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CMS Proposes Changes to CY 2022 Medicare Advantage Risk Adjustment Policies

For CFOs, finance & reimbursement staff, government relations staff

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The Centers for Medicare & Medicaid Services (CMS) has issued Part I of the calendar year 2022 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies. This proposes changes to the Part C CMS-Hierarchical Condition Categories (HCC) risk adjustment model as required by the 21st Century Cures Act, which mandates a 60-day comment period. 

Because of the COVID-19 pandemic CMS is providing earlier notification of the proposed payment changes to give plans more time to prepare bids. Comments are due Nov.13.  

For calendar year 2022, CMS proposes to fully phase-in the 2020 CMS-HCC risk adjustment model, which was first adopted in the calendar year 2020 rate announcement. Specifically, the 2020 model adds variables that count conditions in the risk adjustment model and includes payment for additional conditions for mental health, substance use disorder, and chronic kidney disease. This represents a change from the blend for 2021 of 75% of the risk score calculated using the 2020 CMS-HCC model and 25% of the 2017 CMS-HCC model.  

Because the full transition to the 2020 CMS-HCC model calculates risk scores using diagnoses from encounter data submissions, the Part C risk score used for payment in 2022 would rely entirely on encounter data as the source of Medicare Advantage diagnoses. 

In addition, CMS proposes to discontinue its previous policy of supplementing diagnoses from encounter data with diagnoses from inpatient records submitted to Risk Adjustment Processing System for calculating beneficiary risk scores. 

CMS intends to release Part II of the Advance Notice — which will include additional proposed payment methodologies that require a 30-day comment period — at a later date. A final Medicare Advantage rate announcement for calendar year 2022 is expected to be issued no later than April 5, 2021.

Additional information is available in a CMS fact sheet