Health Law Daily Medicare Advantage, Part D payment methodologies set for 2021
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Tuesday, April 7, 2020

Medicare Advantage, Part D payment methodologies set for 2021

By Anthony H. Nguyen, J.D.

CMS makes official Medicare Advantage and Part D payment methodologies for calendar year 2021 in rate announcement. Other notable changes include ESRD payments and Star Ratings for facilities.

CMS published its calendar year (CY) 2021 rate announcement that finalizes Medicare Advantage (MA) and Part D payment methodologies for CY 2021. The rate announcement addresses comments received on Parts I and II of CY 2021 advance notices that published on January 6 and February 5, 2020. CMS noted in the rate announcement that the policies will continue to modernize and maximize competition within the MA and Part D programs. CMS will also continue phasing out indirect medical education amounts from the MA capitation rates. A 1.66 percent expected average revenue change is expected in CY 2021 for plan payments relative to CY 2020.

ESRD payments. Under Soc. Sec. Act §1853(a)(1)(H), CMS establishes "separate rates of payment" for end-stage renal disease (ESRD) beneficiaries enrolled in MA plans. Outside of the exclusion of organ acquisition costs for kidney transplants from MA ESRD rates, the finalized methodology for CY 2021 ESRD rates is unchanged from previous years. As such, the final trend factor that will apply to the MA ESRD state-level rates for 2021 is 4.04 percent, which is higher than the 2.8 percent that had been proposed.

Additionally, the 21st Century Cures Act amended the Social Security Act to allow all Medicare-eligible individuals with ESRD to enroll in MA plans beginning January 1, 2021. With this enrollment policy change, the Cures Act also made related payment changes in the MA and FFS programs. Thus, effective January 1, 2021, MA organizations will no longer be responsible for organ acquisition costs for kidney transplants for MA beneficiaries, and such costs will be excluded from MA benchmarks and covered under the fee-for-service (FFS) program instead.

Part C and PACE risk adjustment. CMS will continue with its phase-in of the 2020 CMS-Hierarchical Condition Categories (HCC) model as required by 2022 under the 21st Century Cures Act. In this regard, CMS will calculate risk scores for CY 2021 payments to MA organizations and certain demonstrations as the sum of: (1) 75 percent of the risk score calculated with the 2020 CMS-HCC model and (2) 25 percent of the risk score calculated with the 2017 CMS-HCC model. The new risk score calculations represent a change from the even blend of 2020 CMS-HCC and 2017 CMS-HCC models in CY 2020.

CMS will calculate risk scores for payment to MA organizations and certain demonstrations as the sum of 75 percent of the encounter data-based risk score and 25 percent of the Risk Adjustment Processing System (RAPS) based risk score. The encounter data-based risk scores will be based on the 2020 CMS-HCC model and the RAPS-based risk scores with the 2017 CMS-HCC model.

For Programs of All-Inclusive Care for the Elderly (PACE) organizations in CY 2021, CMS will calculate risk scores using the 2017 CMS-HCC model by pooling risk adjustment-eligible diagnoses from encounter data, RAPS data, and FFS claims (with no weighting).

Coding adjustment. As required, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and fee for FFS providers. For CY 2021, CMS will use a coding pattern adjustment of 5.90 percent, which is the minimum adjustment for coding intensity required by the statute.

Additional metrics. As part of the agency’s goals to lower prescription drug costs for Medicare beneficiaries and strengthen competition for generic products, CMS previously sought feedback on a generic utilization Part D measurement concept that would incentivize Part D beneficiaries to choose generics over branded drugs. CMS reviewed the feedback received and will consider it for any potential future development of generic utilization measures for the Part D Star Ratings program. Other measurement concepts that CMS solicited feedback included: (1) ESRD measures under Part C; (2) prior authorizations under Part C; (3) physical functioning activities of daily living patient-reported measure; and (4) initial opioid prescribing under Part D.

COVID-19 pandemic. CMS noted that the rate announcement did not catalog the agency’s actions related to the COVID-19 outbreak. CMS instead referred to an overview of CMS’ actions related to the outbreak for MA organizations, PACE organizations, and Part D sponsors that has been made available. The agency is also responding to inquiries through the HPMS system and developing further guidance on issues related to the COVID-19 outbreak.

Star ratings. CMS also adopted several changes to the 2021 Star Ratings to address the disruption to data collection and plan performance in 2020 posed by the COVID-19 pandemic. Specifically, the agency is eliminating the 2020 collections of Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare Consumer Assessment of Healthcare Providers and Systems (CAHPS) data and replaces the measures calculated based on those HEDIS and CAHPS data collections with earlier values from the 2020 Star Ratings that would not have been affected by the public health threats posed by COVID-19.

The policy for adjustments to Star Ratings in the event of extreme and uncontrollable circumstances, such as major hurricanes, will be the same as the one implemented for the 2020 Star Ratings and codified in regulation for the 2022 Star Ratings. The agency will assign Star Ratings for 2021 in the event that the pandemic prevents CMS from having validated data or results in systemic data integrity issues, or if CMS’s functions become focused on only continued performance of essential functions.

MainStory: TopStory AgencyNews Covid19 ReimbursementNews CMSNews PartCNews PartDNews

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