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Proposed Methodological Changes for CY 2025

by Yvonne Tso, PharmD, MBA





Every year, the Centers for Medicare & Medicaid Services (CMS) informs stakeholders of the methodological changes for the following year in a draft Advance Notice prior to the final announcement in April. For CY 2025, the Advance Notice was published on January 31, 2024. The Advance Notice explains continued adoption of the CMS hierarchical condition category (HCC) risk adjustment model v28 and substantive changes to the STAR rating measures[1]. CMS also reminds Part D plan sponsors of the re-design of Part D in 2025 related to the Inflation Reduction Act (IRA) of 2022. Comments on the Advance Notice can be submitted by 6 p.m. ET March 1, 2024.


Risk adjustment scores are indicative of a plan’s enrollees’ health status and the likely healthcare expenditure for the year. Risk scores or Risk Adjustment Factors (RAF) are reset every year. Each coded diagnosis is linked to an HCC code and carries a specific value for its potential impact on healthcare expenses. CMS-HCC risk adjustment model v28 is calibrated from 2018 diagnoses and 2019 expenditures whereas v24 used 2014 diagnoses and 2015 expenditures. While diagnoses are determined by providers, it is imperative to support the stated diagnoses with annotations and lab and imaging results, if applicable. A provider’s statement alone may not be sufficient in a Risk Adjustment Validation (RADV) audit.


Continuing with the 3-year phase in policy, CMS will apply 67 percent of the adjustment in CY 2025 (33 percent in CY 2024) unless changes are announced in the Final Notice. CMS-HCC v28 differs from v24 in that 2,294 diagnosis codes that used to map to HCCs for payment are removed but 268 diagnosis codes that did not previously map to HCC for payment are added. Version 28 uses ICD-10 codes for diagnoses which are more specific and precise than ICD-9. The HCC coefficient values are also changed[2]. All in all, v28 is intended to capture more complete and accurate data about the health status of enrollees with chronic conditions which have long-term needs requiring care management. 


According to CMS, the risk score trend is 3.30 percent under the 2024 CMS-HCC model and 5.00 percent under the 2020 CMS-HCC model. When using the blend proposed to be used to determine CY 2025 risk scores (i.e., 67 percent of the MA risk score trend under the 2024 CMS-HCC model and 33 percent under the 2020 CMS-HCC model), the blended MA risk score trend for CY 2025 is 3.86 percent[3]. Whether or not v28 will raise or lower risk adjusted payments for your plan when fully implemented depends on coding accuracy by providers, understanding of the new model and knowledge of the enrollee demographics and health conditions. CMS advises that “For plans to analyze their specific payment impact, they must both calculate their raw risk score impact of the model revisions with the phase-in and then net it with the FFS normalization impacts with the phase-in[4].”


For Star Ratings, CMS is implementing a "Universal Foundation" of quality measures, which will focus on provider attention, reduce burden, identify disparities in care, prioritize development of interoperable, digital quality measures, allow for cross-comparisons across programs, and help identify measurement gaps[5]. The ratings measure quality across the continuum of care and health equity. Of note is that emphasis is placed on outcome or intermediate outcome more than on process. For instance, Blood Sugar Control for Diabetic Care has a weight factor of 3 versus Reducing the Risk of Falling with a weight factor of 1. Most of the measurements for CY 2025 rating were completed in 2023; however, data collection for some heavily weighted measures will take place in CY 2024:

  • Getting Needed Care/needed prescription drugs (Parts C and D)

  • Getting Appointments and Care Quickly

  • Customer Service

  • Rating of Health Care Quality

  • Rating of Health Plan/Drug Plan (for Parts C and D)

  • Care Coordination

  • Call Center – Foreign Language Interpreter and TTY Availability (for both Parts C and D)

 

The measurement year for the measures above is between March and June 2024. MA, MAPD, and Prescription Drug Plans will have an opportunity to review and improve their performance for the 2025 STAR ratings.


The Advance Notice reminds plans that offer Part D drug benefits of the changes from IRA 2022 – there will only be three phases in the Part D program in CY 2025, coverage gap being removed. Enrollees have a maximum out-of-pocket expense of $2,000 and zero cost sharing in the catastrophic phase. The Advisory Committee on Immunization Practices (ACIP) recommended vaccines to be free of cost sharing by enrollees and applicable insulins have a monthly cap of a $35 copay. For more details of the Part D program in 2025, please visit https://www.integritasmedicare.com/blog


March 1, 2024 is not far away. If you have opinions on the proposed methodological changes for CY 2025, this is the time to submit your comments to CMS by 6 p.m. ET March 1, 2024. Integritas Medicare has professionals who specialize in risk adjustments, Star Rating measures and Part D. We can help you identify economic and operational risks in the proposed changes to maintain financial stability while providing quality patient care. Call us at 415-596-5277.


[1] The “old” model is v24.

[2] Coefficient values are used to calculate capitation payments for each enrollee.

[3] Risk score trend is factored in year-to-year change in payment. Advance Notice of Methodological Changes for Calendar Year (CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies

[4] 2025 Medicare Advantage and Part D Advance Notice Fact Sheet January 31, 2024

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