On Tuesday, CMS issued Part I of its 2019 Medicare Advantage Advance Notice. The notice was designed to announce changes to the risk adjustment process used in calculating payment for enrollees. The Advance Notice is being published in two parts and ahead of the usual February release to accommodate time for public comment.
Part I of the Advance Notice implements provisions in the 21st Century Cures Act which were designed to expand enrollment in Medicare Advantage plans. Specifically, the law:
- Permits End Stage Renal Disease patients to enroll in a Medicare Advantage plan while requiring the Medicare FFS program to pay for kidney transplants. Effective plan year 2021.
- Requires modifications, effective plan year 2019, to risk adjustment process in determining Medicare Advantage capitated payments, taking into account:
- Number of disease and conditions affecting an MA enrollee
- Dual eligible status
- Presence and severity of chronic kidney disease
- Existence of mental health and substance abuse
Because Congress required notice and comment of these changes, CMS released Part I of the 2019 MA Advance Notice this week to provide for enough time before the usual February release.
To implement the provisions of 21st Century Cures Act, CMS is adding the following categories to their HCC Risk Adjustment Model:
- Drug Abuse, Uncomplicated, Except Cannabis
- Reactive and Unspecified Psychosis
- Personality Disorders
- Chronic Kidney Disease, Moderate (Stage Three)
- Create Drug/Alcohol Dependence, or Abuse/Use with Complications
One of the very valid criticisms of Medicare Advantage is that it works great until you get sick. The way in which the HCC model is constructed and consequently how plan sponsors are paid encourages enrollment of healthier, less medically complex patients. The Congressionally mandated changes to the HCC Risk Adjustment Model are designed to address, part, that problem.
The addition of Stage Three Chronic Kidney Disease, in advance of enrolling ESRD patients in 2021, ensures higher payment to plan sponsors and an accompanying interest in enrolling patients with chronic kidney disease. MA plans are currently risk adjusted for stages four and five of Chronic Kidney Disease.
Now, the HCC Risk Adjustment Model has some significant flaws that have, in the past, encouraged upcoding and other unsavory practices. The ACA requirement to include encounter data have been difficult to implement due to the varying practices of MA organizations and the providers in their networks.
The implementation of the 21st Century Cures provisions is a positive for MA plan sponsors as it will likely increase payments for more medically complex patients which, in turn, encourages greater penetration of the FFS population. It remains to be seen what Part Two of the Advance Notice has to say about other payment factors like FFS normalization and changes to star ratings but we don't expect anything too negative.
Speaker Paul Ryan’s goal of privatizing Medicare is unlikely to be accomplished legislatively in 2018 but expanded enrollment in MA plans is a great substitute. Expect Congress and the Trump administration to do what they can to expand enrollment in 2018 and beyond.
