Today, the Centers for Medicare & Medicaid Services (CMS) published the Calendar Year (CY) 2022 Medicare Advantage and Part D Rate Announcement, finalizing Medicare Advantage (MA) and Part D payment methodologies for CY 2022. This Rate Announcement addresses comments received on Parts I and II of the CY 2022 Advance Notice, published on September 14 and October 30, 2020, respectively. This announcement is being made nearly three months earlier than usual to provide MA organizations and Part D sponsors more time to take this information into consideration as they prepare their bids for 2022. The earlier release will help MA and Part D plans to better project and plan for 2022 plan costs, in light of the uncertainty associated with the coronavirus disease 2019 (COVID-19) pandemic.
COVID-19
The CY 2022 Rate Announcement incorporates aspects of the impact of COVID-19 on health care costs in its estimates of Medicare spending. The health, safety, and welfare of America’s patients and provider workforce in the face of the COVID-19 PHE is the top priority of the Trump Administration and CMS. 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 some of the most significant actions CMS has taken in response to the PHE which relate to the waivers and flexibilities applicable 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” (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]
Net Payment Impact
The chart below indicates the expected impact of the updated methodologies on plan payments relative to 2021.
Year-over-Year Percentage Change in Payment
|
Impact |
2022 Advance Notice |
2022 Rate Announcement |
|
Effective Growth Rate |
4.55% |
5.59% |
|
Rebasing/Re-pricing |
N/A1 |
0.16% |
|
Change in Star Ratings |
-0.34% |
-0.28% |
|
MA Coding Pattern Adjustment |
0% |
0% |
|
Risk Model Revision |
0.25% |
0.25% |
|
Encounter Data Transition |
0% |
0% |
|
Normalization |
-1.64% |
-1.64% |
|
Expected Average Change in Revenue2 |
2.82% |
4.08% |
1Rebasing/re-pricing impact is dependent on finalization of the average geographic adjustment index, which was not available with the publication of the CY 2022 Advance Notice.
2The total does not include an adjustment for underlying coding trend.
2022 Part C Risk Adjustment Model
CMS will complete phasing 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, this risk adjustment model includes variables that count the number of conditions a beneficiary has among those in the risk adjustment model and additional conditions for mental health, substance use disorder, and chronic kidney disease. This represents a change from 2021, when CMS used a blend of 75 percent of the risk score calculated using the 2020 CMS-HCC model and 25 percent of the risk score calculated using the 2017 CMS-HCC model.
For Programs of All-Inclusive Care for the Elderly (PACE) organizations, we are finalizing our proposal to continue to use the 2017 CMS-HCC model to calculate risk scores for CY 2022.
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 for CY 2015 payments, and has since continued to use a blend of encounter and RAPS data-based scores through 2021, when risk scores are being calculated with 75 percent encounter data-based risk scores and 25 percent RAPS-based risk scores.
With the 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 will rely entirely on MA encounter data and FFS claims as the sources of diagnoses.
For CY 2022, CMS is also discontinuing 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 will identify diagnoses for risk score calculation from FFS claims using HCPCS-based filtering logic, which will 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 will make this update for all non-PACE risk scores that include FFS diagnoses (i.e., Part C, ESRD, and Part D).
For PACE organizations for CY 2022, CMS is finalizing the proposal to continue to calculate risk scores using the 2017 CMS-HCC model by pooling risk adjustment-eligible diagnoses from encounter data, RAPS data, and FFS claims (with no weighting).
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 is finalizing the proposal to apply a coding pattern adjustment of 5.90 percent, which is the minimum adjustment for coding intensity required by the statute.
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 being finalized for 2022 will 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.
Part C and D Star Ratings
As part of the Administration’s effort to increase transparency and provide earlier opportunities for input 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 Rules published in April 2018 and April 2019, respectively. In the COVID-19 interim final rule (IFC) (CMS-1744-IFC) published April 6, 2020 (https://www.govinfo.gov/content/pkg/FR-2020-04-06/pdf/2020-06990.pdf), 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) published on September 2, 2020 (https://www.federalregister.gov/documents/2020/09/02/2020-19150/medicare-and-medicaid-programs-clinical-laboratory-improvement-amendments-clia-and-patient) 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 PHE for COVID-19 (85 FR 54844-54847). The Rate Announcement includes updates that the CY 2019 and CY 2020 Final Rules required us to make through this process.
The Rate Announcement 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 solicited feedback in the CY 2022 Advance Notice on a number of different measurement concepts including the following:
- Provider Directory Accuracy (Part C).
- COVID-19 Vaccination (Part C).
CMS will take the feedback received into consideration as we continue to explore the feasibility of developing measures in these areas.
Additional Information
The CY 2022 Rate Announcement may be viewed by going to: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and selecting “2022 Announcement.”
Ratebooks and supporting calculation data may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Ratebooks-and-Supporting-Data.html and selecting “2022.”
The 2015-2019 FFS data used in the ratebook calculations may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/FFS-Data.html
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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 more 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).