While provider and payer groups were happy that the Biden administration delayed implementation of changes to Medicare Advantage’s (MA’s) risk adjustment model, they hinted at a sustained campaign to get rid of them entirely.
Industry reaction to the final 2024 MA payment rule released late Friday details the next fight the Centers for Medicare & Medicaid Services (CMS) can expect in its efforts to rein in overpayments to MA plans. The agency decided to phase in the risk adjustment changes over three years starting in 2024.
“We appreciate that CMS moved to a phased-in approach, but the underlying policy is fundamentally unchanged,” said Mary Beth Donahue, president and CEO of the insurer group Better Medicare Alliance (BMA), in a statement last Friday. The BMA was one of the most vocal groups opposing CMS’ proposed pay rule that introduced the risk adjustment concerns.
BMA—which aired television ads in the Washington, D.C., market bashing the proposed rule—did not comment further on what its next steps are. Another point of contention was the rule’s pay rate change, which was proposed at 1% and bumped to 3.3% in the final regulation.
The American Medical Group Association (AMGA) is hoping that the agency sees the error of its ways at the end of the three-year phase-in period.
“With this more cautious approach, CMS will have an opportunity to refine the plan based on the effects the changes have on providers and their patients,” said AMGA President and CEO Jerry Penso, M.D., in a statement.
Providers and payers had raised concerns over CMS’ decision to change the risk adjustment model for MA plans. The agency will shift the codes it relies on from the International Classification of Diseases (ICD) 9 coding system to ICD-10, which has been in use by physicians since 2015.
The agency also targeted the removal of more than 2,000 diagnostic codes from the MA risk adjustment model. The goal is to identify codes most likely to be abused by plans for up-coding, a practice to make patients appear sicker than they are to inflate risk scores and get higher payments from Medicare.
But providers complained in comments and statements to CMS that the code removal could shift resources away from caring for dual eligible Medicare-Medicaid beneficiaries. An analysis from primary care company Oak Street Health showed that the changes could lead to non-dual patients getting more resources thanks to the removal of the codes.
CMS Administrator Chiquita Brooks-LaSure pushed back on the notion that duals coverage will be hurt. She told reporters Friday that there are “hundreds of codes left” for all the diagnoses that have codes removed.
However, the agency appeared to acknowledge concerns from providers around the short transition to the new system, which was set to start on Jan. 1, 2024. Instead, next year the risk adjustment model will make up two-thirds of the current system and one-third of the new model. By 2026, the new model will be fully phased in.
Some experts say that CMS needs to go further, though, to rein in over-payments to MA plans, especially as the program has surged to make up more than 30 million enrollees.
“The secretary has the authority to go further through the coding intensity adjustment,” said Mark E. Miller, vice president of health policy for the nonprofit Arnold Ventures, in an interview with Fierce Healthcare. “If they do, they will be attacked like they were on the part of the industry.”
CMS must include via federal statute a 5.9% coding adjustment to account for differences in diagnostic coding between MA and traditional fee-for-service Medicare. The agency can go higher than that amount but has chosen not to.
The Alliance of Community Health Plans (ACHP), which represents nonprofit plans, said in a statement that CMS also needs to be more transparent on MA data.
“For years, ACHP has requested CMS share backup justification for its risk score trend and assumptions utilized in development of new risk adjustment models,” the group said.
Miller said the agency should go further as studies from the Medicare Payment Advisory Commission, an independent body that advises Congress on Medicare payment issues, has shown MA plans get overpaid.
“If there is going to be real action taken here I think it will have to be collectively between the administration and the Congress,” he said.
There has been some movement towards a potential compromise on the issue in Congress. Sens. Bill Cassidy, R-Louisiana, and Jeff Merkley, D-Oregon, recently introduced legislation that includes some key reforms to MA coding.
However, it remains unclear whether the legislation can make it through a divided Congress.
“The question of whether anything will happen here will depend on how serious Congress gets on addressing the debt more broadly,” Miller said.