CMS continues shift to risk adjustment encounter data in 2021 Advance Notice

The Centers for Medicare & Medicaid Services (CMS) plans to continue its shift toward encounter data for risk adjustment submissions, according to the agency’s recently released Advance Notice (Part I) for the 2021 calendar year. If the proposed plan is ultimately adopted:

  • Encounter data-based scores will comprise 75 percent of a Medicare Advantage (MA) plan’s overall risk score, using the 2020 CMS-HCC model
  • RAPS-based scores will comprise the remaining 25 percent, using the 2017 CMS-HCC model

The current blend between RAPS and encounter data is 50/50, so CMS is continuing its recent trend of increasing the encounter data component by 25 percent each year despite complaints from the industry about its accuracy.

Part I of the 2021 Advance Notice, totaling just six pages, contains substantially fewer proposed changes than last year’s 41-page document proposing the Alternative Payment Condition Count (APCC) model, which the agency ultimately adopted April 1, 2019. As noted by CMS in the 2021 Advance Notice:

… the APCC CMS-HCC model takes into account the total number of diseases or conditions of an individual enrolled in an MA plan by including a count variable that makes an additional adjustment as the number of diseases or conditions an individual has increases. This risk adjustment model also has additional HCCs for dementia and pressure ulcers. 

CMS predicts transitioning to this model will have a positive impact on overall MA risk scores, increasing them by 0.25 percent. However, it expects the continued to transition to encounter data to have no impact because the agency projects the differential between MA plans’ RAPS-based risk scores and encounter data-based risk scores to be zero. Health plans should work closely with their actuaries to understand these impacts so they have time to provide comments back to CMS, if necessary.

MA plans now have until March 6, 2020 to comment on the new CMS proposal before the final 2021 Rate Announcement is published in early April.

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Rebecca Darnall
As product director, Rebecca provides leadership and oversight into new product and business development, growth, and strategy to assist health plans in the optimization of revenue and risk mitigation. With more than 15 years of healthcare experience, she has a strong track record in creating and establishing operating policies and procedures for risk adjustment programs that comply with CMS requirements and industry practices.

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