Looking Ahead to 2022: Payment Integrity, Claims Accuracy, and Premium Protection Will Be More Important Than Ever for MA and Part D Plans

February 12, 2021

In January, CMS published its Calendar Year 2022 Medicare Advantage and Part D Rate Announcement which finalized payment methodologies for next year. Changes outlined in this announcement suggest that payment integrity, claims accuracy and premium protection will be more important than ever for health plans. Here’s why…

  1. CMS will be using the CMC-HCC model for Part C risk adjustment. In 2022, CMS will finish phasing in the CMC-HCC model. This risk adjustment model incorporates variables that count the number of conditions that a beneficiary has among those in the risk adjustment model and it also considers additional conditions for mental health, substance use disorder and chronic kidney disease.

Given this new approach, it will be critical for health plans to comprehensively capture patient conditions in claims. This includes both physical and behavioral health issues, as well as acute and chronic conditions.

  1. CMS will use new sources of diagnoses for Part C risk adjustment. Historically, CMS has calculated risk scores for payment by reviewing diagnoses that Medicare Advantage plans submit into the CMS Risk Adjustment Processing System (RAPS) and blending that information with diagnoses from encounter data. In 2021, encounter-data based risk scores represent 75 percent of a patient’s overall risk score and RAPS-based risk scores represent the remaining 25 percent of a patient’s overall risk score. Looking ahead to 2022, a patient’s Part C risk score used for payment will be based entirely on data from either Medicare Advantage data or fee-for-service claims as the source of diagnoses. CMS will no longer supplement diagnoses from encounter data with information from RAPS.

Since CMS payments in 2022 will depend entirely on diagnoses derived from encounter data, plans must focus more intensively on the accuracy of claims. HMS’s clinical claim review services, for example, can identify coding, location, level of service and reimbursement errors by comparing claims against medical records. Algorithms driven by artificial intelligence and a team of clinical experts target the claims that are most likely to contain errors.

  1. Plans should expect increased revenue in 2022. CMS has estimated that its new methodologies will increase health plan revenue on average by 4.08%. This represents a significant boost for both Medicare Advantage and Part D plans, even before taking into account increased revenue from membership growth. To preserve this top line growth, health plans will be turning an eye to premium protection measures.

While Medicare Advantage revenue will be increasing, the ability to impact revenue through risk adjustment (RAF) submissions will be more limited. As a result, ensuring accurate payments from CMS is more important than ever. Plans should ensure that payments are not improperly reduced through faulty Medicare Secondary Payer (MSP) designations.

HMS has found that more than 35% of MSP designations are incorrect and each one costs a plan $7,200 per year. Plans should also ensure that individuals with End Stage Renal Disease (ESRD) are appropriately categorized in CMS data. Payments for ESRD members are 10 times the average and we often find inaccuracies in CMS data. Now that individuals with ESRD can enroll in Medicare Advantage, we expect to see even more impact from improper ESRD designation errors. The good news is that plans can remedy MSP and ESRD errors retroactively – for up to seven years. That can represent a significant amount of money for plans.

HMS’s Medicare Advantage premium protection service validates monthly Other Health Coverage Information Files from CMS using advanced COB technology. Premium protection ensures that plans recognize all the revenue they deserve.

It may feel like 2022 is far away, but it’s not too early to start thinking about the impact of the new CMS rate announcement on your business. Keep in mind that Medicare Advantage and Part D plans must finalize their 2022 bids for CMS by June 7, 2021. Leading plans are already developing forward-looking strategies for payment integrity, claims accuracy, and premium protection that will enable them to make the most out of these new CMS rules. If you’d like to learn more about how HMS can help your organization navigate these changes, feel free to contact us.

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