Medicare Advantage plans to average 3.4% increase in 2019, CMS updates HCC models

Medicare Advantage plan payment rates will increase by an average of 3.4% in 2019 due to higher projected per-capita cost growth for Medicare fee-for-service. The final pay bump is significantly higher than the 1.84% increase proposed in the 2019 advance notice.

The announcement also describes changes to CMS Hierarchical Condition Categories (HCC). CMS-HCCs are a risk-adjustment methodology which groups ICD-10-CM codes into disease categories that are related clinically and have similar cost implications. The 2019 model will add mental health, substance use disorder, and chronic kidney disease conditions.

The Payment Condition Count model, a risk adjustment model proposed in the 2019 advance notice which would have adjusted for the number of conditions a beneficiary has, was not approved. CMS received a number of comments that raised concerns about how the model would be implemented and the level of complexity of the model. The agency noted that although the Payment Condition Count model was not approved for 2019, it is required by the 21st Century Cures Act to implement a model that takes into account the number of conditions a beneficiary has. CMS will begin implementing the Payment Condition Count model in 2020. Stakeholders are advised to use the additional time to study the model and its implications.

Another update is that encounter data will be given more weight in risk score calculations for the 2019 revenue rates. CMS will base Medicare Advantage risk scores on 75% fee-for-service data and 25% encounter data in 2019. In contrast, 2018 risk scores are calculated on 85% fee-for-service data and 15% encounter data.