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Another gimmick to overpay private Medicare Advantage plans

2019 Medicare Advantage Part I Advance Notice – Risk Adjustment

CMS.gov, December 27, 2017

Today, the Centers for Medicare & Medicaid Services (CMS) released Part I of the 2019 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C Risk Adjustment Model and the use of encounter data.

2019 Part C Risk Adjustment Model proposal

The 21st Century Cures Act amended the Social Security Act by, in part, requiring CMS to make improvements to risk adjustment for 2019 and subsequent years. In response to these requirements, we are proposing changes to the CMS-HCC Risk Adjustment model that is used to pay for aged and disabled beneficiaries enrolled in Medicare Advantage plans. These proposals reflect changes to risk adjustment required by the 21st Century Cures Act, including an evaluation of adding mental health, substance use disorder, and chronic kidney disease conditions to the risk adjustment model and making adjustments to take into account the number of conditions an individual beneficiary may have, as well as a variety of additional technical updates.

For 2019, CMS is proposing a model that includes additional mental health, substance use disorder, and chronic kidney disease conditions in the risk adjustment model.

With respect to taking into account the number of conditions an individual beneficiary has, in Part 1 of the Advance Notice we describe a proposed new risk adjustment model and discuss an alternative model. The model we are proposing – the “Payment Condition Count model” – takes into account the number of conditions that a beneficiary has, only among the conditions that are included in the payment model. The model discussed as an alternative – the “All Condition Count model” – takes into account all conditions that a beneficiary has, including both those in the payment model and those not in the model.

Overall, while the experience of individual plans would vary, the Payment Condition Count model is projected to increase MA risk scores by 1.1%, while the All Condition Count model would decrease MA risk scores by -0.28%. Under the Payment Condition Count model, the change in MA contracts’ risk scores is generally positive and less varied than the All Condition Count model. The change in MA contracts’ risk scores under the All Condition Count model is more varied, with both negative and positive changes.

https://www.cms.gov...

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CMS.gov

NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties

SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY) 2019 for the Medicare Advantage (MA) CMS-HCC Risk Adjustment Model

https://www.cms.gov...

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CMS floats Medicare Advantage payment tweaks that would boost insurers' risk scores

By Leslie Small
Fierce Healthcare, January 2, 2018

Over the holidays, Medicare Advantage insurers got a gift from the federal government.

That gift arrived on Dec. 27, when the Centers for Medicare & Medicaid Services released part one (PDF) of its 2019 advance notice of changes to MA capitation rates and Part D payment policies.

To comply with the Cures Act, CMS is proposing an MA risk adjustment model that includes additional mental health, substance use disorder and chronic kidney disease conditions. The agency uses risk adjustment models to adjust payments based on the characteristics and health conditions of each plan’s enrollees, with the goal of preventing insurers from enrolling only the healthiest patients.

The agency is also proposing a “Payment Condition Count model" for risk adjustment, which takes into account the number of conditions that a beneficiary has—but only among the conditions that are included in the payment model. This model is projected to increase MA risk scores by 1.1%, meaning more government reimbursement would be flowing toward health plans.

By comparison, the alternative “All Condition Count model”—which takes into account all conditions that a beneficiary has—would have decreased MA risk scores by 0.28%, CMS said.

The proposed methodological change to risk adjustment is “more industry friendly than the status quo,” Leerink Partners analysis Ana Gupte wrote in a research note (PDF). It’s the most positive for Humana, UnitedHealth and WellCare, she said, but also a good sign for the sector as a whole.

Such changes are consistent with the MA-friendly stance of the Trump administration.

https://www.fiercehealthcare.com...

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Comment:

By Don McCanne, M.D.

The private Medicare Advantage plans have continued to be overpaid deliberately. Each year the administration, whether Democratic or Republican, uses quirky arcane rules to ensure an adequate revenue buffer so that private insurers can compete favorably with the traditional Medicare program by offering lower premiums and cost sharing and expanded benefits. This year's gimmick is to use a “Payment Condition Count model" instead of an “All Condition Count model” which then increases Medicare Advantage risk scores by 1.1% and thus pads the margins for the private plans.

For those who need a reminder, this is intended to privatize Medicare, converting it to a premium support (voucher) model. Once a critical mass has enrolled in private plans, Congress will gradually reduce the relative value of the voucher-equivalent, reducing the government component of the funding of Medicare by shifting more costs to the Medicare beneficiaries.

It's working. Medicare Advantage enrollment has increased each year and was at 33% as of 2017 (19 million enrollees). With continued coddling by Congress and the administration, we can anticipate further increases. The current House leadership now wishes to accelerate this change by reducing government expenditures in the traditional Medicare program ("we can't afford it," especially after the tax cuts).

Although we describe their sequential innovative chicanery each year, nobody seems to get excited about it. As disgusting as the analogy is, we seem to be the proverbial frog in the water being heated over the stove. Get out your health care justice thermometers or traditional Medicare will be cooked before we see the pot come to a boil.

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