The Centers for Medicare and Medicaid Services (CMS) has implemented changes in the risk adjustment model for Medicare that will impact your average scores and subsequent payments. It is important to be aware of the changes so that you can adjust your risk adjustment strategies to optimize your performance in calendar year (CY) 2021.
Transition to 100% Claims and Encounter Data
CMS calculates risk scores using diagnoses submitted by Medicare Advantage (MA) organizations and from Medicare fee-for-service claims and encounter data. 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. Since 2015, CMS began using diagnoses from encounter data to calculate risk scores, and has since continued to use a blend of encounter and RAPS data-based scores. They have gradually increased the reliance on claims and encounter data over the RAPS scores, and in CY 2022, CMS will discontinue the policy of supplementing diagnoses from encounter data with diagnoses from inpatient records submitted to RAPS for calculating beneficiary risk scores. That means that only claims and encounter data submitted in CY 2021 will be used to estimate payments for CY 2022. As a result of this change, it is imperative that all claims and encounter data with risk-adjustable diagnosis codes are submitted to CMS in 2021.
Normalization and Coding Intensity Impacts
There are other adjustments that happen every year. CMS adjusts to normalize the average risk adjustment factor (RAF) score for average annual cost with the overall Medicare Advantage population to 1.000, called the normalization factor. This is calculated by dividing the raw RAF score by the normalization factor (Raw RAF/Normalization factor). In addition, CMS adjusts for increased coding by Medicare Advantage Organizations (MAOs) by reducing the score further with the coding intensity, which is calculated by multiplying the above adjusted RAF score by (1 – Coding Intensity). The Adjusted RAF score is represented by the following formula: AdjRAF = RawRAF/normalization (x) [1- coding intensity]. As described in the 21st Century Cures Act of 2016, average RAF scores are scheduled to decrease 7% over the 3-year implementation timeframe. What this means is that the average score of a member with the same conditions documented year-over-year will be lower every year. An example of the net effect of this change is illustrated below, showing the risk score impact year-over-year for the same member (an 86-year old full Medicare Advantage benefit dual, community-dwelling female with diabetes with chronic complications (HCC 18) and COPD (HCC 111).
Risk Score Calculation PY19, PY20, PY21, PY22
Changes required by the 21st Century Cures Act also provides opportunities to ensure that new diagnoses are submitted into CMS for Risk Adjustment purposes. Keep in mind that the 21st Century Cures Act was passed with significant bi-partisan support, and originally intended to benefit the National Institutes of Health for the following reasons:
- Accelerate new diagnostic and treatments
- Improve the FDA drug approval process
- Support programs that focused on opioid dependence
- Target rare diseases
- Enhance support for behavioral health conditions
- Further define interoperability of electronic health records
The impact on the CMS Risk Adjustment Models included the following:
- Adjustment for total number of conditions
- Inclusion of mental health and substance abuse disorders
- Improvement in reporting of severity of chronic kidney disease
This created new and expanded HCC categories to the CMS model:
- Chronic Kidney Disease – focus on staging 3 and above (HCC 136-138)
- Dementia with and without complications (HCC 51-52)
- Substance Use, Abuse, and Dependence (including alcohol, opiates, and cannabis in remission) (HCC 54-56)
- Pressure Ulcers (HCC 157-159)
It also added additional weight for chronic condition counts, called the Alternative Payment Condition Count (APCC). What this means is if members have 4 or more chronic conditions, additional weight will apply to their RAF score. Therefore, it is beneficial to prioritize HCC gaps for total expected counts ≥ 3.
COVID-19 Impact – New Final CMS Sweep Dates
No one would question that challenges faced by both health plans and provider organizations in 2020 due to the COVID-19 pandemic wreaked havoc upon programs that are impacted by Risk Adjustment performance. These challenges present new opportunities that may still be addressed in 2021, considering that CMS has recently announced an extended time period to submit recaptured codes and corrections to data submitted in 2019, 2020, and in 2021. The CMS announcement on January 15, 2021, essentially added an additional ‘final run’ sweep cycle for corrections 6 months beyond the typical January 31st cut-off date. The reason this announcement is so significant is that MAO organizations have an extra window of time to review medical records, claims and encounters to ensure that all relevant risk-adjustment documentation are submitted and accepted by CMS. The calendar for the updated dates are supplied below. It is not too late to establish a retrospective review program to ensure the most accurate documentation possible for 2019 and 2020 encounter dates.
Opportunities to Improve Your Performance
At the end of the day, all of these changes can be addressed with strategies that focus on ensuring that you have accurate and complete documentation on the health (conditions) present within your Medicare Advantage population.
- Verify that all patients, especially those not seen during the pandemic, are scheduled for visits to be examined and that all their risk adjustable conditions are documented. Pre- and post-audit chart reviews, especially for Annual Wellness Visits, can help to ensure comprehensive recapture of chronic and new risk-adjustable conditions.
- Due to COVID-19, CMS is allowing expanded use of telehealth to document risk-adjusting diagnoses. Work with your staff to identify patients with diagnosis gaps and schedule telehealth visits.
- Because of the expanded timelines for CMS sweep cycles, it is not too late to consider retrospective chart reviews for CY 2019 and 2020.
- Ensure that the new HCC conditions added by the Cures Act are captured – especially dementia, pressure ulcers, chronic kidney disease, and substance use. They may not show up as ‘gaps’ as they may not have been captured in the past. It may be appropriate to mine your database for clues that suggest these conditions, including lab data and medication treatments.
- Analyze the completeness of your data with CMS, especially encounter and claims data. Evaluate if there are specific providers, groups, or regions that are not submitting all encounter data.
- Prioritize those members that likely have >3 chronic conditions for visits and chart reviews to ensure that all conditions are captured. The APCC counts can make the difference in your RAF scores.
The Risk Adjustment team at EXL Health is committed to assisting our clients to create solutions for their most complex problems. Clients often present us with situations for which they need our thinking to better serve their customers, meet compliancy requirements, identify payment issues or contain costs, to name a few examples. Whatever the problem, we will do whatever it takes to find a solution. We are intentional about how we collaborate and determined that we will make a difference.
Together, we will do this.
- HPMS Memo – Deadline for Submitting Risk Adjustment Data for Use in Risk Score Calculation Runs for Payment Years 2020, 2021, 2022, and 2023.
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- Report to Congress 2018 – Risk Adjustment in Medicare Advantage, December 2018.
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MS RN, Vice President, Risk and Quality Management, EXL Health
MD, Risk Adjustment Consultant,