Risk Adjustment

Impact of the CMS Final Announcement and Call Letter 2018

On April 3, 2017, CMS released their Final Announcement and Call Letter for payment year 2018. The letter is an update to February’s Advance Notice, subsequent to industry comments. Despite signs that the Administration and Congress would maybe cut back government health programs, CMS continues to explore additional options and new ideas for the Part C and D programs.

Industry comments made it very clear that health plans were not ready for Encounter Data Submissions. Given that, CMS has scaled back plans to base payments on these submissions. In 2018, CMS will blend payments with 85% based upon RAPS submissions and 15% from EDS in 2018 (it was supposed to be an even 50% split). This is a step backward in CMS’s attempts to collect complete and accurate data on patient encounters via Encounter Data Submissions, from which it intends to properly re-formulate Medicare payments and policies. CMS has identified seven measures in the three areas of Operational, Completeness, and Accuracy Performances on which to focus compliance review efforts in the EDS arena.

For the 2018 payment year,  the announcement set the Normalization factor at 1.017 and reduced the Coding Pattern Adjustment by 0.25% (the statutory minimum) to 5.91%. As others have noted, this factor intends to address the more complete and accurate diagnostic coding that is generally observed under Parts C and D Medicare, when compared to Fee For Service coding results. Commenters and industry experts continue to raise the concern that this policy will still permit lackluster FFS coding quality while penalizing those who collect complete and thorough diagnostic information; CMS, however, remains unconvinced, sharing their position that the additional accuracy supplied by the efforts of Medicare Advantage and Part D plans exceeds the original forecasts regarding the Risk Adjustment schema.

Overall, Medicare Advantage payments are expected to rise 2.95%, an aggregate of CMS’s analysis across participating plans based on the factors mentioned above, improved coding accuracy and completeness, etc.

After consideration, CMS has not significantly changed Star Ratings and the underlying adjustment factors (e.g. Categorical Adjustment Index), though a few specific measures were modified. CMS continues to focus on identifying measures that have been maximized by plans and which no longer hold the potential for significantly improve patient care.

For purposes of patient privacy, CMS has undertaken a program (mandated under Medicare Access and CHIP Reauthorization Act, or MACRA) to remove Social Security Numbers from the beneficiary identifiers used in the Medicare program—specifically, the Health Insurance Claim Number (HICN), which is based on a beneficiary SSN plus one or more additional clarifying characters. In 2018, CMS intends to replace all HICNs with a unique Medicare Beneficiary Identifier (MBI) that will not be SSN-based.  All health plans and other organizations handling Medicare data will need to adapt to this change.



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