Get Health Data Essential's Richard Lieberman's take on CMS's proposed changes to the Stars Program in 2013.  In a recent white paper, Mr. Lieberman indicates the changes will be "more incremental than the monumental changes made for the 2012 rating period", but that there are several key issues to note.  Access the white paper by clicking the link below.

ProposedChangestoStarsin2013.pdf (2.42 mb)

William MacBain, Senior Vice President, Gorman Health Group

The newly minted ACO regulation from Medicare has some zingers hidden in its 696 pages. Okay, to be fair, the actual regulation is only 70 pages long, double spaced. The rest is all preamble, where CMS describes the 1200 comments on the proposed rule, and how they have responded (or not) in the final rule.

The first zinger has to do with the Physician Quality Reporting System, known to its friends as PQRS. Since 2007, CMS has paid a bonus to physicians who report quality data. Under current rules, CMS will pay physicians ½% of allowed charges from 2012 through 2014. BUT, docs in an ACO will only be able to participate in the PQRS through the ACO. The ACO will report as if it were a group practice. If the ACO fails to report in compliance with the PQRS rules, its docs won’t get the PQRS bonus. This could be an issue in recruiting doctors who may not see a clear advantage to the ACO to begin with, given all the other requirements.

A second zinger is the approach to risk adjustment. CMS has agreed to use the Medicare Advantage HCC risk adjuster for newly assigned beneficiaries. They won’t use HCCs for continuing beneficiaries – people who were assigned to the ACO last year. HCCs are based on diagnosis codes on last year’s claims. CMS reasons that an ACO would improve coding accuracy in year one, to get the best risk adjustment they could for continuing beneficiaries in year 2. So only new-to-the-ACO beneficiaries will get risk adjusted for higher HCC scores. BUT, if the average HCC score for continuing beneficiaries goes down in year two, then CMS will risk adjust and reduce the benchmark accordingly. The inference is that reduced scores could only reflect reduced average risk. So ACOs that are not diligent in keeping their risk scores up could be docked a chunk of money for apparent losses resulting from poor coding, not from poor care management.

On 04/04/2011 CMS announced the final MA capitation rates and to our industry’s surprise the final rates were quite different from those projected in the initial February notice. The highlights from the final call letter are as follows:

1. 2012 MA capitation rates will increase a mere 0.4%, a staggering1.2 % less than projected 45 days ago. Health plan CFOs are already working on strategies to trim benefits and remain competitive with market competitors, this will enable plans to either reduce or eliminate the impact on their earnings.  
2. Please note that the above rate increase does not include any Risk Adjusted premium increases perceived by plans, so those of you who have been working hard will begin to reap tremendous competitive advantages in 2012.  
3. The Final Call projects a negative growth factor for MA of -0.16%. A far cry from the well-received growth projection of 0.7% given 45 days ago. This based on lower physician rates that are also announced in the Call Letter. After all it’s the providers who truly market MA products based on their overall satisfaction with plan benefits and compensation.  
4. CMS will conduct Integrity Audits on plans with members’ share of cost at or above 10% after 7/1/2011. Expect to see plans try to stay below the 10% to avoid CMS audits 
5. RADV Audit Methodology has remained unchanged.  While CMS received a tremendous response rate from the letter sent out in December 2010, it has decided not to implement method changes for the time being.  Expect the method announcements later this year.  
6. STARS – CMS will be paying Quality bonuses for plans with higher than 3 Stars in 2012; these plans will also be given competitive advantages during enrollment periods in an attempt to increase highly rated plans’ growth year round. The key here will be plans’ ability to work with providers, since a large number of the STAR measures are directly dependent on the Provider offices.   

   In short this ride of ups and downs continues; the survival skills for MA remain constant: excellence in HCC, and your plan’s ability to develop long term partnerships with providers to yield the high quality equitable healthcare delivery experience we all want for ourselves in the not too distant future!

    

   Kenneth Persaud CEO, Precision Healthcare Systems  

Cheri Rice, Director of the Medicare Payment Group, recently sent an alert regarding the 2012 Payment Year Model Diagnoses Crosswalk and model software files on the Risk Adjustment webpage. 

The crosswalk and model software files can be found in the downloads section of the Risk Adjustment webpage located at the following URL:

htp://www.cms.gov/MedicareAdvtgSpecRateStates/06_Risk_adjustment.asp

All questions should be sent to analyst@AskRiskAdjustment.com

The latest edition of Rising to the Challenge! is hot off the presses!  We've put together a brand-new format and are really excited to get your feedback, so please leave your comments here - let us know if you like it, love it, hate it - and what we can do to make it even better!

Interested in being a contributor in future issues?  Contact us!  krodriguez@rasociety.org

In this issue we address:

• 2011 Advance Notice
• ICD-10 Preparedness
• RADV Extrapolation Update
• Finance Departments see Stars!
• Association News 

RISE MARCH 2011 template.pdf (589.14 kb)

Rise_December_2010.pdf (73.83 kb)

Last Friday CMS posted the Advance Notice of Methodological Changes for Calendar Year (CY) 2012 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2012 Call Letter. The officials held the press conference to announce the posting of the 153-page:

http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2012.pdf

Premature Synopsis:

The final Rate Notice for 2012 will be announced on April 4^th 2011, however this draft letter has consistently proved to be an accurate indicator of the debate ongoing in D.C. In the meantime the thought leaders in our industry have until March 4^th to comment on the Notice and Call Letter.

Information about agent and broker compensation structures is not due until July 25, 2011.

Kenneth Persaud, CEO, PRECISION HEALTHCARE SYSTEMS

According to an article written in January of 2011 by Citi Group's leading Managed Care Equity Analyst Carl McDonald, in January, 2011. CMS is asking plans to submit comments regarding its risk adjusted data validation (RADV) sampling and payment error calculation methodology by January 21st. In a notice that went out to plans in December, CMS describes the sampling and error calculation methodology that will be used when conducting audits of member risk scores. These risk scores are based on the health status of a plan's membership, with plans treating less healthy members receiving additional payments from CMS, based on medical charts and diagnosis codes prepared by the providers of medical care. The RADV reconciliation will be used to determine if a Medicare Advantage plan was overpaid by CMS as a result of improper coding practices by physicians.  The notification from CMS provides additional details in the audit. In the audit, CMS will select up to 201 members per contract to make up the sample size in the RADV audit. Enrollees must meet the following guidelines to be a part of the audit:

1. Must be enrolled in the same plan for all 12 months that the data was collected.

2. The members must be Non-End State Renal Disease (non-ESRD) status in or prior to the payment year.

3. Non-hospice between January of the data collection year and January of the payment year, and had less than 12 months of hospice during the payment year.

4. In Medicare Part B coverage for all 12 months during the data collection period

5. Had at least one risk adjustment diagnosis submitted during the data collection period that led to at least one CMS-HCC (hierarchical condition category) assignment. These HCCs were presented for risk adjusted payments, based on plan-submitted risk adjustment data, and are referred to in CMS lingo as the validation HCCs for the sampled enrollees.  CMS will increase the confidence interval to 99% for the next round of audits, up from 95%, which plans will view positively. However, CMS did not include a fee for service error adjustment in the RADV methodology, which plans will not like. The issue is that doctors make mistakes when coding, regardless of whether a member is in a managed care plan or in traditional  Medicare. CMS is looking to compare error rates in managed care to 0, rather than comparing them to an error rate in the traditional Medicare program. If this is the case, plans may be penalized twice, once for the lack of the fee for service error adjustment and again when an audit finds errors at plans.  One issue that remains unclear is how CMS will extrapolate its findings from the audit. In the past, CMS has indicated that payment adjustments resulting from its RADV Audits won't be limited to the sample population, but will be extrapolated to the relevant plan population. Current thinking is that the findings from the sample will be extrapolated up to that particular contract or subsidiary, but not the entire company, limiting the potential adverse impact on a company's earnings.  As many of our colleagues in the industry had hoped, it appears CMS is making an attempt to Right Size the implications of a RADV audit methodology that has been fraught with errors from inception. 

-Kenneth Persaud, CEO Precision Healthcare Systems

What are organizations doing to direct efforts and protect revenue streams in light of CMS changes in Medicare Advantage (MA) reimbursement? CMS has begun to implement changes in payment methodology for MA organizations once again.  It seems that when MA organizations have just gotten used to risk based reimbursement, they must now reorient once again when looking at reimbursement rates.  MA organizations have just, in the past few years, completed the total transition to risk based revenue funding.  Now they must keep this in place and work on other measures that are contained in the MA Star Rating.

MA organizations revenue will no longer be strictly risk based.  Starting very soon, organization's reimbursement will not only be based on the "wellness" of members associated increased payment for sicker members, but will also be based on quality measures derived from the Star Rating system.  Organizations in the coming years will actually begin to loose payment if the Star Ratings are 3 or less.  While we can all applaud the focus on quality, there are many questions about the Star Rating that may need to be addressed: 

• Are the Star Ratings fair?
• Are the Star Ratings based on data that is too old?
• How will this new system play into the CMS Risk Adjustment Payment Audits?

Organizations must take active and immediate actions to assess and improve their Star Rating.  Data that goes into this rating may very well be old- up to a year.  Actions now for quality improvement and customer satisfaction will not be reflected immediately in your rating.  What is your organization doing to transition? Will the delay in data gathering affecting the Star Rating be detrimental to your revenue in the short run?

Let us know how your organization is preparing for this change and the measures you are taking to affect your Star Rating!

-Ann U. Greenberg, CHP, CCEP, President, AG COMPLIANCE GROUP, LLC

 Member of the Advisory Board, RISE

By 2014, many changes in how our health care system operates will have been enacted. Some of them designed to slow the growth of health care spending, others to provide access to health care for the residents of the U.S. who are currently uninsured. The individual mandate to purchase health insurance coverage, along with the creation of state and regional American Health Benefit Exchanges, or "Health Insurance Exchanges" will mean more people will be shopping for health insurance coverage on the individual market, comparing plans based on price, benefits, cost-sharing requirements, quality, reputation and the provider network available to beneficiaries. The Department of Health and Human Services is currently soliciting public comment on the development of the Exchanges.

Health insurers will be able to price plan premiums based on age, smoking behavior, location, and family size. However, because health insurers will no longer be able to base premiums on disease conditions, health status, or other risk factors in the individual health insurance market, there is a risk for adverse selection among plans doing business in and out of the Health Insurance Exchange. Subsidies available for plans doing business in the Exchange could result in higher risk users of health care joining the Exchange, while healthier individuals could receive coverage by purchasing non-Exchange plans.

In order to deal with this issue, the Patient Protection and Affordable Care Act (PPACA) allows for the use of risk adjustment and reinsurance payments in the Health Insurance Exchanges that will be created by states or groups of states. Although risk adjustment is currently used in the Medicare Advantage program (using the HCC model) and in Medicaid managed care plans to compensate health plans that enroll sicker, higher risk people, the risk adjustment methods used have faced criticism.

One concern when states begin using risk adjustment in the individual or small business markets is the level of data available and reported by health plans in order to calculate the risk adjusters, while another is the ability of the risk adjuster to subsidize premiums for plans that take on high-risk populations, while also allowing the lowest risk members of an enrolled group to pay affordable premiums. Although the Department of Health and Human Services will be able to provide some guidance related to competing risk adjustment methods and data needs to states, state policymakers need to make these decisions now and understand the consequences of those decisions.

States are currently pre-occupied with future requirements to expand Medicaid, creating the individual Health Insurance Exchanges and Small Business (SHOP) Exchanges, and dealing with budget shortfalls due to prolonged unemployment and economic struggles. However, 2014 is quickly approaching, and each state will need to decide how to collect data from health plans, what variables are needed, and how to design their risk adjustment methods. Some may decide to use a fairly simple method, which could put their residents at risk of inequitable premium rates in the individual market. On the other hand, some states could develop very complex methods that would require several years to implement. Regardless of the state strategy, serious thought needs to be put into the use of risk adjustment in the individual market. Simply using the Medicare or Medicaid managed care models may not adequately deal with the diversity of enrollees that will be entering the health insurance market in 2014. In addition, state policymakers and planners will need to develop and implement a risk adjustment mechanism that will be sustainable in their state, given the inherent limitations of data collection, population characteristics, and state financing.

Each state needs to think carefully about the approach they will use and work toward that goal efficiently and aggressively, in order to safeguard the health insurance markets under the Individual Mandate. Dr. Will Dow, from the Petris Center at UC Berkeley, recently spoke at a California Program on Access to Care Legislative Briefing on the importance of risk adjustment. While it is directly applicable to California, his presentation carries important lessons for any state that is actively designing their own Health Insurance Exchange and is facing the daunting task of determining a risk adjustment approach that will keep premiums affordable for all members of the market.

Dylan H. Roby, PhD

Assistant Professor of Health Services, UCLA School of Public Health, Research Scientist, UCLA Center for Health Policy Research

Recent finalization of the appeals process for Risk Adjustment Data Validation (RADV) audits has not left plans any more comfortable with the RADV audit process and still deeply concerned about the extrapolation process and the process' financial impact on plans. CMS has allowed for three processes for appealing RADV audits. First, CMS allows all MA plans to submit CMS-Developed attestations along with outpatient medical records with missing or illegible provider signatures or credential that otherwise could result in payment errors as part of an RADV audit. Next, CMS allows for a document dispute process to allow MA plans to dispute other types of medical record review related errors (i.e. errors that arise from the operational processing of medical records selected for the RADV audits). Finally, CMS established an appeal process for RADV payment error calculation, which provides MA plans with three levels of review to challenge CMS' calculation of their payment errors. The appeals process includes a request for reconsideration, an on-the-record hearing before a CMS Hearing Officer, and a discretionary review by the CMS Administrator concerning these three areas only.

Plans are still left in the dark as to how the error rate is calculated and how the calculated error rate will be extrapolated. No appeals process is available to plans for these issues. In addition there has been no word as to how CMS will deal with the imbedded issue that fee-for-service (FFS) plans have the same errors. Plans are at the mercy of providers for the accuracy of their documentation of visits. Until the same issues are addressed in the FFS environment with providers, or there is a logical accommodation for such errors, imposing an extrapolated error rate on MA plans not only raises an issue of fairness but may for some plan raise questions of viability and willingness to participate in the Medicare Advantage program.

What are Plans to do while the error rate issues are dealt with? Perhaps Plans need to change their method of payment to providers. Now may be the time to institute a quality program for medical record documentation with payment tied to the quality of the record itself. With the advent and wide spread useage of EMRs this may be a more viable option. Providers are responsible for providing the service to our members but there are also responsible for accurately documenting these services. Making part of provider payment contingent on quality documentation of visits will be imperative to the reduction of error rates for Plans - no matter how CMS decides this error rate and extrapolation will be calculated.

Increased focus on quality of records, increased auditing, and increased activity around the audits and the attestations leave heavy administrative burden on Plans that are not there for FFS.

Ann U. Greenberg, AVP, Ethics & Compliance Officer, CHP, CCEP, LOVELACE HEALTH PLAN

Member of the Advisory Board, RISE