CMS Announces Final 2021 HCC Risk Adjustment Changes

April 13th, 2020 - Wyn Staheli, Director of Research

Categories: Medicare

On April 6, 2020, the Centers for Medicare & Medicaid Services (CMS) published their final Medicare Advantage (MA) and Part D payment methodologies for CY 2021. Now is the time to prepare for these upcoming changes.

Medicare Advantage Plans (Part C) 2021 Payments

The 2020 CMS-Hierarchical Condition Categories (HCC) model phase-in continues as they prepare for the full implementation in 2022. CMS continues to use diagnoses codes submitted to MA organizations as part of its Risk Adjustment Processing System (RAPS). The CMS risk score calculations for 2021 payments to MA organizations will be weighted as follows:

75% of the risk score calculated with the 2020 CMS-HCC model and
25% of the risk score calculated with the 2017 CMS-HCC model.

As expected, the weight is shifting away from the 2017 CMS-HCC model which is currently 50% of the blended risk score for 2020 with the 2020 CMS-HCC model and 50% of the risk score calculated with the 2017 CMS-HCC model. There will also be a 5.9% coding pattern adjustment which takes into account variations between fee-for-service (FFS) claims and MA patient information.

It should also be noted that for their Programs of All-Inclusive Care for the Elderly (PACE) organizations, they will “continue to calculate risk scores using the 2017 CMS-HCC model by pooling risk adjustment-eligible diagnoses from encounter data, RAPS data, and FFS claims (with no weighting).”

ESRD and Kidney Organ Acquisition Costs for 2021

Beginning in 2021, beneficiaries with End-Stage Renal Disease (ESRD) will be able to enroll in MA plans. CMS will make separate payments for ESRD patients. While there are no changes to the ESRD payment methodology for 2021, the trend factor increased to 4.04% from the previous 2.8% estimate. One change of particular note is as follows:

“Effective January 1, 2021, MA organizations will no longer be responsible for organ acquisition costs for kidney transplants for MA beneficiaries, and such costs will be excluded from MA benchmarks and covered under the FFS program instead. The CY 2021 Advance Notice provided a step-by-step description of the methodology by which CMS will estimate the kidney organ acquisition costs to carve out from MA ESRD and non-ESRD benchmarks, which we are finalizing through the Rate Announcement. PACE organizations will continue to cover organ acquisition costs for kidney transplants and CMS will continue to include the costs for kidney acquisitions in the development of PACE payment rates.”

See the References listed below for more complete information on these finalized 2021 risk adjustment changes. As always, innovHealth’s HCC Coder product helps maximize coding accuracy and increase revenue with a variety of tools and up-to-date information.

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