sponsors-52220.pdf).
Please note that the CMS Medicare Drug and Health Plan Contract Administration Group also issued guidance on these topics in two additional HPMS memos which respond to questions CMS received related to the above-mentioned memos. See “Updated Guidance for Medicare Advantage Organizations” (May 11, 2020) and “Updated Guidance for Medicare Advantage Organizations” (May 13, 2020) (available at: https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-18).
For a comprehensive listing of CMS’ actions in response to the PHE, please refer to the Current Emergencies website (available at: https://www.cms.gov/About-CMS/Agency-Information/Emergency/EPRO/Current-Emergencies/Current-Emergencies-page).