Podcast: Sifting the 2019 Medicare Advantage Final Rate Notice

The Centers for Medicare & Medicaid Services (CMS) has just released its final 2019 Medicare Advantage and Part D Rate Announcement and Call Letter. What are the key takeaways for Medicare Advantage plans when it comes to their risk adjustment programs? We dive in on “From the Trenches,” a new podcast from Verscend Technologies. Our guest on this episode is Lesley Brown, Cotiviti vice president of Risk Adjustment.


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From the Trenches is a new podcast from Cotiviti, a leader in healthcare data analytics, exploring the latest trends in healthcare quality and performance analytics, risk adjustment, payment integrity, and payer-provider collaboration. Check out all our episodes in your browser, or subscribe on your smartphone or tablet with Apple PodcastsTuneInGoogle Play, and Stitcher.


About our guest:


Headshot_Lesley_BrownAs vice president of Risk Adjustment at Cotiviti, Lesley Brown drives the product strategy for Cotiviti’s end-to-end Risk Adjustment solutions, ensuring that we continue to deliver innovative and compliant solutions for our customers. She has more than 30 years’ experience in product and project management in the healthcare and pharmaceutical industries. Before joining Verscend, she served as senior vice president of product management at Halfpenny Technologies, a leading provider of clinical data exchange solutions for healthcare providers. She also previously served as senior vice president of care management products for TriZetto, where she was accountable for the quality, delivery, and support of the software solutions in the its care management portfolio, and she held multiple positions at Alere Health. Lesley is the co-author of 10 U.S. patents and has been published in 16 peer-reviewed scientific and clinical journals.


Podcast transcript

From a risk adjustment perspective, what were your top three takeaways from this final notice? 

One of the major purposes of the final notice is to provide the Medicare Advantage capitation rates and any related payment policies. Medicare Advantage health plans rely on this and the other information that's in the Advance Notice to prepare their bids for coming Payment Year, 2019. Top of the list would be the fairly substantial changes to the CMS-HCC model used to calculate the risk scores in 2019, with the decision to add several new HCCs to that payment model, which obviously potentially could increase the payments over to the health plans.


Second would be the significant increase in the national growth rates for both the Medicare Advantage and per-capita fee-for-service, at about 5.93 percent and 5.11 percent respectively. These are up a little bit from the Advance Notice that came out in December, and actually up significantly over the past five years, where they've been around 2.9 to the 3 percent rate. These are the growth rates that are then used to calculate the 2019 capitation rates for Medicare Advantage health plans.


Third would be around the continued transition of the blended RAPS/EDS data to calculate the risk score—the commitment to continue to increase the EDS contribution to the risk score blend, up from last year's 15 percent EDS, 85 percent RAPS (in Payment Year 2018) to 25 percent EDS, 75 percent RAPS (in Payment Year 2019).


What overall changes is CMS making to the HCC risk adjustment model for 2019?

As mentioned, CMS has decided to change the HCC risk adjustment model to include additional conditions for three major disease areas: chronic kidney disease, mental health, and substance use disorder. Particularly the last two, I think, are very key given the focus lately both on the government and individual health plans around opioid use as well, so those have been added.


For chronic kidney disease, there is the addition of the HCC for stage 3. Previously, there have only been HCCs for stages 4 and 5. For mental health, there have been two new HCCs added around psychosis and personality disorders, and then for substance abuse, they've renamed one of the HCCs and added conditions to that, and added a new HCC as well.


Comments from many of the industry stakeholders in this latest announcement that were from the Advance Notice are actually very favorable (in agreement that these additions). They agree that they are clinically meaningful and will help them predict significant costs for their members, and as such will really allow the plans to better serve their members.


In the Advance Notice in December, CMS also floated the concept to add variables that would count the member conditions based off requirements from the 21st Century Cures Act. After further review and listening to this extensive feedback from the plans and stakeholders, the final notice indicated they would not be moving forward with that piece of the model, and there was the potential for them to add what they're calling the Payment Condition Count model in 2020.


There has been a lot of concern among Medicare Advantage plans about the transition from the Risk Adjustment Processing System or RAPS to the Encounter Data System or EDS. What did CMS decide to do for 2019 and what might the impact be for Medicare Advantage plans?

CMS is going to continue the transition over from RAPS to EDS. If you recall several years ago, they implemented EDS, but decided rather than just switching from RAPS to EDS, they were going to transition over time. In 2019, they will be increasing that blend from 15/85 percent to 25/75 percent, with the 25 percent from EDS utilizing the new HCC model. In continuing to use a blended model, versus just going all-out with EDS, CMS is acknowledging that many health plans are experiencing issues with this. They do believe that in doing the blended model, they are relieving the burden on Medicare Advantage plans, who otherwise would have to be tracking four risk scores versus two risk scores.


The shift to using EDS data for calculating risk scores still appears to be posing substantial risk for many Medicare Advantage organizations, and the fact that CMS has not gone above that 25 percent for Payment Year 2019 I believe implies that they are well aware that many Medicare Advantage plans are still unprepared or ill-equipped to submit and monitor the EDS submissions accurately.


EDS represents a significant change from the RAPS submissions process. Rather than the plans filtering the data, all the unfiltered claims and supplemental data goes directly to CMS, and they apply the filtering logic. This creates a different type of burden for Medicare Advantage organizations than they were experiencing with RAPS—really, it's just a shift in their operational processes. They need to verify all the data that is submitted is complete and accurate, and that all the appropriate diagnosis codes are being accepted for risk adjustment. It's really essential for these Medicare Advantage organizations to understand that filtering logic, to monitor the submissions and response files, and I think importantly to compare the risk scores that were being calculated with RAPS and other benchmarks to make sure they are not actually losing any revenue as they transition over. It's just a different set of burdens and processes that I think many plans are still getting their hands around.


CMS has also been looking at how to implement a requirement of the 21st Century Cures Act to “take into account the total number of diseases or conditions of an individual beneficiary,” and it’s been looking at adding a variable to the risk adjustment model that would accomplish this. What did CMS decide in this 2019 final notice?

In the Advance Notice back in December, CMS laid out several options to add variables to the CMS-HCC model that would count the number of member conditions. CMS has done a lot of study around this, and there were two major models that they proposed: an “All Condition Count” model and a "Payment Condition Count" model.


The All Condition Count, as its name implies, considers all the conditions that a beneficiary has, encompassing both those that are included in the payment model for risk adjustment and those that are not. CMS predicted at the time that this would decrease the overall Medicare Advantage risk scores by about 0.28 percent. The Payment Condition Count, which considers only those conditions included in the payment model, CMS projected would increase the overall Medicare Advantage risk scores by about 1.1 percent across the board.


CMS opened this up for comment and got a lot of feedback from the stakeholders. While many stakeholders actually supported the implementation of the Payment Condition Count model, they also requested that CMS delay the rollout of this so that plans could have additional time to really evaluate the full impact of this proposed change. As such, for Payment Year 2019, CMS announced that they would implement the updated CMS-HCC model without count variables, referring to it as the "No Condition Count" HCC model. Then in 2020, they will look to add this condition count.

At Verscend, we have a lot of customers who closely follow policy changes from CMS, such as this final notice. What kind of work do we do here internally when these changes get released? 

We have a multi-faceted team that manages our Risk Adjustment solution, ensuring that we stay on top of these very important industry changes. This team includes people from our compliance team, from our product management team, data operations, and Verscend’s data analytics and reporting team. At least annually, this cross-functional team will meet to review changes such as this one, ensuring that we can be ahead of that timeline on any updates that we need to make on our side. This includes our applications—for example, with the addition of these HCCs, we make sure that our coding application identifies these as risk-generating codes now—as well as our submission systems, making sure from the EDS side that we're allowing for the appropriate HCCs to be included, and included also in our valuations as well.


Depending upon the extent of edits such as this and any data permitting that we may have, we may also do a "before and after" comparison so that we can let clients know the impact in advance. For example, with the addition of these new HCCs to the risk adjustment model, we can take previous years’ dates-of-service (DOS) data for a client, run it through this new model, and compare it to their existing submissions data to give them a valuation as to what the impact of the changes would be. This process is typically done annually, but we will also do this process throughout the year if other changes come out—either from CMS or from other industry bodies—or if there is a new set of CPT codes or HCPCS codes so that we can manage and stay on top of that.


Podcast music credit: "Inhaling Freedom" by Nazar Rybak, via HookSounds.


Jeff Robinson
As director of marketing communications, Jeff supports Cotiviti's customers by developing a wide range of communications including white papers, case studies, podcasts, articles, and videos offering best practices in healthcare analytics. Before joining the organization in 2016, he worked in journalism as the morning host and news director for KCPW, a public radio station in Salt Lake City.

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