Insurers push for RADV rule, MA payment changes will lead to cuts

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Insurers are objecting to Medicare’s advance notice of charge rates and the final risk-adjusted data verification (RADV) rule, which they say will impact consumers and taxpayers.

To improve program integrity, the Risk Adjusted Data Validation (RADV) rule changes how CMS calculates what a plan must pay to the federal government when risk adjusted diagnosis codes are not supported by medical records. A risk adjustment based on participants’ health conditions determines the benefits of the plan.

The CMS rule extrapolates the error rate in the audit sample to the entire contract. This practice is common to other audits but is new to RADV. And CMS estimates fees at about $4.5 billion over the next 10 years, applying those changes to audits starting in target year 2018, although the new fees won’t arrive until 2025.

In addition to the RADV rule, it is proposed to change Medicare Advantage payments for the upcoming plan year, which occurs annually when CMS publishes its notice of proposed MA payment changes. The changes are technical adjustments that allow the payment formula to reflect economic changes and Medicare spending trends.

The current CMS estimates are that planned payments per applicant for the MA will be just over 1% higher in 2024 than this year. The Congressional Budget Office estimates that the proposed changes to total payments for 2024 are unlikely to affect the spending trajectory of Medicare Advantage.

Insurers, however, take issue with the RADV rule and the payment adjustments, saying they will not result in higher fees and will ultimately hurt insurers financially.

Melea Bridgford, director of risk adjustment analytics at Episource, said Medicare has two payment systems: fee-for-service, where CMS pays directly, and Medicare Advantage Organizations (MAO), where a member can enroll and CMS pays a capitation rate . The capitation rate is based on how sick the participant is, and this is where risk assessment comes in.

From the beginning, CMS understood the difference between a service fee and an MA when it comes to the claims they receive, and CMS applies a modifier to the MA, she says. Service fees and MAs share the same model as to which conditions are considered, with the risk scores associated with those conditions. The difference, she says, is that CMS pays on a per capita basis, and they’re going to do more to make sure they cover different conditions. The modifier reduces the risk score.

“When RADV came out and CMS checked the accuracy of these samples they were extracting, CMS turned around and said they would have a paid assessor,” Bridgford said. “The way it worked is, in some respects, similar to the benchmark. The MA will review the charts to find the terms they are missing; they don’t check every diagram. So there’s some of it where they don’t gather for everything. From the MAO point of view, they won’t be 100% accurate.”

According to her, when paying for the service, checking the diagnostic code is not possible. The provider is simply paid based on the claims they submit.

“CMS has been looking into the error rates in its FFS claims and applied that as an evaluator when it comes to the MAO RADV audit,” Bridgford said. “MA did not meet the standard of 100% accuracy. Now that we’ve got rid of the pay-for-service adjuster, this is saying to MAO, “You’ll stick with this 100% fixer.”

The stumbling block for insurers remains the discrepancy between their forecasts and those of CMS. While CMS said the 2024 advance notice rule for Medicare Advantage and Part D for prescription drug programs would increase the cost of Medicare Advantage plans by just over 1%, payers say it would result in a reduction of more than on 2%.

Bridgeford knows why.

“The CMS analyzes the service fee data,” she said. “They don’t look at Medicare Advantage data. They take the percentage they get and apply it to the MAO. house. I think there are many differences in this. Avalere did research on applying CMS logic specifically to MAO and they found some shortcomings – trying to apply the same rules from fee-for-service to MAOS. missing data points.

“Both sides will be a little self-serving,” she said. “They will play to their advantage.”

Bridgford said nothing was known about what it would take to comply.

“They are focusing more on compliance and doing compliance reviews,” she said. “It’s important that when these MAOs do their chart reviews, they don’t just look one way. They put themselves at risk when they don’t back up their claims. More attention is being paid to linking the overview of charts to the statement. “

Mark Hamelburg, senior vice president of federal programs at AHIP, also questioned the CMS numbers because they refer to Medicare Advantage payment changes. In his opinion, the changes will undoubtedly harm insurers.

“CMS estimates an average rate cut of 2.27% based on the policy in the proposed rule,” Hamelburg said. “The problem of confusion lies in this 3.3% risk estimate trend being used to offset other cuts. This is not the first time administrations have included a risk assessment calculation when they issue a Medicare Advantage rate notice. But in each case where they have done so, they calculate this risk score trend, but only after they separately calculate the cumulative impact of offers in the rate notice. They’ll either put it in a footnote or add a line. I think it’s quite clear – we have to do the math.”

The proposed changes from the rate notice averaged -2.27%, Hamelburg said. Under the Obama administration, he said, a distinction was made between what the rate notice does and what the administration thinks will happen, separate from the actual policy. This trend is only reflected in the official FAQ sheet, he said, because it is not part of the advance notice rate setting policy.

“In our view, it is clear that the policies listed in the four corners of the advance notice do not include this perceived risk assessment trend,” Hamelburg said. “If that were the case, it would have been included in the notice. CMS would be transparent about how they made this calculation and stakeholders could weigh in and comment. In fact, there is no transparency about how they calculated it.”

AHIP has serious questions about this number. One of the proposed changes to the rate notice relates to the risk adjustment model associated with the removal of HCC codes or hierarchical condition categories that CMS believes contribute to the risk assessment trend. Hamelburg said it seems strange that at the same time that they are proposing changes to reduce the trend in risk assessment, they are estimating that the trend will continue.

“The focus should be on the rates as they will be changed based on the rate notice,” he said.

As for how the rate notice will affect insurers, Hamelburg said it will vary by plan and region. There are concerns about individuals who are dual-eligible for Medicare and Medicaid, and those with more medical conditions who are affected by the changes, especially for plans that serve a high percentage of these members.

Hamelburg said this could have a significant impact on premiums and possibly reduce member benefits.

The Department of Health and Human Services disputes AHiP’s claim to cut rates, saying in February, “Despite industry-funded reports indicating to the contrary, the Biden-Harris administration is not proposing Medicare Advantage cuts. In fact, the administration is proposing to increase Medicare. Advantage payments this year by 1%, on top of an 8.5% increase in Medicare Advantage payments last year.”

Bridgeford said she sees an opportunity.

“Ultimately, this is a movement towards value-based care,” she said. “With the move, there is really an opportunity for suppliers and insurers to develop relationships with each other. The stronger this relationship, the more accurate your data can become.

“When we talk about risk adjustments, you put so much focus on finances, but it comes down to whether you get these clearer pictures,” Bridgford said. “The result is better care and better management of participant care.”

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