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New Report Estimates Impact Of The 2020 Medicare Advantage Advance Notice

posted by AHIP

on March 1, 2019

On December 20, 2018 and January 30, 2019, the Centers for Medicare & Medicaid Services (CMS) released the payment year (PY) 2020 Advance Notice Parts 1 and 2 (Notice), respectively. Part 2 also included the Call Letter.

America’s Health Insurance Plans (AHIP) has retained Wakely Consulting Group, LLC (Wakely) to provide a financial impact summary report of the information presented in the Notice, as well as an analysis of the impact of two, proposed Encounter Data Submission (EDS) risk adjustment models described in Part 1 of the Notice.

The CY2020 fee-for-service (FFS) growth rate, which is now the major driver of Part C benchmark rates, is 4.52%. There are several other components of the benchmark determination that affect the expected benchmarks and payment for 2020 as compared with 2019.

These components can be broken down into two main parts:

  • Change in Part C benchmark payment rates, which is comprised of the growth rate, changes in applicable percentages, changes in average star rating (which impacts the quality bonus payment), and the impact of the benchmark cap required by the Affordable Care Act. Wakely estimates the combined impact of these items is 4.55% for 2020 as compared with 2019.
  • Impact of changes to the calculation in MA risk scores for payment year 2020. Wakely estimates the combined impact of these items is -2.74% for 2020 as compared with 2019. This impact is comprised of changes in FFS normalization, the risk model revision, and the changing blend for RAPS and EDS in 2020. Our estimates rely on independent analysis of FFS data and information provided in the CMS fact sheet.

More details on the analyses underlying these estimates are described in this report.