Risk Adjustment

CMS 2019 Advance Notice

CMS has released the Advance Notice much earlier than usual.  Usually, it comes out in February, but given the significant proposed changes, CMS was mandated to give the health plans more time to comment.

The 2019 Advance Notice will be published in two parts this year due to requirements in the 21st Century Cures Act, which mandated certain changes to the Part C RA model and a 60-day comment period (30-days is the norm).  CMS will publish a second part of this document in the normal February timeframe.  Comments are due to CMS by March 2.  The Final Announcement reflecting all changes will be made on April 2, 2018.

Here is a summary of the proposed changes required by the 21st Century Cures Act that pertain to our businesses:

  • Addition of mental health, substance use disorder, and chronic kidney disease (CKD) conditions to the RA model.
    1. CMS proposes to add the following new HCCs to the model:
      1. Drug Abuse, Uncomplicated, Except Cannabis (HCC 56)
      2. Reactive and Unspecified Psychosis (HCC 58 — the current HCC 58 will be renumbered as HCC 59)
      3. Personality Disorders (HCC 60)
      4. Chronic Kidney Disease, Moderate (Stage 3) (HCC 138)
  1. Mental Health
    1. Two HCCs classified as mental health are already included in the 2017 CMS-HCC model:
      1. HCC 57 Schizophrenia
      2. HCC 58 Major Depressive, Bipolar, and Paranoid Disorders
    2. For payment year 2019, CMS proposes to add HCC 59 Reactive and Unspecified Psychosis and HCC 60 Personality Disorders to the CMS-HCC model.
  2. Substance Use Disorders
    1. CMS proposes to add diagnoses to HCC 55 to better account for the costs related to accidental (unintentional) or undetermined overdose. HCC 55 will be renamed “Drug/Alcohol Dependence, or Abuse/Use with Complications.” Selected poisoning (overdose) codes for the following substances will be incorporated into HCC 55:
      1. Heroin, Cocaine, Opium and other opioids, Methadone and other synthetic or unspecified narcotics, Lysergide (LSD) and other or unspecified hallucinogens, Psychostimulants, Alcohol (ethanol)
    2. CMS proposes to split HCC 56 into three HCCs, and include in the proposed model one of these HCCs:
      1. A new HCC 56 “Drug Abuse, Uncomplicated, Except Cannabis.”
      2. The other two additional HCCs, HCC 202 “Drug Use, Uncomplicated, Except Cannabis” and HCC 203 “Alcohol Abuse and Cannabis Use/Abuse, Uncomplicated, Non-Psychoactive Substance Abuse, and Nicotine Dependence,” would be excluded from the model for payment, but would be considered in the count of all conditions in the alternative model.
  3. CKD – Chronic Kidney Disease
    1. Chronic Kidney is identified by five stages of severity. Stage 1 indicates the lowest level of severity and Stage 5 indicates the highest level of severity.
    2. Two stages of Chronic Kidney Disease are already included in the 2017 CMS-HCC model:
      1. HCC 136 Chronic Kidney Disease, Stage 5
      2. HCC 137 Chronic Kidney Disease, Severe (Stage 4)
    3. Three stages of Chronic Kidney Disease are not included in the 2017 CMS-HCC model:
      1. HCC 138 Chronic Kidney Disease, Moderate (Stage 3)
      2. HCC 139 Chronic Kidney Disease, Mild or Unspecified (Stages 1-2 or Unspecified)
    4. Since Chronic Kidney Disease Stage 3 is well specified, and for many beneficiaries will indicate significant medical expenditures, CMS proposes to include HCC 138 for payment in the CMS-HCC model.
      1. Including HCC 138 in the model ensures that beneficiaries with HCC 138 remain well predicted, however as observed, including HCC 138 does not substantially increase predicted cost.
  • Payment Condition Count Model
  1. This proposed model takes into account the number of conditions that a beneficiary has, only among the conditions that are included in the payment model.
  2. Additional coefficients (i.e. increase in RAF score) begin with between four and six conditions in the six community segments, and begin with ten conditions in the long term institutional (LTI) segment.
  3. The add-on coefficients are capped at 10 payment conditions.
  4. CMS also discusses a model where ALL conditions (not only those that are currently used for payment purposes) are counted, but gives significant evidence and explanation why they don’t think this is a valid model.
  • Three Year Phase-In (2019-2022) tied to EDPS Phase-in
  1. CMS is proposing to phase ALL the above changes to the model over a three year period.
    1. 2019PY (2018 DOS) – 25% proposed model/75% 2017 CMS-HCC model (current)
    2. 2020PY (2019 DOS) – 50% proposed/50% current
    3. 2021PY (2020 DOS) – 75% proposed/75% current
  2. CMS also proposes to tie EDPS to this proposed model. In other words, for the current model above, only RAPS data will be used.  For the proposed model, only EDPS data will be used.
  3. CMS also mentions that one interpretation of the 21st Century Cures Act may allow CMS to postpone this until 2020 PY, so if there isn’t solid industry agreement, we will probably be delayed a year.
  4. According to CMS, they project that the effect on risk scores for health plans will be a positive 1.1% for the industry. The range varies from 4% to -2.0% for individual plans.
  • Commentary & Analysis

For all these proposed changes, CMS does a good job of explaining why they are proposing these changes and what evidence supports it.  In addition, they give additional research and explanation around other considerations, which they didn’t end up including in the proposed model.

CMS does include the complete proposed coefficient tables (including the new HCCs and add-ons for 4 or more HCCs) for both the proposed Payment Condition Count Model and the alternative All Conditions Model. Prior to the end of the commentary period, health plans should be building this model and running their data/membership through it to see how it will affect them specifically.  CMS gives an expected range of a 4% to -2% of impact across all the MA plans in the industry; however, health plans should be skeptical of these numbers, since CMS may be using stale or different data than will actually be used when the model goes into effect.  In addition, CMS is typically budget neutral, at best, when changing its policies.  But whatever the case, there will be winners and losers across the industry, and the winners will tend to be those who understand this new model quickly, those who are already excelling at risk adjustment, and those who have a strong handle on their EDPS submissions.

From an actual coefficient perspective, there are some major changes (positive and negative) to both the demographic and HCC scores for community, institutional, Medicaid and new enrollees.  These changes could drastically affect a health plan’s risk scores/revenue based on their current member mix and/or expected future member mix.  It is imperative that health plans at the very least understand these changes, let alone comment to CMS based on their specific data and findings, and be prepared as soon as possible to change processes (coding, submissions, error management, revenue projections, etc.) if they do go into effect (or some variation thereof) in April.  Even though this proposed model will be for 2019 payment year, the underlying data being used will start with 2018 dates of service, which is now.


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

Presentation @ RISE VBC: Effective Collaboration Strategies Between Payer & Provider