Risk Adjustment in Medicare – How It could change for the better for Duals and why that matters

January 4, 2016 § Leave a comment

By Melissa Shannon and Stephanie Giannetto, Commonwealth Care Alliance

First – What is risk adjustment in Medicare?  Risk adjustment describes how Medicare adjusts payments to plans for each individual it serves based on what diseases each person has.  As you can imagine, what counts and what doesn’t, and by how much, gets quite complicated and makes a big difference in payment.  Medicare uses the same rules for all Medicare Advantage Plans, including our SCO, and for duals demonstrations – like our One Care Plan.

CMS ProposalAnd that, historically, has been a problem. We have long believed, and industry-funded research has suggested, that Medicare underpays plans for members that are Medicaid eligible: the poorest Medicare beneficiaries.  This fall, the Centers for Medicare and Medicaid Services (CMS) – having heard our deep concern – did its own research and found that we were right.  They found that their risk adjustment model is under predicting costs for seniors who are eligible for full Medicaid benefits by close to 10% and for disabled Medicaid beneficiaries under age 65 by approximately 5%, while overpaying for other Medicare members. This is really big news!  We are grateful to CMS, not only because of what this could mean for the sustainability of our plans, but because this and other recent actions by CMS demonstrate a real evolution in their understanding of the true needs of the poorest Medicare beneficiaries.

What’s even better is that CMS proposes to fix these inequities as soon as possible. Their proposal is really quite simple. They propose to split Medicare beneficiaries into six groups based on what level of Medicaid they qualify for (full, partial, or none) and whether they are disabled or elder, so that each group is getting more accurate payment.

CMS has announced that it will make this change for the duals demonstrations for 2016, which should do a world of good in securing the sustainability of the demonstrations, like One Care, around the country.

Unfortunately, because Senior Care Options (SCO) operates under Medicare Advantage, “as soon as possible” for our SCO program is not until the beginning of 2017. And, there are some steps to get through before this proposal can become the plan in Medicare Advantage.  There are some, big national plans serving higher-income Medicare beneficiaries that stand to lose under this proposal who are fighting it.  And, it is likely that CMS will not continue the change in the duals demonstrations beyond 2016 if it does not become the policy for Medicare Advantage in 2017.

So, you can be sure that we are working with Congress and others to urge CMS to follow through with their common sense proposal.  Our friends at Disability Advocates Advancing their Health Care Rights (DAAHR), Community Catalyst, Health Care For All, the SNP Alliance, the Association for Community Affiliated Plans (ACAP), and others are all doing the same.  And, it’s working: key Republican and Democratic legislators have urged CMS to go through with it. This is a rare opportunity to help government to do the right thing for the country’s highest need Medicare enrollees and we are proud to be a part of it.



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