The Center for Medicare and Medicaid Services issued an advanced notice on February 3, 2022,
regarding updates in payment policies for Medicare Part D and Medicare Advantage organizations. The
news focuses on changes in the risk-adjustment model and revenue growth changes for the parties
involved. The notice is open for public comments till March 3, 2022. After analyzing the received
comments and comparing them with the health equity goals of the CMS, the organization will release
the final rule on April 4, 2022.
The usual workflows of RCM medical billing are changing with the evolving policies focused on
greater access to healthcare and bridging the health equity gap in the nation. The AHIP (America’s
Health Insurance Plans) has shown its support for the changes proposed by the CMS. It means that
there might be more remarkable changes in premium cost and increased covered services. This, coupled
with changes in patient financial services, RCM medical billing ecosystem could undergo some
positive changes. Stay abreast of the latest evolutions in the American healthcare industry to
ensure better services for your patients. Here is what you need to know about Medicare Part D and
Medicare Advantage payment changes.
Goal of Payment Changes
The CMS is moving towards improving healthcare accessibility and reducing the gap in health equity
to ensure improved services for patients from different walks of life with diverse economic
backgrounds. CMS defines equity as “the consistent and systematic fair, just, and impartial
treatment of all individuals, including individuals who belong to underserved communities that have
been denied such treatment.” The advanced notice published by the CMS says that Medicare Advantage
organizations and Medicare Part D play key roles in achieving the above goal. The execution covers
the following points:
Medicare wants a more data-driven approach to cover the needs of the patient. Organizations need to
collect and refine data on the patient’s ethnicity, race, and social determinants of health.
The CMS also targets managing healthcare disparity with a more methodological approach. It also
strengthens the need for data scrubbing and analysis for a better outcome.
The CMS wants to introduce changes to the program that will significantly improve the program’s
efficiency. The focus should be on spending the allocated sums effectively to reach the patients in
need.
Coding Pattern Adjustment
Coding intensity adjustment is a crucial decision taken by the HHS, CMS, and the White House to
maintain the parity between diagnostic coding patterns of the Medicare Advantage plans and the
traditional Medicare plans. It is vital to accurately represent the population cost that the
Medicare Advantage organizations and contracted providers code during services. The adjustment is
made as such to bring down the risk score of the targeted population.
The CMS, in its advanced notice, mentions that a coding adjustment of 5.9% has been in place since
2019 and will continue to be the factor for the year 2023 in the case of Medicare Advantage
organizations. In the case of Medicare Part D, CMS is likely to change the current RxHCC risk
adjustment model to a more updated version for better accuracy and representation. It will take into
account the updated ICD-10 codes and do away with the ICD-9 codes.
Expected Payment Changes
The CMS has published a guideline on how the proposed policies are going to change the payments in
the year 2023. The projected change in revenue growth with the new policies in place is 7.98%,
according to the notice. The thorough changes due to each revision are:
Effective growth rate: 4.75%
Change in star ratings: 0.54%
Normalization: -0.81%
Medicare Advantage Risk Score Trend: 3.50%
The star ratings for Medicare Part C and Part D are also going to have a significant impact on the
healthcare map in the future years. The CMS has proposed to develop a Health Equity Index keeping in
mind the star ratings. It will take all the societal determining factors in a single score and
summarize it further for the final Star rating for the organizations. The CMS is also hopeful that
the driving force of the Medicare Advantage organizations is going to enhance the value-based models
in healthcare.
Change in Normalization Factor
The normalization factor is a crucial score to consider to keep the FFS risk score at a consistent
rate over a period of time. Generally, the CMS uses the FFS scores from the most current years to
calculate the normalization factor. However, for the year 2023, CMS proposes that the normalization
factor be extracted, keeping five historical years in mind. The advanced notice points out that
taking the usual methodology into consideration with the ongoing pandemic in 2020 had resulted in an
erroneous risk score for 2021. Updating the years and taking 2021 into consideration for 2023 risk
score calculation will lead to severe underrepresentation of the risk.
Why are these changes relevant to RCM medical billing?
Medicare collections form a significant part of the hospital revenue. With changes in Medicare
payment plans, the premium burden of the patients is also bound to change, which will be a
significant factor in the collections of RCM medical billing.
Preparing a road map for
the upcoming year to make the most out of the changed Medicare plans is of utmost importance for a
healthy revenue cycle. The risk score analysis methodologies are also evolving, giving scope for
change in the revenue cycle management operations.
With a value-based model in mind, the CMS is aiming to shorten the gap in healthcare access in the
USA. Therefore improving the patient experience is vital for the growth of healthcare organizations.
Make sure the RCM medical billing team collects and analyzes complete and accurate data to monitor
the healthcare plans of the patients. The changed strategy of the new plans could have a significant
effect on the workflow pattern of the RCM teams. Keep your staff updated on the new avenues and how
they will affect the revenue cycle management of the organization.
We hope this article helped you understand how the recent changes to Medicare Advantage and Medicare
Part D will affect RCM medical billing. Please connect with us in the comment section below in case
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