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1.66% Rate Hike for Medicare Advantage Plans – CMS

Medicare Advantage plans get a 1.66% rate increase for 2021, which is higher than the .93% the Centers for Medicare and Medicaid Services announced in its advance rate notice.

CMS on Monday published the 2021 rate announcement finalizing MA and Part D payment methodologies. The final policies will continue to modernize and maximize competition within the MA and Part D programs, CMS said.

WHY THIS MATTERS: CODING

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and fee-for-service providers. For CY 2021, CMS is finalizing the proposal to apply a coding pattern adjustment of 5.90%, which is the minimum adjustment for coding intensity required by the statute.

CMS is finalizing as proposed the continued phase-in of the 2020 CMS-Hierarchical Condition Categories model. The 21st Century Cures Act requires that CMS phase in changes to risk adjustment payments over a three-year period, with full implementation by 2022.

To continue phasing in the model that meets statutory requirements, CMS is finalizing the proposal to calculate risk scores for payments to MA organizations as the sum of 75% of the risk score calculated with the 2020 CMS-HCC model and 25% of the risk score calculated with the 2017 CMS-HCC model.

This represents a change from the blend for CY 2020 of 50% of the risk score calculated with the 2020 CMS-HCC model and 50% of the risk score calculated with the 2017 CMS-HCC model.

ENCOUNTER DATA

CMS calculates risk scores using diagnoses submitted by MA organizations and from Medicare fee-for-service claims. Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by MA organizations for the purpose of calculating risk scores for payment.

In recent years, CMS began collecting encounter data from MA organizations, which also includes diagnostic information. For 2021, CMS is finalizing the proposal to calculate risk scores for payment to MA organizations and certain demonstrations as the sum of 75% of the encounter data-based risk score and 25% of the RAPS-based risk score.

CMS is finalizing the proposal to calculate the encounter data-based risk scores with the 2020 CMS-HCC model and the RAPS-based risk scores with the 2017 CMS-HCC model.

THE LARGER TREND

The rate announcement does not catalog CMS’ actions related to the COVID-19 outbreak. CMS is developing further guidance on issues related to the COVID-19 outbreak.

Additionally, the agency has solicited feedback on a generic utilization Part D measurement concept as part of its efforts to lower prescription drug costs. CMS encourages Part D sponsors to leverage favorable tier placement and effective formulary management tools to incentivize beneficiaries to fill generic alternatives over branded products.

CMS will consider additional feedback for any potential future development of generic utilization measures for the Part D Star Ratings program.

It is offering stakeholders an opportunity to discuss the 2021 rate announcement, as well as guidance related to the COVID-19 outbreak for MA organizations, PACE organizations, and Part D sponsors, with CMS staff during a call that will be scheduled in the near future.