Fact sheet

2020 Medicare Advantage Part I Advance Notice – Risk Adjustment

2020 Medicare Advantage Part I Advance Notice – Risk Adjustment

Today, the Centers for Medicare & Medicaid Services (CMS) released Part I of the 2020 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C Risk Adjustment Model and the use of encounter data.

The 2020 Advance Notice is being published in two parts again this year due to requirements in the 21st Century Cures Act, which mandated certain changes to the Part C risk adjustment model and a 60 day comment period for these changes. Changes to other payment methodologies proposed for the following calendar year that are typically contained in the Advance Notice only require a 30 day comment period and will be released in accordance with that statutory deadline. The payment policies for 2020, proposed in both Part I and Part II of the Advance Notice, will be finalized in the annual Rate Announcement.

2020 Part C Risk Adjustment Model proposal
The 21st Century Cures Act requires CMS to make adjustments to the risk adjustment model to take into account the number of conditions an individual beneficiary may have, in addition to the additive factors in the existing model.  For 2020, we are proposing to implement the model proposed, but not finalized in the 2019 Rate Announcement. This model adds variables that count the number of conditions a beneficiary may have that are in the risk adjustment model (“payment conditions”). In addition to the proposed model, we are presenting an alternate Payment Condition Count model that is similar, but includes additional condition categories not in the current risk adjustment model for pressure ulcers and dementia. We are soliciting comment on which version of the model to implement beginning with 2020 payments.

Further, the 21st Century Cures Act requires that CMS fully phase in the required changes to the risk adjustment model by 2022. We are therefore proposing to begin the phase in of this new model in 2020, starting with a blend of 50% of the risk adjustment model first used for payment in 2017 and 50% of the new risk adjustment model proposed.

Using Encounter Data

The model we are proposing in Part I of the Advance Notice for 2020 builds upon the model being used for 2019 risk adjustment payments that includes technical updates such as calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and including additional condition categories for mental health, substance use disorder, and chronic kidney disease.

CMS calculates risk scores using diagnoses submitted by Medicare FFS providers and by Medicare Advantage organizations. Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by Medicare Advantage organizations. In recent years, CMS began collecting encounter data from Medicare Advantage organizations, which also includes diagnostic information. In 2016, CMS began using diagnoses from encounter data to calculate risk scores, by blending 10% of the encounter data-based risk scores with 90% of the RAPS-based risk scores. CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25% encounter data and 75% RAPS in 2017, 15% encounter data and 85% RAPS in 2018, and 25% encounter data and 75% RAPS in 2019. For 2020, CMS proposes to calculate risk scores by adding 50% of the risk score calculated using diagnoses from encounter data, RAPS inpatient diagnoses, and FFS diagnoses with 50% of the risk score calculated with diagnoses from RAPS and FFS diagnoses. CMS is also proposing to implement the phase-in of the new risk adjustment model by calculating the encounter data-based risk scores exclusively with the new risk adjustment model, while continuing use of the risk adjustment model first implemented for 2017 payment for calculating risk scores with RAPS data.

Report to Congress

The 21st Century Cures Act also requires the Secretary to submit to Congress a report on the Part C risk adjustment model and the ESRD risk adjustment model every three years, starting with a report due no later than December 31, 2018. This first report on risk adjustment in Medicare Advantage required by the 21st Century Cures Act is being released at the same time as Part I of the 2020 Advance Notice.  This report includes information on the performance of these risk adjustment models by providing a wide range of predictive ratios. To view the Report to Congress, please visit: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors.html.

Process

To be assured consideration, comments on the proposals announced today should be submitted by February 19, 2019. The final 2020 Rate Announcement will be published by Monday, April 1, 2019.

To submit comments or questions electronically, go to www.regulations.gov, enter the docket number “CMS-2018-0154” in the “search” field , and follow the instructions for ‘‘submitting a comment.’’

Part I of the Advance Notice may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and selecting “2020 Advance Notices.”