Comment Letter: Advance Notice of Methodological Changes for Calendar Year 2024 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies

The Centers for Medicare and Medicaid Services (CMS or the Agency) has been at the forefront of improving value in our nation’s health system. The meaningful steps the Agency has taken to accelerate adoption of coordinated, longitudinal models of care, and that support earlier, more accurate diagnosis of health conditions and interventions to prevent further disease progression, is transforming health care. Financial alignment in CMS payment models is key to this impact. Along with the Shared Savings Program (SSP) in Traditional Medicare, Medicare Advantage (MA) is central to Medicare’s ambitious goal of supporting all Medicare beneficiaries in accountable, longitudinal coordinated care by 2030. In turn, risk adjustment is a critical design element in all these person-focused payment arrangements, so that Medicare payments to providers and plans create aligned incentives and supports for early diagnosis and effective treatment for beneficiaries at higher risk. This includes attention to beneficiaries less likely to have adequate access to care due to social barriers associated with economic status, race, and ethnicity. Medicare’s risk adjustment policies not only have increasingly large consequences for Medicare spending. They also are fundamental to enabling the transition to more person-centered health care, especially for beneficiaries with serious chronic conditions or risk factors and those who have historically been underserved under fee-for-service – particularly in terms of early diagnosis and treatment to prevent further disease complications.

Keeping in mind the central importance of risk adjustment both for Medicare spending and for CMS care transformation goals, we appreciate CMS’ attention to its risk adjustment principles in its proposed reforms in Medicare Advantage risk adjustment. Principle 10, which states that “discretionary” diagnostic categories that are subject to discretionary coding variation or that are not clinically important or associated with future cost variation should be excluded. However, without further analysis, we are concerned that CMS’ proposed risk adjustment reforms may not be fully consistent with other risk adjustment principles. This includes principles 1 and 2 (clinically meaningful and predicting expenditures), and principle 5 (encouraging specific coding).
No policy reforms are perfect. A reform that substantially addresses issues of aggressive coding by plans may also have collateral effects on reducing payments and thus incentives and supports for plans to diagnose patients early and treat them effectively. While we support the Agency’s goal in correcting risk adjustment in a manner that addresses increased and discretionary spending that is not clinically or empirically valid, we also believe there is some evidence that the proposed reforms will have consequences for beneficiaries facing real health risks, particularly for conditions like diabetes and depression that are common and often undertreated in fee-for-service medicine, particularly among lower-income and underserved beneficiaries.

Moreover, while the proposed reforms have short-term fiscal benefits, they are likely to work against CMS’ critical long-term goal of aligning risk adjustment methodologies across its accountable care programs and with the increasingly sophisticated and reliable electronic clinical data that are used to support care management and coordination for effective, whole-person care. Several organizations, including Duke-Margolis, National Quality Forum, and CareJourney, have outlined a longer term path to accomplish these risk adjustment reforms. The current proposed reforms create an opportunity to begin this risk adjustment transition, which would have a much more fundamental impact on eliminating current incentives for many plans to invest in infrastructure for coding rather than in infrastructure for true clinical care improvement in appropriate diagnosis and treatment.
Our comments and recommendations for risk adjustment are three-fold:

• The risk adjustment reforms as proposed have significant impact on lower-income beneficiaries and racial and ethnic minorities, who are more likely to have the conditions and complications involved in the reforms, and on the plans who disproportionately serve such beneficiaries;
• CMS should conduct further beneficiary impact analyses to better understand these impacts and potentially support alternative policies to mitigate them, and should incorporate such analyses in proposed risk adjustment reforms in future advance notices;
• CMS should use this opportunity to seek public input and begin the transition to a more sustainable risk adjustment strategy – one that, in contrast to current approaches, diminishes incentives for investment in increasing administrative risk adjustment scores, and increases investments in electronic data systems to support early diagnosis and needed clinical interventions.
• In addition to these important efforts on improving risk adjustment, we also appreciate CMS’ efforts in this AN and in a recent New England Journal of Medicine article to allow stakeholders to provide feedback on efforts to align measures across its programs. We believe this a critical step to increasing participation in value-based programs and look forward to providing feedback on these efforts in the future.

Read the full comment letter here.