Fact Sheets
2021 Medicare Advantage Advance Notice Part I – Risk Adjustment
2021 Medicare Advantage Advance Notice Part I – Risk Adjustment
Today, the Centers for Medicare & Medicaid Services (CMS) released Part I of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C CMS-Hierarchical Condition Categories (HCC) risk adjustment model and the use of encounter data.
The 2021 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 Part C risk adjustment 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 2021, proposed in both Part I and Part II of the Advance Notice, will be finalized in the annual Rate Announcement on or before April 6, 2020.
Continued Phase-in of the 2020 CMS-HCC Risk Adjustment Model
The 21st Century Cures Act requires that CMS phase in changes to risk adjustment payments based on section 1853(a)(1)(I) of the Social Security Act over a 3-year period, beginning with 2019, with such changes being fully implemented for 2022 and subsequent years. In order to phase in the model that meets the statutory requirements (the 2020 CMS-HCC model), for calendar year (CY) 2021 for calculating risk adjustment payments, CMS is proposing to calculate risk scores for CY 2021 payment as follows:
Continue to phase in the implementation of the risk adjustment model finalized for CY 2020 for payment to Medicare Advantage (MA) organizations and certain demonstrations by calculating risk scores using the sum of:
- 75% of the risk score calculated with the 2020 CMS-HCC model and
- 25% of the risk score calculated with the 2017 CMS-HCC model.
This proposal represents a change from the blend in CY 2020 of 50% of the risk score calculated with the 2020 CMS-HCC model and 50% of the risk score calculated with the 2017 CMS-HCC model. For PACE organizations, CMS proposes to continue to use the 2017 CMS-HCC model to calculate risk scores (and therefore risk adjustment payment amounts) in CY 2021.
Using Encounter Data
CMS calculates risk scores using diagnoses submitted by MA organizations and from 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, for CY 2016, CMS blended 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 data for CY 2017, 15% encounter data and 85% RAPS data for CY 2018, and 25% encounter data and 75% RAPS data for CY 2019. For CY 2020, CMS is continuing to use a blend to calculate risk scores, by calculating risk scores with 50% encounter data and 50% RAPS data.
For CY 2021, CMS proposes to calculate risk scores for payment to MA organizations and certain demonstrations by summing 75% of the encounter data-based risk score with 25% of the RAPS-based risk score. Specifically, CMS proposes to calculate the encounter data-based risk scores with the 2020 CMS-HCC model and the RAPS-based risk scores with the 2017 CMS-HCC model.
For PACE organizations for CY 2021, CMS proposes to continue calculating risk scores by pooling risk adjustment-eligible diagnoses from encounter data, RAPS data, and FFS claims to calculate a single risk score (with no weighting).
Process
To be assured consideration, comments on the proposals announced today should be submitted by March 6, 2020. The final 2021 Rate Announcement will be published by Monday, April 6, 2020.
To submit comments or questions electronically, go to www.regulations.gov, enter the docket number “CMS-2020-0003” 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 “2021 Advance Notices.”
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