The CMS 2019 Advance Notice and Call Letter (the Notice) was released February 1, 2018.   

The CY2019 fee-for-service (FFS) growth rate, which is now the major driver of Part C benchmark rates, is 4.1%.  This was consistent with projections published last year; however, this is the largest growth rate since the 2016 Rate Announcement published in 2015.  

As noted in Part 1 of the Advance Notice, released December 27, 2017, a new Part C risk adjustment model was proposed that added new HCCs for chronic kidney disease and mental health/substance abuse, as well as introduced new variables reflecting the number of “payment HCCs”.  The impact of the new model on average risk scores nationwide is small at +0.3%; however, CMS notes that the impact can vary substantially by plan.  Medicare Advantage Organizations (MAOs) can see their plan-specific impact by downloading risk scores in HPMS.

CMS is continuing to observe a significant increase in Part C FFS risk scores for 2017, as was the case with 2016 data.  The proposed 2019 FFS normalization factor for is 1.040, as compared with 1.017 for 2018.

Overall MA Payment Impact:  Wakely estimates that, on average, 2019 Part C standardized benchmarks will increase 4.8% over 2018 nationwide. 

This reflects the impact of the growth rate, change in star ratings and changes to applicable percentages (i.e. quartile rankings). We also estimate that the change in CMS revenue for 2019 versus 2018 is expected to be +2.5%. This takes into account changes in Part C risk scores, including the FFS normalization factor and the MA Coding Pattern adjustment.

Plans should be aware that the changes in the benchmarks can be considerably different (and typically are greater in magnitude) than the change in CMS revenue to the plan. Plans are paid 100% of their Part C basic bid (assuming they bid below the benchmark), which is unaffected by the benchmark for most plans, plus a percentage of the remaining difference of the excess of the benchmark above the bid. Therefore, a reduction in the benchmark will impact plans differently based on the disparity of the plan’s bid compared to the benchmark (i.e. the “savings”) and the star-based percentage of the savings retained by the plan (i.e. Part C “rebate”).

Our analysis of county specific benchmarks and plan revenue was aggregated using January 2018 CMS published MA enrollment and star ratings for payment year 2019. 

Click here for Wakely's full summary and analysis