Tag Archives: Cures Act

CMS proposed changes to the Medicare Advantage risk adjustment model

Late last month, the Centers for Medicare and Medicaid Services (CMS) released a 60-day “Advance Notice of Methodological Changes for Calendar Year (CY) 2019 for the Medicare Advantage (MA) CMS-HCC Risk Adjustment Model,” which describes proposed changes to the 2019 Part C risk adjustment model. CMS is seeking comments on the proposed changes, which are due by March 2, 2018.

The 21st Century Cures Act (Cures Act) requires CMS to make improvements to the CMS-HCC risk adjustment model for 2019 and subsequent years. The Cures Act directs CMS to:

• Evaluate the impact of including additional diagnoses for mental health and substance abuse disorders, as well as chronic kidney disease
• Make adjustments to the risk payments to account for the number of diseases or conditions of a beneficiary
• Phase-in the above changes to the risk adjustment payment over a three-year period, beginning with 2019 and fully implemented for 2022 and subsequent years

Based on the evaluation of the additional diagnosis codes, CMS is proposing to add to the model three new Hierarchical Condition Categories (HCCs) related to mental health and substance abuse, and one new HCC related to chronic kidney disease. In addition, CMS is proposing to include additional diagnosis codes for an existing substance abuse HCC.

In order to account for the number of conditions for each beneficiary, CMS has proposed to include new HCC count variables in the proposed risk adjustment model. As part of the development of the new count variables, CMS compared the predictive power of a model that counts only the conditions that result in a payment to MA plans in the CMS-HCC model (“Payment Condition Count” model) to a model that counts all conditions, regardless of whether they are used for risk payment (“All Condition Count” model). CMS concluded that the “Payment Condition Count” model increased the predictive accuracy of the risk adjustment model, while the “All Condition Count” model decreased the predictive accuracy. Both models are included in the Advance Notice for comment. CMS also noted that, in order for the overall fee-for-service (FFS) risk score to remain revenue-neutral, adding the new count variables would result in a decrease to the coefficients for many HCCs.

For 2019, CMS is proposing a model phase-in schedule that blends 25% of the risk score calculated using the proposed “Payment Condition Count” model and 75% of the risk score calculated using the existing 2017 CMS-HCC model. The weights of the “Payment Condition Count” model are proposed to increase to 50% in 2020, 75% in 2021 and 100% in 2022. However, CMS comments that because the three-year phase-in is required over a four-year period (2019 to 2022), it may be possible to use 2019 for comments and implement model changes in 2020.

In addition to the requirements directed by the Cures Act, CMS is proposing to recalibrate the 2019 CMS-HCC model using more recent data. The Advance Notice also proposes an increase to the weight given to the Encounter Data System (EDS) risk scores, from 15% in 2018 to 25% in 2019; these weights are used to blend the EDS and Risk Adjustment Processing System (RAPS) risk scores during the transition to 100% EDS. For 2019, CMS is proposing to combine the two phase-ins (increasing the weight for EDS and adding the proposed new model) by using the “Payment Condition Count” model exclusively for EDS risk scores and the existing 2017 CMS-HCC model exclusively for RAPS risk scores. Hence, CMS will only calculate two risk scores, one using the proposed model and EDS data at a 25% weight, and the second using the existing model and RAPS data at a 75% weight. CMS also plans to include RAPS inpatient submissions as an additional data source for the EDS risk scores, noting that inpatient submissions for EDS are low compared to RAPS. No explanation is offered for why inpatient submissions are low under the EDS methodology.

In the CMS fact sheet, it is stated that the new model will lead to an estimated 1.1% risk score increase across all MA plans, which equates to a 0.3% risk score increase after recognizing the 25% phase-in. However, results will vary for each plan. We expect to be able to evaluate the impact using actual data for individual plans once CMS releases the updated mapping of diagnoses to HCCs later this month.

The full text of the Advance Notice can be found here. The CMS Advance Notice Fact Sheet can be found here.

How the Cures Act affects parity of behavioral health services

perlman_j_danielPresident Obama signed the 21st Century Cures Act (Cures Act) into law on December 13. This lengthy bill has gotten attention mostly for its funding of cancer research, reforms to the U.S. Food and Drug Administration (FDA) drug approval process, funding for opioid addiction treatment, and policies to address suicide prevention and serious mental illnesses. Additionally, there are important provisions related to enforcement of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

MHPAEA requires parity of benefits for mental health/substance use (behavioral) conditions and medical/surgical (physical) conditions in health plans that cover both physical and behavioral benefits. It applies to self-funded employer-based plans, and also to insured plans in the large group, small group, and individual markets. MHPAEA applies to quantitative items, such as financial requirements (copays, deductibles, etc.) and some types of treatment limitations (such as annual visit limits). It also applies to nonquantitative items, such as medical management practices and drug formulary design.

The quantitative items have historically received the most attention from health plans and employer plan sponsors, perhaps because there is a clear mathematical test in MHPAEA’s implementing regulations for how to comply. We have seen less attention paid to MHPAEA’s requirements for nonquantitative treatment limitations (NQTLs), where the regulations are less specific. However, NQTLs are just as important in the regulations, and in fact they have been the driving factor behind a number of publicly disclosed enforcement actions under MHPAEA or similar state parity laws.

There are two repeatedly occurring themes throughout the parity-related provisions of the Cures Act. First, the Cures Act seeks to strengthen enforcement of MHPAEA generally. Second, it requires the implementing federal departments (Treasury, Health and Human Services, and Labor) to provide further clarification regarding the NQTL rules under MHPAEA.

Here are key provisions of the Cures Act as related to behavioral health parity:

• The Cures Act requires the departments responsible for enforcement to issue a compliance program guidance document within 12 months. This document should provide concrete examples of what does and does not comply with MHPAEA, including actual examples of findings from investigations. For NQTLs, the examples must provide clear detail to explain the finding of compliance or noncompliance. This document is to be updated every two years with further examples of compliance and noncompliance.

• The law requires the departments to prepare a similar guidance document for health insurers and plan sponsors. This also needs to provide examples of how to comply with the disclosure requirements of MHPAEA. The Cures Act requires the guidance document to provide examples of disclosing information related to what NQTLs there are in a plan, what factors are used to apply an NQTL, and how the plan ensures that they are applied at parity.

• The law enumerates several even more specific types of information for which the departments must provide guidance related to NQTL compliance. For example, the final rules implementing MHPAEA state that in order for an NQTL to be compliant when applied to behavioral services, there must be parity between medical/surgical and behavioral care in the “processes, strategies, evidentiary standards, or other factors used in applying” the NQTL. The Cures Act seeks more clarity and examples regarding the meaning of those terms.

• If a plan issuer or sponsor is found to have violated MHPAEA at least five times, this will trigger an audit by the departments of plan documents in order to help improve compliance. It remains to be seen how “five times” will be defined and interpreted.

• The U.S. Department of Health and Human Services (HHS) is required to produce an “action plan” to improve federal and state coordination of enforcement of MHPAEA.

• For each of the next five years, the departments must submit a report to Congress summarizing the results of all closed federal investigations completed in the past year regarding serious violations of MHPAEA. This report must have detail on how many investigations there were, what benefit classes were examined, what the investigations were about, and how the final decisions were reached.

• The Government Accountability Office (GAO) must prepare a report detailing how well insurers and plan sponsors are complying with MHPAEA. The Cures Act specifically lists NQTL compliance as something to be included in this report, along with a discussion of how well MHPAEA is being enforced.

• There is a brief clarification in the Cures Act that benefits for eating disorders (including residential treatment for eating disorders), if provided, must be provided at parity under MHPAEA.

In short, the Cures Act does not introduce new parity requirements per se, but rather seeks greater clarity and enforcement of existing rules (particularly with respect to NQTLs).