April 20, 2022

The Centers for Medicare and Medicaid Services (CMS) released this month an announcement regarding Medicare Part C (Medicare Advantage program) and Medicare Part D (Medicare drug program).  The Announcement addresses changes for the two programs beginning in January of 2023.  The following will summarize the key points addressed in the CMS announcement.

Impact on Payment

The chart below indicates the expected impact of the policy changes and updates on Medicare Advantage (MA) plan payments in comparison with 2022 rates.

Part C Risk Adjustment

For 2023, CMS will continue its 2022 policy to calculate 100 percent of the risk score using the 2020 CMS-HCC model.  The agency is also continuing its policy of calculating risk scores for MA enrollees using diagnoses exclusively from MA encounter data submissions and fee-for-service (FFS) claims. 

Part C End Stage Renal Disease (ESRD) Risk Adjustment

For next year, CMS is finalizing its revised risk adjustment model for payment to MA organizations and additional demonstrations and programs [such as Medicare-Medicaid Plans (MMPs) where the demonstration also uses the MA risk adjustment models] for enrollees with ESRD so as to improve the prediction of costs for these enrollees. The revised model is calibrated on more recent data, using CMS’s current approach to identify risk adjustment eligible diagnoses from encounter data records.  It also incorporates the clinical updates and revised segmentation, which accounts for the differential cost patterns of dually eligible beneficiaries.

PACE Risk Adjustment

As to the 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, the 2019 CMS-HCC ESRD models to calculate ESRD risk scores and the 2020 RxHCC model to calculate Part D risk scores.

MA Coding Adjustment

Each year, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and FFS providers.  For 2023, CMS is finalizing a coding pattern adjustment of 5.9 percent, which is the minimum adjustment for coding pattern differences required by statute.

MA Normalization Factor

For 2023, CMS will use the methodology typically used for calculating the normalization factor, which is to project the payment year risk score using a trend that is based on five historical years of FFS risk scores under the payment year model.  Due to the impact of COVID-19, CMS is finalizing the proposal to not update the years in the trend and instead use the same years of FFS risk scores that were used to calculate the 2022 normalization factors, 2016 through 2020.

Part D Risk Adjustment

CMS will implement an updated version of the RxHCC risk adjustment model for Part D sponsors other than PACE.  The RxHCC model is 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. 

Part C and D Star Ratings

The announcement 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, and lists the states and territories with Individual Assistance designations that began in 2021.

You can learn more about the Rate Announcement by clicking on the following link:
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.  To learn more about MiraMed Global Services, please visit us at info@miramedgs.com.