Risk Adjustment

Preparing for a different future: The 2021 Rate Announcement

Written By
Meleah Bridgeford
Director of Risk Adjustment, Payer Solutions

When the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year 2021 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies on April 6, COVID 19 was top of mind. Page two of the Rate Announcement is centered on the response to the pandemic and it can be felt throughout. However, CMS also formally announced subtle changes coming for 2021.

With the pandemic in mind, we’d like to review key points from the 2021 Announcement and attempt to retrospectively assess their efficacy.


Increased EDS Percentage


CMS continued its increase in EDS percentage in the RAPS/EDS blend. 2019’s CMS blend of 75/25 RAPS/EDS moved to 50/50 for 2020. 2021’s blend will be 25/75, marking the first-time plans will be reimbursed mostly on what they submit through EDS.

As our health system moves away from FFS and towards value based care, EDS continues to grow in importance for its ability to capture SDOH and more. But the increased costs associated with COVID-19 testing and treatment will present a challenge for this years’ submissions. We suspect CMS will take a wait-and-see approach. However, considering all the stresses affecting you and your company, we highly recommend extra diligence and scrutiny when conducting your EDS error management to make any necessary pivots easier.


Increasing Coding Trends, Increasing Revenue


CMS noted a 3% increase in coding trends since the model was changed to include more HCCs in 2019. Because CMS added more HCCs to the 2020 model, and payment condition counts were included as well, there was another 3.3% assumed increase in the coding trends for this year.

There aren’t any changes to the model for the 2021 payment year. Yet in April, CMS assumed a 3.56% increase in coding trends for 2021, even though this coding trend is not included in the 1.66% increase in revenue that CMS is predicting. We believe these trends show what CMS is expecting to see and give plans a baseline understanding of the growth they can expect.

We emphatically believe there’s room for growth and improvement in any program, even in the middle of a pandemic. The continual analysis of gaps and tracking of closures can help any plan realize growth. But it is important to note that these predictions were made with different expectations than today.

For example, according to Episource’s SVP of Product Development, Sujata Bajaj, during a recent presentation at RISE National, “If a member has no visit by June, there is approximately a 57% chance that they will not complete a visit by year end. Especially this year, we are seeing a big drop in office visits due to the Covid-19 crisis and expect demand for office visits to return as the stay-at-home order is eased, but there will also be fewer months remaining to complete visits.”


The Steady Incorporation of Telehealth


At the start of the COVID-19 public health emergency, CMS acknowledged that telehealth had to play an increased role in delivering care. The government acted swiftly to bolster its effectiveness and accessibility. Temporary waivers were passed to provide flexibility and HCCs were reassessed to expand coverage. Some of the added HCCs that can be captured include:

  • HCC19: DIabetes without Complication
  • HCC27: End Stage Liver Disease
  • HCC56: Substance Use Disorder, Mild, Except Alcohol and Cannabis
  • HCC70: Quadriplegia

The incorporation of telehealth services, though rocky at the outset, has proven to be incredibly popular with at-risk patients. Citizens, Senators, and providers called on CMS and HHS to make them permanent, and even the directors of these organizations came out in favor of telehealth. In fact, on August 3rd, the president issued an executive order calling on the HHS to review and propose a new payment model for telehealth services for rural patients as well as develop a plan for expanding the use of telehealth beyond the public health emergency.

The 2021 Announcement laid the foundation for telehealth as a temporary solution, but it’s become vital during COVID-19, and proven to be a part of the future of healthcare. We look forward to telehealth becoming a fixture of value-based care during this time of isolation, and an important tool for the collection and incorporation of SDOH data and HCCs.


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