CMS admits underpaying dual-eligible health plans

"The CMS has revealed that it underpays health plans that enroll large numbers of people who are dually eligible for Medicare and Medicaid, and the agency plans to modify its risk-adjustment model to make up for the underpayment.

In response to persistent and vocal complaints from health plans questioning the accuracy of the CMS' model for predicting costs of dual-eligible beneficiaries, the agency conducted a retrospective analysis of its 2014 plan data.

The CMS uses a prospective model (called the CMS-HCC) to calculate risk scores, using health status in a base year to predict costs in the following year. Those scores drive adjustments to capitated payments made for elderly and disabled beneficiaries enrolled in Medicare Advantage (MA) plans and certain demonstration programs.

“Our findings show that the community segment of the 2014 model … somewhat underpredicts for full-benefit, dual-eligible beneficiaries,” the CMS said in an under-the-radar notice sent to plans on Oct. 28. The agency did not reveal a dollar amount for the underpayment.

In the highly technical document, the agency outlined some tweaks to its risk model that officials believe will lead to more accurate payments to plans. The CMS is seeking comments on the proposed alterations by Nov. 25, and will publish final changes in a notice for the following payment year in February 2016."

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