February 16, 2022

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) released its 2023 Medicare Advantage (MA) and Part D Advance Notice.  The 159-page document is meant to provide the medical community with a head’s up on potential provisions that will be included in the 2023 Final Rule relative to Medicare Part C (Medicare Advantage) and Part D (drugs).  The following is a summation of those provisions that are presented in a fact sheet provided by CMS.  The Final Rule is expected to be published by April 4.

Part C Payment Impact

Officials at CMS provided an estimate of the expected impact of the proposed policy changes on MA plan payments from last year’s payments.  The following includes a sampling of those estimates in terms of change in percentage:

The MA risk score trend is the average increase in risk scores, not accounting for normalization and MA coding adjustments, which are shown on separate rows.  Individual plans’ experience will vary.

Part C Risk Adjustment

CMS will continue the CY 2022 policy to calculate 100 percent of the risk score using the 2020 CMS-HCC model, which was phased in from CY 2020 to CY 2022, as required by section 1853(a)(1)(I) of the Act, as amended by the 21st Century Cures Act.  The agency will also continue their policy of calculating risk scores using diagnoses exclusively from MA encounter data submissions and fee-for-service (FFS) claims.

CMS is soliciting comments on whether enhancements can be made to the CMS-HCC risk adjustment model to address the impacts of social determinants of health on beneficiary health status by incorporating additional factors that predict the relative costs of MA enrollees.

ESRD Risk Adjustment

CMS uses a separate model to calculate the risk scores applied in payment for the Part A and Part B benefits provided to beneficiaries in end stage renal disease (ESRD) status when enrolled in MA plans, Program of All-Inclusive Care for the Elderly (PACE) organizations, and certain demonstrations, including Medicare-Medicaid Plans (MMPs).  CMS is proposing to implement a revised model for payment to MA organizations for enrollees in ESRD status and intend to use the revised model for additional organizations other than PACE.  The revised model would be calibrated on more recent data, using CMS’ current approach to identify risk adjustment eligible diagnoses from encounter data records.  It also incorporates improvements previously made to the Part C CMS-HCC model, specifically the clinical updates and revised segmentation, which accounts for the differential cost patterns of dual eligible beneficiaries.

PACE Risk Adjustment

For 2023 payment to Program of All-Inclusive Care for the Elderly (PACE) organizations, CMS will continue to use the 2017 CMS-HCC model to calculate non-ESRD risk scores as it has done since 2020 and the 2019 ESRD models to calculate ESRD risk scores as we have done since 2019.

MA Coding Pattern Adjustment

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and FFS providers.  For 2023, CMS proposes to apply a coding pattern adjustment of 5.9 percent, which is the minimum adjustment for coding pattern differences required by statute.  The agency maintains that it continually reviews MA coding patterns and assess how it calculates the MA coding pattern adjustment, so that it can determine the appropriate level of the adjustment.

MA Normalization Factor

CMS is proposing to use the methodology typically used for calculating the normalization factor, which is to project the payment year risk score using five historical years of FFS risk scores under the payment year model.  For 2023, the agency is proposing not to update the years in the trend because of concerns that the changing use of services in 2020 (due to the COVID-19 pandemic) resulted in an anomalous 2021 risk score, which will result in a projection that significantly underestimates what the 2023 risk score is likely to be.  Accordingly, CMS is proposing to use the same years of FFS risk scores that were used to calculate the slope for the 2022 normalization factors, i.e., 2016 through 2020.

Part D Risk Adjustment

For 2023, CMS proposes to implement an updated version of the RxHCC risk adjustment model used to adjust direct subsidy payments for Part D benefits offered by stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs).  The recalibrated RxHCC model includes a clinical update to the RxHCCs based on ICD-10-CM diagnosis codes rather than ICD-9-CM codes used in the prior models.  The recalibrated model also includes an update to the data years (2018 diagnoses to predict 2019 costs) using the same approach CMS used to filter diagnoses from encounter data records for risk score calculation, including the risk adjustment allowable CPT/HCPCS codes.

Star Ratings

The Advance Notice includes information about the date by which plans must submit their requests for review of the appeals and complaints measures data, lists the measures included in the Part C and D Improvement measures and the Categorical Adjustment Index for the 2023 Star Ratings.  It also lists the states and territories with Individual Assistance designations that began in 2021 from the nationwide FEMA major disaster. 

Comments on the proposals set forth in the Advance Notice must be submitted by Friday, March 4, 2022.  To submit comments or questions electronically, go to www.regulations.gov. enter the docket number “CMS-2022-0021” in the “search” field, and follow the instructions for ‘‘submitting a comment.’’  To view the 2023 Advance Notice, please visit: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and select “2023.”  To find out more about the business solutions that we at MiraMed Global Services provide to America’s hospital community, please visit us at info@miramedgs.com.