CMS Is Tweaking Medicare Advantage Risk Adjustment

Last month, CMS announced improvements for 2022 Medicare Advantage and Part D payments, adding the finishing touches to a phase-in of a new, divisive payment system spanning several years focused solely on encounter results for plan risk scores.


Miami, FL -- (SBWIRE) -- 10/15/2020 -- Previously, CMS trusted reports sent via its Risk Adjustment Processing System (RAPS) mechanism to supplement encounter details in the estimation of payment but claimed that the approach would be discontinued by 2022.

Risk ratings reflect the projected medical costs of a patient and are used in tailoring discretionary contributions to the Medicare Advantage schedule. The sicker a person is, generally, the higher the risk score, thus, the higher the payout received by an MA plan. In 2012, CMS started gathering experience data, or data based on claims data produced in a practice or hospital setting by a provider, supplier, or provider. As reported by insurers, these details may be inaccurate or unreliable, so risk ratings may reduce federal benefit premiums if based solely on the data.

As mandated by the 21st Century Cures Act, CMS will fully transition to this risk adjustment measurement model by 2022. The use of encounter data to determine payments has been steadily growing since 2016, when it comprised 10% of a risk score. Last year, 25% of risk improvement ratings were tailored to encounter data, and that figure soars to 75% in 2021. Encounter data will be the single deciding factor for risk management estimation in 2022.

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