Medicare Advantage May See 2.8% Change in 2022 Revenue, 4.5% Growth

Medicare Advantage proposed policy changes may result in a 2.82 percent average change in revenue and 4.55 percent change in growth, projected the CMS calendar year (CY) 2022 Medicare Advantage and Part D Advance Notice Part II.

The full phase-in of the CMS-Hierarchical Condition Categories (HCC), proposed in the Advance Notice Part I, is among the factors influencing these changes. The full phase-in would mean that Medicare Advantage plans no longer use risk adjustment processing system (RAPS) data but, rather, encounter data. In previous years, the approach was blended.

This risk model revision is expected to have a 0.25 percent effect on the change in revenue.

CMS recommended a 5.9 percent change in payment to Medicare Advantage plans based on the different approaches to diagnosis coding between Medicare Advantage plans and traditional Medicare.

CMS also announced a risk adjustment plan for Part D plans, both stand-alone plans and those attached to Medicare Advantage plans. The model uses encounter data to make the adjustment.

The agency also has moved to codify the Part C and Part D Star Ratings program for the 2021 and 2022 Star Ratings. CMS has adapted the Star Ratings system for 2022, due to the impending impacts of the pandemic.

“In addition, we are soliciting input on future measures and concepts as we continue to enhance the Star Ratings over time,” the press release stated.

Along with Star Ratings enhancements, CMS requested feedback on COVID-19 vaccination for Medicare Advantage as well as provider directory accuracy for Medicare Advantage.

The announcement predicted the encounter data transition and the Medicare Advantage coding pattern adjustment would have no effect on the percentage change in payment for 2022.

Normalization could result in a negative impact on change in payment, CMS indicated. The agency expected that payment would drop by 1.64 percent in 2022 because of it. The change in Medicare Advantage Star Ratings is expected to lead to a 0.34 percent drop in payment.

Comments must be submitted by November 30, 2020, CMS stated, and the final rate announcement will be published on or before April 5, 2021.

The Office of the Inspector General (OIG) has investigated CMS processes around reviewing encounter data in the past.

In December 2019, the OIG conducted a study which determined that Medicare Advantage plans were submitting chart reviews as part of their request for risk adjustments from CMS, without offering additional service record evidence to prove that the service occurred as indicated in the charts.

Medicare Advantage plans received $6.7 billion in risk adjustments in 2016 for services without this additional proof, OIG discovered.

Ultimately, OIG recommended that CMS implement greater oversight of Medicare Advantage organizations' risk-adjustments processes, that CMS verify encounter data, and that the agency determine the impacts of health plans submitting for risk adjustment without service records to back up their data.

CMS said it would follow through on these recommendations.

As far as Medicare Advantage Star Ratings, experts have anticipated that the coronavirus pandemic will leave lasting impacts on Star Ratings through pandemic-era policies.

Expanding Medicare Advantage eligibility for end stage renal disease patients as well as expanding telehealth and rural health plan options—as proposed in the Contract Year 2021 Medicare Advantage and Part D Final Rule—impacted the star rating cut points and the role of patient experience.

The Interim Final Rule, though, could influence Medicare Advantage Star Ratings for several years. The rule suspended reporting requirements for 2020 due to the pandemic which, given the typical strategy of basing Star Ratings on two years of data, could have prolonged repercussions, Avalere experts noted.

“We appreciate that CMS continues to recognize the value of this essential program, and has continued to offer additional flexibilities to allow health insurance providers to innovate to provide greater value to older Americans,” Matt Eyles, president and chief executive officer of America’s Health Insurance Plans (AHIP), said in a statement.

“We will continue to review the proposed 2022 rate notice, and we look forward to sharing important feedback with CMS during the comment period.”