Impacts of CMS’ 2022 Advance Notice Part I on Risk Adjustment

On September 14th, 2020, CMS released their Advance Notice Part I for CY2022. CMS published this earlier than in the past to accommodate a potential early publication of the CY2022 Rate Announcement. In light of the uncertainty associated with COVID-19, an early Rate Announcement could benefit Medicare Advantage Organizaions (MAOs) by having information earlier in the year to prepare their bids, which are due the first Monday in June 2021.

While there were not any surprises, MAOs should start to think about how to align their strategies and operations to better prepare for the changes that are coming. 

100% of risk scores will be based on Encounter Data (EDS)

CMS is moving forward with their plan to fully phase in the CMS 2020 HCC risk adjustment model for Payment Year 2022 using EDS. The 2017 CMS-HCC model submitted to the Risk Adjusted Processing System (RAPS) to calculate 25% of the risk score will no longer be used. CMS will also discontinue the use of RAPS inpatient diagnoses to supplement EDS data.

Impacts: CMS is projecting the risk score impact of transitioning to the 2020 HCC risk adjustment model to be 0.25%. The CY2022 impact on MA risk scores being calculated using 100% encounter data is projected to have a neutral impact at 0.00%. Discontinuing the use of RAPS inpatient diagnoses to supplement EDS data is also expected to have an impact of 0.00%.

What MAOs can do:

1.    Perform a RAPS to EDS revenue neutrality impact analysis.

2.    Ensure risk adjustment reporting processes can be run using 100% EDS.

  • Traditional risk adjustment reporting processes (e.g., analytics, targeting, suspecting, RAF projections, and accruals) rely on processing RAPS responses to determine which member diagnoses have been accepted by CMS to drive suspecting, revenue projections, etc. Plans must start to create reporting models that solely rely on encounter data and the associated encounter data CMS response files.

3.    Ensure the completeness of supplemental data being submitted to EDS.

  • MAOs must start to ensure that all risk adjustment supplemental diagnoses data (i.e., chart reviews) are being submitted downstream to CMS via the encounter transactional system. Plans should start to evaluate this as part of a comprehensive EDS to RAPS reconciliation process.

4.    Assess the prevalence (and possible under-reporting) of behavioral health related conditions to inform population health initiatives.

  • The 2020 CMS HCC model adds more behavioral health conditions and substance use disorders. Plans could use this as an opportunity to capture a greater level of detail on behavioral health related conditions. Often times, these conditions may be under-reported and can have an impact on other population health identification and stratification programs. Additionally, behavioral health, and, more importantly, the early detection and ongoing treatment of these types of conditions can improve clinical outcomes.

Long term strategy:

In the longer term, MAOs should start to think about how the shift of 100% EDS to calculate risk scores may start to impact other operational areas:

1.    Shift to more prospective risk adjustment programs.

  • The majority of MAOs rely on retrospective chart reviews to submit supplemental diagnoses records for their MA beneficiaries. CMS will accept these types of supplemental data as linked or unlinked (i.e., linked back to the originating encounter). As CMS relies solely on encounter data for risk score calculation, plans should start the process of evaluating their risk adjustment programs and begin to think about transitioning the supplemental diagnoses submission upstream so that all of the information can flow through the encounter systems.

2.    Ensure a robust error correction and remediation process.

  • PY2021 will be last year RAPS will be accepted for risk score calculation (2020DOS). MAOs that plan on submitting EDS to CMS directly (i.e., without the use of a vendor) need to start assessing their adequacy to have a robust and timely EDS error correction and remediation process. For many plans, this means having a cross-functional business team to ensure that all encounter data records are being submitted to, and accepted by, CMS.

GHG, in partnership with Pareto Intelligence, has worked with numerous MAOs to evaluate encounter data processes and ensure accurate revenue capture. Given the increased emphasis on the EDS submission model and the growing potential for revenue shortfall, MAOs should begin assessing encounter data now to resolve issues in advance of submission deadlines.

WEBINAR: On October 8th, GHG’s SVP of Healthcare Analytics and Risk Adjustment Solutions, Jeff De Los Reyes, moderated a webinar with Austin Bostock of Pareto Intelligence and Meleah Bridgeford of Episource to discuss the future of the regulatory environment, as well as steps you can take to ensure that your data is ready in advance of the submission deadline.

If you did not get a chance to attend the webinar, click here to learn more and view the recording.