Medicare Advantage insurers rail against “encounter data” to CMS

While Medicare Advantage insurers are excited about getting more flexibility to tailor supplemental benefits for chronically ill patients in 2020, they aren’t happy with the CMS’ plan to increase the use of “encounter data” to calculate their payments.

In the more than 200 comments on the 2020 Medicare Advantage and Part D Advance Notice and call letter, insurers were generally supportive of CMS’ plan to expand the supplemental benefits that plans may offer their chronically ill patients to include things like nonmedical transportation and home-delivered meals or produce, as called for by the Bipartisan Budget Act of 2018.

Insurers wrote in their comments that they should be able to determine their own definitions of a chronic illness, and some urged the CMS to recognize supplemental benefits that support nutrition, social isolation and home safety as a way to address patients’ social determinants of health.

In commenting on the CMS’ plan to modify the Medicare Advantage risk-adjustment model to reflect patients’ total number of conditions, most health insurers support what the CMS labeled the alternative model—one that accounts for diagnoses including dementia and ulcers.

But many insurers expressed worry and frustration that the CMS intends to move ahead with its use of encounter data in calculating patients’ risk scores, which help determine the payments health insurers receive from the federal government. Encounter data is information about patients’ medical conditions documented by doctors and hospitals.

The CMS has used encounter data to calculate risk scores since 2016 but wants half the data used to calculate the risk score to come from encounter data in 2020, up from 25% this year.

The rest of the data used to calculate risk scores comes from diagnoses submitted by insurers to CMS through the risk-adjustment processing system, or RAPS.

Insurers have long argued that encounter data is often incomplete and inaccurate, which reduces the risk scores of the patients and thus, Advantage plans’ payments.

“Although CMS has been collecting encounter data since 2012, the agency has to date failed to address recommendations made by the Government Accountability Office in 2014 and 2017 to demonstrate the encounter data are complete, accurate and reliable before being used as the basis for payment,” lobbying group America’s Health Insurance Plans wrote in a comment.

AHIP and others insurers wrote that the CMS is using the transition to encounter data to ultimately reduce funding for the Medicare Advantage program.

“We also have concerns that CMS may be using the EDS transition to reduce MA payments without providing full information about the impact to stakeholders and others,” Cigna Corp. wrote.

AHIP pointed out that President Donald Trump’s 2019 budget estimated that fully phasing in the use of encounter data would reduce Medicare Advantage spending by $11.1 billion over 10 years.

New York-based insurer EmblemHealth, meanwhile, wrote that the emphasis on using encounter data doesn’t jibe with the healthcare system’s shift toward value-based care.

“Both plans and providers should be evaluated on the outcomes we are able to achieve for Medicare beneficiaries,” it wrote. “Encounter data requires plans and providers to focus on procedures and gathering the detail to justify them.”

Still, other commenters said they are supportive of using more encounter data to calculate payments. The Medicare Payment Advisory Commission wrote that encounter data is more reliable that RAPS data as a source for diagnoses. RAPS data relies on Medicare Advantage insurers’ promises that the data are accurate, and results for the few audits of the data show that many diagnoses are not supported by patient medical records, MedPAC wrote.

Moreover, while some insurers argue that submitting the encounter data is difficult, MedPAC noted in its comment that plans have invested in the infrastructure and processes to submit the data and few reported ongoing issues.

Health First, a not-for-profit provider-sponsored health plan in New York with 160,000 Advantage members, wrote that encounter data will not only provide useful information on cost, utilization, risk and quality of care, but will also create “transparency on whether encounters originate from claims or external risk adjustment activities.

Beyond encounter data, many insurers wrote that the CMS’ use of a higher “normalization factor” to calculate patients’ risk scores in 2020 would further reduce plan funding. The normalization factor is meant to align Medicare Advantage risk scores with traditional fee-for-service Medicare rates. The higher the normalization factor, the lower the risk score and payments to the Medicare Advantage plan.

Many plans wrote that the trend toward a higher normalization factor over the past several years is the result of coding changes, and they urged the CMS to reduce the factor.

“If the normalization factor is artificially high and not reflective of the true costs, the impact will ultimately decrease our ability to adequately serve the beneficiaries covered by our programs because plan payment will not be adequately reflective of risk-adjusted costs,” Centene Corp. wrote.


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