CMS Policy Update on Encounter Data and Positive Risk Score Impact

Health Fidelity's Chris Gluhak On September 14th, CMS released part I of an advanced notice on risk adjustment for Medicare Advantage. The advanced notice itself has caused a stir despite being an update on the already in-progress transition toward the exclusive use of EDPS (encounter data processing system) for risk adjustment data submission, and the phasing out of RAPS (risk adjustment payment system). In part, this was because there was no early preview. Today, we’re going to discuss the advance notice itself and how it affects Health Fidelity partners, as well as why CMS broke from the normal cadence.

Why the lack of an early preview?

The reason for the lack of early preview is the business disruption to the insurance markets caused by COVID-19 in 2020. MAOs have requested a much-accelerated policy update from CMS for PY 2022 to allow for a gradual and more controlled planning and adaptation process to the future regulation. The Part C updates, as described in the Advance Notice Part 1, will be followed by the Advance Notice Part 2, expected later this fall. It is likely containing updates to Part D, PACE, and ESRD methodologies and payment policies.

To avoid additional downstream surprise from this change to the notification cadence, the final call itself is likely to come around mid-January, 2021. However, in another unprecedented move, CMS is also keeping the possibility alive for the final call letter to be split into two components, Part 1 and Part 2. The latter of which may be published on or close to the final deadline of 4/5/21.

Summary of proposed changes:

The current proposal is that AAPC (“v24”) will become the only active CMS-HCC model for risk score calculation for PY 2022, without any changes applied to it from its PY 2020 version. As a result, CMS projects the net impact of calculated risk scores to be an increase of 0.25%.

Risk Score Calculation & Submissions for PY 2022

  • For Medicare Advantage, CMS proposes:
    • The attribution of 100% weight to Encounter data (i.e. from EDPS submission) and FFS claims. The EDPS component of the risk score is calculated using only the AAPC model of PY 2020.
    • RAPS submissions will no longer be needed or counted toward risk score.
  • CMS had already prescribed the following balance of models and weights for risk score calculation for PY 2021 in the corresponding final call letter in early 2020:
    • 75% of score weight from Encounter data + RAPS inpatient data (via the APCC model of PY 2020)
    • 25% of weight from: RAPS data (via the PY 2017 CMS-HCC model)

Lumanent’s Compatibility with EDPS:

For Health Fidelity partners covering populations under Medicare Advantage, the advance notice suggests that submission processes will ultimately be simplified, since the RAPS process can be eliminated. Risk score calculation is also simplified. As noted, this has been an in-progress transition for some time now, and our products and services are moving along as expected to account for the changes. We also plan to continue to support RAPS/EDPS differentiation for several years, particularly within Lumanent Retrospective Review, as customers may still be using the original, mixed functionality for their internal audit projects.

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