The Centers for Medicare and Medicaid Services is developing a new model for how it pays dual-eligible health plans after an analysis showed it was underpaying these plans.
The Oct. 28 letter from Cheri Rice, director of Medicare Plan Payment Group, said CMS is reviewing its risk-adjustment model. Comments will be taken through Nov. 25.
"In recent years, there has been an increased focus among some plans on exclusively serving the dual-eligible population and CMS feels it is an appropriate time to revisit the model," Rice said.
Rice said CMS is focusing on the community segment of the model, for beneficiaries who have been in an institution for fewer than 90 days, as differentiated from beneficiaries residing in long-term care facilities for 90 days or longer.
There are unique cost patterns to both, she said.
Rice admitted in the letter that while CMS does well predicting payment for the institutional segment for dual-eligible beneficiaries, fairly accurately predicts for non-dual eligible beneficiaries and somewhat overpredicts for partial benefit dual-eligible beneficiaries, it somewhat underpredicts for full benefit dual-eligible beneficiaries.
CMS said it was responding to concerns about the accuracy of the risk adjustment model for predicting costs and to concerns by the Medicare Payment Advisory Commission, including whether partial duals and full duals should be treated differently.
"As we stated in our 2016 Rate Announcement, 'we take very seriously the concerns raised by commenters that the model may disproportionately affect specific populations, particularly dual eligibles,'" Rice said. "We will evaluate the impact of the model on these populations."
CMS is developing a model that includes separate community segments for six populations including: full benefit dual aged; full benefit dual disabled; partial benefit dual aged; partial benefit dual disabled; non-dual aged and non-dual disabled.
"We are considering separate model segments for these six subgroups of dual eligibles because our analysis indicates that these subgroups have distinct cost profiles," she said. "We determined that full benefit duals have higher costs than partial benefit duals, and partial benefit duals have higher costs than non-duals."
CMS is calibrating a revised model using 2013-2014 data, she said.
CMS calculates risk scores using health status in a base year to predict costs in the following year. Based on these scores, CMS makes payments to the Medicare Advantage plans.
Plans have long questioned CMS's payment methods for dual-eligible beneficiaries and said its star ratings unfairly penalize plans that serve low-income beneficiaries and those dually eligible for Medicare and Medicaid.
Low star ratings make plans ineligible for bonuses, and puts them at risk of losing their CMS contracts.
CMS will finalize proposed changes to the model for inclusion in payment year 2017, which will be released in February, 2016.
"In the coming months, we will share our analysis with stakeholders and, if appropriate, propose modifications to the model to improve predictive accuracy in a future year's process," Rice said.
Twitter: @SusanJMorse