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CMS Releases Final Medicare Advantage Part C & D Payment Policies for CY 2022

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The Centers for Medicare & Medicaid Services (CMS) has finalized the Medicare Advantage Part C and Part D payment methodologies for calendar year 2022. Because of the COVID-19 pandemic, CMS is providing earlier notification of the finalized payment changes to give plans more time to prepare bids for 2022, which are due June 7. The finalized changes are expected to increase plan revenue by 4.08%.  

CMS will fully phase-in the 2020 Part C CMS-Hierarchical Condition Categories (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 will rely entirely on encounter data as the source of Medicare Advantage diagnoses.  

In addition, CMS discontinues 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.  

For calendar year 2022, CMS will apply a coding pattern adjustment of 5.9%, which is the minimum adjustment for coding pattern differences in diagnosis coding between Medicare Advantage organization and fee-for-service providers required by the statute. 

CMS has released a fact sheet on the rate announcement.