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AHA Questions CMS Medicare Advantage Risk Score Calculation

AHA has called on CMS to not rely on encounter data for calculating risk scores affecting MA health plans.

AHA opposes CMS use of encounter data for MA plans

Source: Thinkstock

By Kyle Murphy, PhD

- The American Hospital Association (AHA) has voiced concerns about the methodology the Centers for Medicare & Medicaid Services (CMS) intends to use to calculate risk scores for health plans under the Medicare Advantage and Part D prescription drug benefit programs in 2018.

Last week, the association issued a written response to the federal agency’s 2018 Advance Notice and Draft Call Letter calling into question the use of encounter data in calculating risk adjustment scores.

“We agree with CMS’s proposal not to move forward with plans to increase the proportion of the risk adjustment scores that are based on encounter data,” wrote AHA Executive Vice President Thomas P. Nickels. “However, we have ongoing concerns both about the use of encounter data for purposes of risk adjustment and the continued calculation of benchmark caps after inclusion of the quality bonus payments.”

Of the hospitals, health systems, and healthcare organizations represented by the association, close to 100 sponsor health plans.

The AHA letter addresses three components of the recent CMS notification for reconsideration, the first being risk scores.

In particular, the association challenges the proposed methodology comprising Risk Adjustment Process System (RAPS) data and encounter data, the former making up 80 percent of the final score and the latter 20 percent. “The AHA continues to have strong reservations about relying on encounter data to calculate risk scores at this time,” Nickels state.

AHA doubts the accuracy of risk scores calculated using the current methodology CMS proposed to maintain:

We remain concerned that the use of encounter data may result in inaccurate risk scores. Specifically, provider data collection efforts were not designed to support MA risk-adjustment calculations. In our comments last year, we provided an example of certain physician billing systems that limit coding to only four diagnoses. In other cases, some providers choose to only code some diagnoses, not all. While the coding done by providers may be sufficient for treatment and their own billing purposes, it could lead to undercoding for purposes of MA risk adjustment, which may inadvertently reduce plan risk scores

Nickels referenced a Government Accountability Office (GAO) report issued earlier this year that found deficiencies in CMS efforts to ensure the quality and accuracy of encounter data and recommended the federal agency hold off on using this data until fully assessed. AHA has done the same.

“We encourage CMS to reconsider use of encounter data until the issues related to data quality and provider and plan burden are addressed,” Nickels advised.

The association also challenged the federal agency’s interpretation of a statute that prevents CMS from paying full bonus payments to high-performing MA plans as a result of benchmark caps: 

CMS continues to include the quality bonus payments when calculating whether a plan has met or exceeded the maximum payment threshold — or benchmark cap — for a county. As a result, some high-performing MA plans are not receiving their full bonus payment when that payment pushes their total reimbursement above the benchmark cap. CMS acknowledges that this way of applying the cap “diminishes incentives for MA plans to continuously improve the care provided to Medicare beneficiaries,” but states that it does not have legal authority to pay the full bonus payment irrespective of the benchmark cap.

In the letter, AHA disagreed with the interpretation.

“Specifically, we believe that the law directs the agency to consider the bonus payment amount when calculating rates for purposes of applying the cap and, therefore, is not required to include such amounts,” Nickels wrote. “We urge CMS to reconsider its interpretation of the statute, which is unquestionably inconsistent with well-documented policy goals of incentivizing the highest quality care and coverage.”

The remainder of the letter touches on drug price increases impact the Part D prescription drug program.


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