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Blog   |   5.11.17

4 Things Risk Adjustment Leaders Need to Know About the 2018 CMS Final Call Letter

Recently, the Centers for Medicare & Medicaid Services (CMS) released its Final Medicare Advantage (MA) Part C and D Call Notice for 2018. We combed through the  notice, and here is what we think risk adjustment professionals need to know.

1. What is the final call notice and why is it important to risk adjustment?

The notice establishes important reimbursement guidelines for the following payment year (so this year’s notice applies to 2017 DOS and 2018 payment). It announces four pieces of information in particular that are important to risk adjustment professionals:

  • the fee-for-service (FFS) normalization factor
  • the coding intensity adjustment
  • the RAPS/EDPS blend
  • the CMS HCC model

The final notice arrives two months after a draft is published, and five months before Medicare Advantage open enrollment (see below).

Payment rates rise or fall annually because CMS bases the MA payment model on the FFS model, and they adjust annually to ensure that they are doling out equivalent payments across the two programs.

2. What changes were announced in the 2018 call notice?

The MA coding intensity adjustment increased from 5.66% to 5.91%, the FFS normalization rate increased from .998 to 1.01, and the RAPS/EDPS blend moved from 75/25 to 85/15. The CMS HCC model did not change.

From 2014-2018, these four factors have shifted constantly, deeply affecting risk adjustment and the Medicare Advantage industry. As seen in the graph below, this year’s call notice adjustments, except for the RAPS/EDS blend, are not a notable break from previous ones.

*These factors are for MA plans only. PACE, ESRD functioning graft model and ESRD dialysis model as well as RxHCC normalization factors are different.

3. Are there any changes to the HCC model?

No, last year’s model (which introduced significant changes) is still being used.

4. Are there any changes to RAPS and EDPS submissions rules?

CMS scaled back its requirements for EDPS (Encounter Data Processing System) submission, and will now allow risk adjustment data to be submitted 85% in RAPS form and 15% in EDPS form. If they went along with their historic plan, CMS would have called for 50% of risk adjustment data to be submitted in EDPS form and 50% RAPS. In fact, this year’s split is more generous in fact than last year’s 75% RAPS/ 25% EDPS split.

This is a surprising move because CMS has always moved to increase the percentage of EDPS data required in submission, not decrease it. Still, there are no signs that this means CMS is giving up on transitioning to full EDPS eventually; this appears to be a temporary slowdown.

You can read the full announcement from CMS here, and review the factsheet here. 

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