Risk Adjustment

9 Things To Know About The 21st Century Cures Act & 2020 APCC Model

Written By
Erik Simonsen
Chief Operating Officer

Since the 21st Century Cures Act (CCA) was passed in 2016, there have been several changes to the existing risk adjustment model. Over the next few years, and until the Alternative Payment Condition Count (APCC) is fully implemented in Payment Year (PY) 2023, we expect to see even more.

The CCA tasks CMS with using better models to predict medical expenses for the Medicare Advantage population that specifically take into account the number of chronic conditions a patient has concurrently. Additionally, the act calls for action on the End-Stage Renal Disease (ESRD) model, and a review of the relative risk and predicted medical costs.

Of course, these changes are meant to more accurately predict expenses and risk adjustment payments. Many of the other changes are benefit modifications in MA as well as more definitive guidance on data exchange. Most significant in risk adjustment is the continued move to 100% Encounter data utilization for risk score calculation. The overarching theme is data, whether its data exchange, sources of RAF data or leveraging it for better predictability. The following summary offers 9 things they’ll need to consider.


1. APCC may be more predictive of cost


In April 2019, CMS released the 2020 Medicare Advantage Rate Notice and confirmed the APCC model for calendar year 2020. According to the new model, for HCC counts that are greater than 4 but less than 10, there’s an additional coefficient in the RAF score. Two additional levers were also added: coding intensity, which remained unchanged, and the normalization factor, which is high and results in a 7% decrease in risk scores, according to our analysis. Although the coefficient can result in a small increase in revenue, it won’t be enough to offset the change in the normalization factor. CMS says APCC is expected to be more predictive of expense, but we won’t know until after it’s fully implemented.

Under the new APCC model, risk score coefficients for dual eligibles, or members who qualify for both Medicare and Medicaid, will be lower. However, it still greatly benefits members and plans to maintain their dual eligible status. Plans should continue to assist members in maintaining enrollment.


2. Telehealth for all Medicare Advantage plans (and FFS)


In previous years, telehealth benefits were only available to beneficiaries who lived in rural communities. As a result of the CCA however, it’s now an approved benefit for all Medicare Advantage plans yet utilization remains low. However, because this is a new benefit as of 2020, utilization may change and should be tracked closely.


3. Poor STAR rating performing plans have more leeway


When the ACA was passed, CMS had authority to terminate Medicare Advantage plans that had failed to achieve 3 stars after 3 years. With the passage of the CCA however, plans now have up to 10 years to improve their quality ratings. A total of 4 plans have failed to achieve STAR ratings above 3 as of the 2020 ratings. Overall, nearly 81% of MA members are in a 4 STAR plan or above. Since the start of the STAR ratings program in 2011, there has been a general trend of MA members moving towards more highly rated plans. At the same time, we see that average plan ratings are also moving higher. You can find the STAR rating details here.


4. A new ESRD Model


Under the CMS-HCC Risk-Adjustment Model (V23), Chronic Kidney Disease stage 3 was added as an additional HCC code with the goal of preventing patients in this group from advancing to later stage kidney failure. The CCA also includes a new proposed ESRD model, which is set to decrease payments, but will incentivize providers for at-home dialysis and kidney transplant use. In late September however, dialysis centers, major health systems and industry stakeholders called on CMS to reconsider the model, so it remains to be seen what will happen.


5. Beneficiaries have more time to switch plans


Previously, Medicare Advantage beneficiaries had only 45 days to change their plans after annual enrollment, but now they have up to 3 months. Health plans, however, can only run marketing campaigns between October and December. We predict this will initially create some instability, yet keep in mind that it also takes seniors some time to be made aware they have the provision so it may not be significant right away.


6. New mental health HCCs


Since the CCA was passed, several new mental health HCCs were added. Health plans will need to ensure their providers are accurately documenting and coding these conditions to avoid missed opportunities. These have come in over the course of the last two years as a result of the CCA’s mandate to make risk adjustment more predictive of cost. These include:

HCC 51 Dementia with complications
HCC 52 Dementia without complication
HCC 56 Substance use disorder, mild, except alcohol and cannabis
HCC 57 Schizophrenia
HCC 58 Reactive and Unspecified Psychosis
HCC 59 Major depressive disorder, bipolar, and paranoid disorders
HCC 60 Personality disorders


7. Medicare Advantage plans must prepare now


Under the APCC model, the percentage of EDS data that will make up risk scores will continue to be phased in. For 2019, submissions are at a 50/50 split. In 2020, it will be 75/25. By 2021, EDS data will make up 100%. Through our analysis, we’ve found that both physicians and coders are consistently missing the same HCCs. Although health plans may have a 95% accuracy rate, they may not realize that the remaining 5% of missed codes can often account for as much as 20% of the entire value of a chart audit.


8. Information Blocking & Interoperability


The CCA clearly states that health IT vendors cannot block information sharing and calls for new technologies to share information. The ONC in 2019 has put forth an ambitious proposal around interoperability and we await the final rule on this. Though this topic is still being publicly debated between EMR vendors and the HHS, interoperability will be critical in the coming years to the success of value based care initiatives and member management. The CCA has also requested the creation of a trusted exchange framework. The framework would drive policies for a viable data exchange, rules for compliance, and basic semantic guidance on data.


9. Most items mentioned above must go into effect by 2022 (PY 2023)


While many of the items mentioned above have not been fully effectuated, the CCA mentions that most of these items must be in place by 2022 (PY 2023). In the next year or so, we will see a number of policy changes come to fruition, from Interoperability adoption to full implementation of encounter data as the source of RAF. Episource, as always, will lead the charge in adoption of these new rules.



We simplify the management of member programs by making it radically more efficient, and increasing value to healthcare organizations and their members

Don’t Miss Our Presentation on Surfacing Non-Compliant Codes at RISE West