Depending on how stakeholders play their cards, the U.S. Centers for Medicare & Medicaid Services (CMS) updated risk adjustment policy could lead to belt tightening or a golden opportunity for providers. provides palliative care in Medicare Advantage.
The majority of palliative care provided to US patients is currently reimbursed through risk-based models such as Medicare Advantage and Accountable Care Organizations (ACOs). And those payments are determined in part by risk adjustment, a system the U.S. Centers for Medicare & Medicaid Services (CMS) plans to change next year in an effort to rein in spending.
While responses will likely vary between plans, this could mean providers could receive lower payments.
The way Medicare Advantage works is we receive a monthly, risk-adjusted, payment for each member, in addition to a revenue bonus for [star ratings]. This will then boost our ability to purchase services on behalf of our members, Jain told Palliative Care News. The reason is that if we start out being paid less overall, our subsequent units will likely see smaller or lower increases in payments.
If [MA plans] begin to be paid less in the aggregate, our downstream entities will likely see smaller or lower increases in payments.
-Doctor. Sachin Jain, CEO, SCAN Group
CMS began changing the risk adjustment process earlier this year through the 2024 final rule for Medicare Advantage plans. The agency is implementing a 3.3% base rate increase for MA plans, but will also begin a three-year period of implementing an updated approach to risk adjustment.
Risk adjustment tips
In short, the agency is switching the coding system from the Internal Classification of Diseases (ICD)-9 to ICD-19. It also eliminated more than 2,000 diagnostic codes used by MA programs. According to CMS, the affected codes focus on conditions with more coding variations.
CMS’s goal is to reduce what are considered Medicare Advantage overpayments. For example, CMS will overpay MA plans by $28 billion by 2023, largely due to coding intensity, research from the California Southern University (USC) Schaeffer Center for Health Economics and Policy
Paying Medicare Advantage plans more accurately for the care they provide is how we ensure that Medicare Advantage enrollees, especially certain populations, said CMS Administrator Chiquita Brooks- said: Populations with the highest health disparities, and those in underserved communities, can continue to access the care they deserve. LaSure in a statement.
These diagnosis codes are used to determine the patient’s Hierarchical Condition Classification (HCC) score. According to Fred Bentley, executive director of ATI Advisorys’ Medicare Innovation Group, this number represents the total of all underlying health conditions, comorbidities or diagnoses.
Essentially, each beneficiary receives an HCC score, and CMS uses that factor to determine how much they pay to the MA plan each month for that patient.
There is a lot of interest and scrutiny surrounding this issue. If that’s the dynamic: you get paid more the sicker your patients get, then you’ll document any and all underlying conditions to maximize your reimbursement, Bentley told Palliative Care News. It’s led to a lot of concerns around encryption and then there’s also concerns around, Okay, so you’ve recorded all these conditions and even if they’re completely accurate and complete face, are you a true Medicare Advantage plan that develops care plans and delivers care and pays for appropriate care, depending on the complexity and needs of your members? tablets.
If you are paid more the sicker your patient is, you will document every underlying condition to maximize your reimbursement. It has led to a lot of concerns around encryption.
-Fred Bentley, managing director, ATI Advisory
These concerns prompted CMS to consolidate and rationalize its diagnosis codes. For example, some conditions, such as major depression, may have up to 300 different codes associated with it.
According to MA proponents, such as the advocacy group Better Medicare Alliance (BMA), eliminating some of those codes could result in lower payments from CMS plans to MA, which in turn could lead to a reduction in payments or benefits to suppliers and consumers.
As we continue to evaluate the impact of CY’s 2024 Medicare Advantage Advance Notice, we want to express concern that the proposed risk adjustment changes jeopardize the progress made in enhancing health equity, halting disease progression and providing high-quality, high-value care, the BMA stated in a letter to CMS earlier this year. We fear the greatest impact could be on the most vulnerable seniors, including beneficiaries eligible for Medicare and Medicaid as well as those with special needs programs about chronic disease.
The impact on individual palliative care providers will largely be determined by the terms of their existing agreements with MA plans and how they allocate risk between payers and service provider.
For example, SCAN Health Plan delegates the majority of risk to its downstream service providers, with about 92% of beneficiaries in full-risk transactions, according to Jain. He said he expects these groups will likely look at ways to manage medical and administrative costs differently.
Speculatively, it’s also possible that MA plans and their provider networks could invest more in palliative care, given the cost savings such services are known to generate.
They may see greater adoption of health plans that are trying to avoid costly inpatient hospitalizations by providing more pain and symptom relief in an outpatient setting, Jain said. If I were a palliative care team or physician, I would not view this as positive or negative. I tend to be someone who sees every obstacle as an opportunity. I will focus on this issue and will strive to provide more palliative care services to more appropriate patients to really help programs manage costs in a shrinking revenue environment.
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