CMS proposes using more encounter data for MA risk adjustment

By | January 8, 2020

Dive Brief:

  • CMS is planning to increase the amount of encounter data that will be used to calculate Medicare Advantage risk adjustment payments for next year to 75%, with the remainder using traditional Risk Adjustment Processing System data. That’s up from the 50/50 mix in place for this year.
  • The change announced in the first part of the 2021 MA advance notice Monday continues the phase-in of encounter data, which is more detailed than RAPS information. But payers say the data are less accurate and will reduce payments.
  • CMS said the second part of the MA advance notice will be published by early next month and both parts will be finalized by April 6. Comments on the encounter data change are due March 6.

Dive Insight:

MA plans receive monthly risk adjustment payments based in part on patient health status. CMS has tried to gather better information for that purpose by ramping up use of encounter data. It was first used to calculate payments in 2016 at a level of 10%.

Payers, however, have railed against using more encounter data to calculate risk payments. In comments on the 2020 changes, America’s Health Insurance Plans said it “continues to have very significant concerns about the expanded use of encounter data for payment purposes given the unresolved operational issues that prevent CMS from generating complete and accurate risk scores and CMS’ open acknowledgement that expanding the use of encounter data will reduce payments.”

The Medicare Payment Advisory Commission supports increased use of encounter data for risk adjustment. In its June report to Congress, the group recommended legislation that would withhold MA payments for plans that submit incorrect or incomplete encounter data.

“Detailed encounter data are the best vehicle for learning about how, and how much, care is provided to the one-third of Medicare beneficiaries who receive benefit through an MA plan,” the commission wrote.

The use of more detailed data could help crack down on fraud, which is an issue in the increasingly popular and lucrative MA program. 

The U.S. Government Accountability Office has encouraged using encounter data for MA risk payments, but warns CMS is not doing enough to validate the information. “To the extent that CMS is making payments based on data that have not been fully validated for completeness and accuracy, the soundness of billions of dollars in Medicare expenditures remains unsubstantiated,” GAO wrote in a 2017 report.

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