AMGA Backs CMS Proposal to Limit 2018 Medicare Encounter Data

March 07, 2017 - The American Medical Group Association (AMGA) recently supported a CMS proposal to delay the increased use of encounter data to determine Medicare Advantage plan risk scores and claims reimbursement amounts.

In a recent proposed rule, CMS stated that it will keep the 2017 blend of 25 percent encounter data and 75 percent Risk Adjustment Processing System data, rather than increasing encounter data’s weight to 50 percent as previously proposed.

“This delay is a welcome development,” stated Donald W. Fisher, PhD, CAE, AMGA President and CEO. “AMGA and the GAO [Government Accountability Office] have pointed out concerns about the accuracy of Medicare Advantage encounter data. It’s encouraging that CMS is acting on our recommendations.”

To determine risk payment scores for Medicare Advantage plans, CMS uses diagnoses submitted by Medicare fee-for-service providers and Medicare Advantage organizations. In the past, the federal agency relied solely on the Risk Adjustment Processing System (RAPS). Through RAPS, providers and Medicare Advantage organizations gathered and filtered through own diagnosis codes and sent them to CMS for risk score calculations.

Providers and Medicare Advantage organizations with higher risk scores receive a greater base rate, which results in a larger Medicare reimbursement amount.

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In a 2008 final ruling, CMS announced its intention to use more encounter data to determine Medicare Advantage risk scores. Encounter data provides more detailed information on diagnoses and treatments for all healthcare services and items furnished to a beneficiary.

The federal agency developed the Encounter Data System and implemented encounter data use for risk scoring in 2015. At first, CMS used a blend of 90 percent RAPS and 10 percent Encounter Data System information to calculate risk scores.

Starting in 2017, the federal agency upped the percent weight of encounter data to 25 percent and announced its intention to further increase the weight to 50 percent by 2018.

However, many healthcare stakeholders voiced concerns that accelerating the transition to encounter data to determine claims reimbursement amounts was premature. Under the Encounter Data System, providers and Medicare Advantage organizations send unfiltered data to CMS. The federal agency then filters the encounter data and gathers valid diagnosis codes.

While providers and Medicare Advantage organizations face less reporting burdens, they now have the task of verifying that their encounter data is accurate and complete. They also must ensure that they are appropriately coding their records or else CMS may not pick up on the correct diagnosis code.

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Some stakeholders argued that providers and Medicare Advantage organizations may need more time to implement encounter data strategies.

In addition, other stakeholders claimed that CMS is not ready to manage more encounter data, which could lead to inaccurate claims reimbursements. The Government Accountability Office (GAO) found in January 2017 that CMS “has made limited progress to validate the completeness and accuracy of the Medicare Advantage encounter data.”

The federal agency was charged with completing the following encounter data validation steps:

• Setting requirements for collecting and submitting encounter data

• Reviewing provider and Medicare Advantage organization capabilities to collect and submit encounter data

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• Conducting automated verifications on submitted encounter data for accuracy and completeness

• Performing statistical analyses for accuracy and completeness

• Checking medical records to verify encounter data

• Summarizing findings on encounter data accuracy and completeness to give recommendations to providers and Medicare Advantage organizations

GAO revealed that CMS only completed two validation steps pertaining to reviewing provider capabilities and performing automated checked on submitted encounter data by October 2016. The federal agency was also only half-way done with establishing encounter data submission and collection requirements as well as conducting data analyses.

In addition, CMS had yet to address medical record reviews, the GAO added.

Based on stakeholder and GAO concerns, the federal agency opted to decelerate the encounter data transition.

The AMGA commended CMS for slowing encounter data weight increases, but they were not the only industry group to speak out. The American Hospital Association (AHA) also agreed with the federal agency’s decision in the proposal rule.

“We agree with CMS’s proposal not to move forward with plans to increase the proportion of the risk adjustment scores that are based on encounter data,” stated Thomas P. Nickels, AHA Executive Vice President. “However, we have ongoing concerns both about the use of encounter data for purposes of risk adjustment and the continued calculation of benchmark caps after inclusion of the quality bonus payments.”

The AHA claimed that provider data collection strategies are not equipped to handle Medicare Advantage risk-adjustment calculations. For example, some provider billing systems limit coding to just four diagnoses and other systems only allow providers to choose from a limited diagnosis list.

“While the coding done by providers may be sufficient for treatment and their own billing purposes, it could lead to under-coding for purposes of MA [Medicare Advantage] risk adjustment, which may inadvertently reduce plan risk scores,” the organization continued.

In addition to provider capability concerns, the AHA also questioned the federal agency’s readiness to handle more Medicare encounter data and its interpretation of a benchmarking statute, which stops CMS from paying full bonus payments.

CMS plans to review all comments, including those from the AMGA and AHA, and release a final ruling by April 3.