Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

AMGA Supports 15% Limit for Medicare Advantage Encounter Data

CMS finalized a rule to lower the percentage of encounter data used to determine 2018 Medicare Advantage risk scores, earning approval from AMGA.

AMGA commended CMS for only using 15 percent encounter data to determine Medicare Advantage risk scores in 2018

Source: Thinkstock

- AMGA recently applauded CMS for further reducing the percentage of encounter data to be used to determine Medicare Advantage enrollee risk scores from 25 percent in the proposed rule to 15 percent in the final 2018 performance year update.

“It is important that any risk adjustment in MA [Medicare Advantage] is fair and accurate,” stated Chet Speed, AMGA Vice President of Public Policy. “With the flaws in the current Encounter Data System, CMS made the right choice in dropping the weight to 15 percent.”

CMS announced earlier this week that it dropped the encounter data weight after reviewing stakeholder comments on the proposed encounter data transition rule. Under the proposal, the federal agency planned to determine 2018 Medicare Advantage enrollee risk scores using 75 percent of the legacy Risk Adjustment Processing System’s (RAPS) information and 25 percent encounter data.

The proposed mix of provider data represented a stall in increasing the encounter data percentage. CMS proposed to keep the 2017 blend, rather implement a planned half-and-half combination of RAPS and encounter data.

Despite the proposed transition stall, CMS chose to decelerate the encounter data transition in 2018.

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Many healthcare stakeholders, like the AMGA, have warned against increasing the encounter data weight for Medicare Advantage risk adjustment and claims reimbursement because CMS was not prepared to handle encounter data validation.

In a March 2017 letter to CMS, AMGA cited a recent Government Accountability Office (GAO) report that found CMS “has made limited progress to validate the completeness and accuracy of the Medicare Advantage encounter data.”

GAO reported in January 2017 that CMS had six encounter data validation steps to complete, but it had only finished two. The federal agency developed processes to review encounter data collection and submission capabilities for Medicare Advantage organizations as well as to conduct automated verifications on submitted encounter data for accuracy and completeness.

However, CMS is only half-way done with creating encounter data collection and submission requirements, performing statistical analyses for data completeness and accuracy, and summarizing findings on encounter data use to develop recommendations for providers and Medicare Advantage organizations.

The federal watchdog also noted that the federal agency has yet to address medical record review procedures to verify encounter data.

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Based on GAO findings, AMGA stated that CMS could not ensure proper claims reimbursement amounts for Medicare Advantage plans based on encounter data risk adjustments.

Medicare Advantage claims reimbursement amounts would also decrease under greater encounter data weight, the AMGA argued. According to a cited February 2017 Avalere report, Medicare Advantage risk scores based on encounter data in 2015 and 2016 were respectively 26 percent and 16 percent lower than RAPS risk scores.

With lower enrollee risk scores, providers could face decreased claims reimbursement rates. Avalere estimated that a full encounter data transition in 2016 would have resulted in an average 16.1 percent reduction in per-member-per-month payments rates, equating to a $260.4 million decrease.

The American Hospital Association similarly challenged the encounter data transition in March 2017, arguing that CMS should not rely on encounter data for Medicare Advantage risk adjustments.

“We remain concerned that the use of encounter data may result in inaccurate risk scores,” stated Thomas P. Nickels, AHA Executive Vice President. “Specifically, provider data collection efforts were not designed to support MA risk-adjustment calculations.”

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Nickels elaborated that some provider-focused medical billing systems limit coding to only four diagnoses, whereas other systems only code some diagnoses, but not all.

“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 risk adjustment, which may inadvertently reduce plan risk scores,” he wrote.

In addition to encounter data concerns, AMGA also expressed worries with other finalized 2018 Medicare Advantage updates. CMS also announced in the recent ruling that it will implement a minimum coding intensity adjustment per law. The adjustment will be at negative 0.25 percent.

“This is a problem that Congress can address with help from the stakeholder community,” AMGA’s Speed said.  “This year-to-year variation isn’t helpful, and a more equitable system should be explored.”

The recent CMS rule also maintained that Medicare Advantage plans in some counties are not eligible for bonus payments under the Medicare Star Rating System even if they demonstrate quality care. The federal agency intends to address the benchmark cap issue but did not finalize changes to the rating system.

“Quality should be recognized, and a technical quirk in the law shouldn’t keep MA plans from forgoing bonuses they otherwise earned,” Speed stated.

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