Introduction
The Centers for Medicare & Medicaid Services (CMS) uses a multi-staged process in the calculation of risk scores for Medicare Advantage (MA) risk adjusted payment to ensure payments reflect the most accurate information balancing three key priorities:
- CMS’s operational requirements to calculate risk scores.
- Providing plans with the most accurate payment in a timely manner to support beneficiary care; and
- Providing plans adequate time to report all applicable encounters and to obtain supporting medical record documentation.
To achieve this balance, risk scores are calculated in a payment cycle that begins in the payment year two years prior to the current payment year and ends in the subsequent payment year. Three risk scores are calculated across the payment cycle – the initial, mid-year, and final risk scores. Each risk score reflects the incremental risk adjustment (RA) data collected in the intervening period. Payments based on the initial and mid-year risk scores are interim payments. Each interim payment is reconciled to changes in the updated risk score and its predecessor in the payment cycle. The final reconciliation payment represents the last update in the payment cycle. Below, key issues are reviewed regarding the timing and different stages of payments calculations, including what data is used at each stage.
Payment Cycle Rationale
The risk adjustment model for MA is “prospective,” meaning the model predicts future costs based on prior health status indicators—namely, diagnosis codes from encounter submissions. For example, the payments for PY 2021, which runs from January through December 2021, will ultimately be calculated based on risk scores using diagnoses submitted on encounters and chart reviews for healthcare services performed from January to December 2020.
However, delays in provider billing forms, which comprise the data for encounter submissions, as well as delays in access to medical records for chart reviews are common. Thus, these data, which contain the diagnoses integral for risk score calculations, may not be ready in time to make payment beginning January 2021. In fact, it can often take providers days, if not weeks, to submit billing records to the health plans. Time is also needed for plans to review medical record documentation and submit diagnoses via chart reviews to RA. Hence, CMS makes initial and interim payments to help ensure the priorities of supporting beneficiary care while allowing time to improve the accuracy of payments. Details on this payment cycle are provided in the next section.
MA Payment Cycle Milestones
The chart below summarizes the process of MA payments from initial through interim and final payments. For illustrative purposes, the dates used in the chart help identify key milestones for PY 2021. There are four key periods of risk score data submission, calculation, and payment which are color coded in the chart; (1) yellow for initial risk score and payment, (2) blue is for the mid-year, (3) grey is for interim final, and (4) green is for the final.
Given the operational requirements of risk score calculation, CMS uses older risk adjustment data to generate initial risk scores and payments (yellow time period). This provides funding to MA plans to help cover medical services and other benefits beginning in January 2021. For PY 2021, the initial risk score is based on diagnosis data from July 2019 to June 2020 dates of service.
Starting with the mid-year payments (see the blue time period), risk scores are calculated using diagnosis data from dates of service in the year prior to the PY (e.g., January 2020 through December 2020 for PY 2021). In the last few years, in response to the COVID pandemic and other reasons, CMS has conducted an interim-final reconciliation (see grey time period), which will include additional risk score data from encounter records. In the last stage (see the green time period), final risk scores and payments are calculated. These payment adjustments to MA plans would include the most comprehensive run out of encounter and chart review submission data. This process optimizes the plans’ability to identify and submit RA data that most accuratelyreflect their enrollees’ conditions.
Both the interim final and final payment adjustments occur after the PY (e.g., during calendar year 2022 for PY 2021). Also, both interim payments, as well as the final payments, are made through what CMS refers to as reconciliation payments. These payments are processed using adjustments (either up or down) to the next available monthly payments to MA plans.
Opportunities
Due to the iterative nature of the risk score calculations and associated payment reconciliation process, MA plans have multiple opportunities to submit, correct, and resubmit diagnosis data for RA. These include multiple opportunities to capture all undeleted diagnoses that were used for payments in prior applicable PYs. In the example of PY 2021, plans have until the final reconciliation to make additions to the RA data submitted to CMS for payment purposes. It is important for plans to know that after the final reconciliation, it will not be possible to make any more additions, although it is possible to submit deletes.
RaLytics solutions can help ensure the re-diagnoses submitted in prior applicable payment years as well as identify new and emergent diagnoses. Additionally, RaLytics consulting services can help optimize a strategy for timing such that payments are optimized and compliant with all applicable regulations. Contact RaLytics for more information: Info@ralytics.com.