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First Advance Notice for 2020 Issued; Condition Counts Will Be Factored Into Risk Adjustment and Encounter Data Goes to 50%

First Advance Notice For 2020 Issued; Condition Counts Will Be Factored Into Risk Adjustment And Encounter Data Goes To 50%

Given the requirements of the 21st Century Cures Act (CURES), the Centers for Medicare and Medicaid Services (CMS) for the second year in a row issued a first advanced notice for 2020 in late December. The notice deals largely with giving additional notice related to risk adjustment changes in store for 2020.

CMS notes that “a key element in the success of Medicare Advantage is ensuring that payments to plans reflect the relative risk of the people who enroll.” This is embodied in the very robust risk adjustment program it has rolled out over the last two decades. As we know, CMS is getting more and more savvy as it seeks to ensure proper payments to each plan based on the risk of its population. This comes with changes both to the global demographic factors as well as the clinical risk indicators.

Condition count to impact risk adjustment model

For 2020, consistent with CURES, CMS is once again proposing to take into account the number of conditions an individual beneficiary may have in the risk adjustment model. It proposed this last year, but only implemented changes related to substance use disorder, mental health, and Chronic Kidney Disease (CKD) diagnoses.

In the 2019 Advance Notice, CMS offered three proposals with regard to adjusting the model to take into account the number of conditions an individual has:

  • The Payment Conditions Count (PCC) model, where only those paid in the model will be factored into the adjustment for the total number of conditions.
  • The All Conditions Count (ACC) model, where any condition regardless of whether it is currently paid in the model will be factored into the adjustment for the total number of conditions.
  • Not factoring the number of conditions in.

As we noted, it backed away from any proposal here, but must implement now to meet the mandate. It will do so by implementing the PCC in 2020. The proposed PCC model includes a separate factor for the count of conditions. While each HCC that is present has its weight, the PCC will compensate plans more for those with a greater number of overall conditions as this will lead to higher costs. For 2020, CMS will phase in the implementation of the proposed changes by calculating risk scores using the sum of:

  • 50% of the risk score calculated with the proposed “Payment Condition Count” CMS-HCC model and
  • 50% of the risk score calculated with the 2017 CMS-HCC model.

Continued phase-in of encounter data submissions

For 2019, CMS calculated risk scores by adding 25% of the risk score calculated using diagnoses from encounter data, FFS claims, and RAPS inpatient records with 75% of the risk score calculated using diagnoses from all RAPS records and FFS claims. For 2020, CMS will further phase in encounter data by calculating risk scores by adding 50% of the risk score calculated using diagnoses from encounter data, FFS claims, and RAPS inpatient records with 50% of the risk score calculated with diagnoses from all RAPS records and FFS claims.

Specifically, CMS will calculate the encounter data-based risk scores as follows:

  • With the proposed PCC CMS-HCC model,
  • Using diagnoses from encounter data, FFS claims, and RAPS inpatient records.

RAPS risk scores would be calculated as follows:

  • With the 2017 CMS-HCC model,
  • Using diagnoses from all RAPS records and FFS claims.

Suffice it to say that the maintenance and calculation of risk adjusted revenue just got twice as complicated – as if it was not complicated enough already.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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