And with a growth rate of 4% the announcement is good news for actuaries, but behind the scenes plans will still grapple with CMS’ new risk scoring formula that now leans heavily on encounter data.
YOY expected impact of the updated methodologies on plan payments relative to last year.
The federal agency is also continuing to phase-in its 2020 CMS-Hierarchical Condition Categories (HCC) model.
How CMS calculates risk scores for MA in 2021:
- 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
Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by MA organizations to calculate risk scores for payment. In recent years, CMS began collecting encounter data from MA organizations, which also includes diagnostic information.
In 2015 and 2016, CMS started using encounter data (10%) to calculate risk scores and has amped up the role it plays in the formula:
- 2018: 85% RAPS + 15% Encounter Data
- 2019: 75% RAPS + 25% Encounter Data
- 2020: 50% Split
CMS reduces MA payments annually to account for coding differences between MA and FFS Medicare. The 2021 coding adjustment is a 5.91% reduction per year , the minimum required.
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To learn more about how MA plans get paid check out this tip sheet from the Better Medicare Alliance