APG Welcomes CMS’s Plans to Phase In Medicare Advantage Risk Adjustment Model Changes

March 31, 2023

Washington, DC – America’s Physician Groups (APG) today expressed satisfaction that the Centers for Medicare & Medicaid Services (CMS) has elected to phase in the implementation of proposed changes to the Medicare Advantage (MA) risk adjustment model – a decision that will allow CMS to gather more input from stakeholders about the expected impact on disadvantaged MA enrollees. APG looks forward to further analyzing and understanding the real-world impact of the scheduled phase-in of the new risk-scoring approach, and the fact that the new model will take full effect in 2026.

“We are gratified that CMS and the Biden Administration listened to the collective voice of health care provider groups that asked for either a one-year delay or phased-in adoption of the drastically different risk adjustment model for MA,” said Susan Dentzer, APG President and CEO. “Multiple studies pointed to the damaging impact of the proposed changes on low-income, less educated, chronically ill MA enrollees likely to be dually eligible for Medicare and Medicaid, and also to be Black or LatinX. Proceeding rapidly with these changes without further analysis and stakeholder input would have flown in the face of the administration’s commitment to greater health equity. We are glad that CMS and the administration mostly listened.”

Dentzer added that the decision to phase in the risk adjustment model changes should also allow opportunities for CMS to share more detailed information about the methodology underlying its proposed diagnostic coding changes; potentially make revisions to lessen the adverse impact on the worst-affected populations; and allow MA plans and the physicians who care for patients to seek ways to mitigate the harmful effects.

CMS’s proposed risk adjustment overhaul included removing more than 2,000 diagnostic codes that the agency said were reported more frequently in MA than for in traditional fee-for-service Medicare. CMS assumed that most of the resulting coding activity was inappropriate, even though there are few incentives for diagnostic coding to occur in the traditional Medicare program, and thus this portion of Medicare is considered “under-coded.” By contrast, APG and others have argued, the coding in MA can reflect real illnesses that affect Medicare beneficiaries. Many of the diagnostic codes CMS proposed to eliminate or downgrade were for common chronic conditions, such as major depressive disorder, diabetes, vascular disease, rheumatoid arthritis, and inflammatory connective tissue disorders such as lupus. APG argued that altering these codes would reduce the resources that risk-adjusted payments provide to care for many beneficiaries, particularly the disadvantaged populations among whom these conditions are highly prevalent.

To CMS’s legitimate concerns about any inappropriate coding, which APG shares, “we have argued that CMS and other federal agencies have the tools to eliminate it, and should adopt even more,” Dentzer said. In previous recommendations to CMS, APG has concurred with others’ recommendations for annual risk adjustment data validation audits, and recommended that diagnostic coding in both MA and traditional Medicare be linked to clear evidence in electronic health records that any needed treatment plan has been adopted and implemented.

APG looks forward to working with CMS and other stakeholders over the coming two years to refine the agency’s revised risk adjustment model further. APG believes that the new model should strike an optimal balance between reducing the risk of inappropriate diagnostic coding and still accurately reflecting the health status of Medicare beneficiaries, especially those who are disadvantaged.

In addition, APG asks CMS to look beyond implementation of the new risk adjustment model and prepare for the agency’s goal of having all Medicare beneficiaries in accountable relationships with their providers by 2030. As enrollment in the MA program grows, it will become increasingly meaningless to maintain the flawed comparison of diagnostic coding patterns between MA and traditional Medicare fee-for-service. APG is eager to partner with CMS and other stakeholders to develop an alternative method for better adjusting for beneficiaries’ health, demographic, and social risk factors in MA and across Medicare programs. An optimal risk adjustment model would recognize that patients’ physicians and their other clinicians should determine patients’ diagnoses and related codes; would require that all diagnoses are also reflected in patients’ care plans, and that these plans are implemented; and should also document both patients’ health-related social needs and interventions to address them.

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About America’s Physician Groups
America’s Physician Groups is a national association representing approximately 360 physician groups with approximately 170,000 physicians providing care to nearly 90 million patients. APG’s motto, ‘Taking Responsibility for America’s Health,’ represents our members’ commitment to clinically integrated, coordinated, value-based healthcare in which physician groups are accountable for the costs and quality of patient care. Visit us at www.apg.org.

Contact: Greg Phillips, APG Director of Communications, 202-770-1901