CMS Issues Medicare Advantage Advance Notice

The Centers for Medicare and Medicaid Services (CMS) has issued Part I of the Medicare Advantage Advance Notice. The proposal would fully phase in the 2020 CMS-Hierarchical Condition Categories (HCC) risk score model and would rely entirely on encounter data as the source of Medicare Advantage diagnoses. CMS is proposing two changes to the sources of diagnoses used to calculate risk scores: (1) discontinue use of Risk Adjustment Processing System (RAPS) inpatient diagnoses to supplement encounter/Encounter Data System (EDS) data; and (2) end the blending of encounter data-based and RAPS-based risk scores and move to using 100 percent of the risk score calculated using diagnoses from Medicare Advantage encounter data and fee-for-service (FFS) claims. In the 2021 rates, 25 percent of the risk score calculation is based on the 2017 CMS-HCC model and encounter data is blended with 25 percent RAPS data. The blending would be phased out for 2022.

The first part of the Advance Notice comes earlier than is customary and establishes sufficient leeway for the required comment periods to be accommodated and still allow for the publication of the Rate Announcement in January 2021, several months earlier than the statutorily mandated April date. While indicating that they may revert to typical publication timelines, CMS currently intends to publish Part II of the Advance Notice in the fall of 2020. The Agency believes that Medicare Advantage organizations and Part D sponsors (including Program of All-Inclusive Care for the Elderly (PACE) organizations) could potentially benefit from having information about capitation rates, risk adjustment factors, methodologies, benefit parameters, and assumptions earlier in the year so that they have more time to prepare their 2022 bids, which must be submitted by the first Monday in June. The goal is to provide flexibility in this unusual time when all stakeholders are grappling with additional uncertainties created by the COVID-19 pandemic.

Part I of the Advance Notice is available here.

LeadingAge NY Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841