CMS Announces Changes to HCC Payment Model for 2020

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On April 1, the Centers for Medicare & Medicaid Services (CMS) released the Final Announcement outlining changes to the HCC Payment model for Medicare Advantage Plans and PACE Programs for Payment Year 2020. The HCC model used to calculate risk scores for PACE will change from the version used since 2012 (Version 21) to the 2017 model known as Version 22.

This change has caused a great deal of concern as Version 22 does not contain many of the HCCs frequently seen in the population PACE serves. Importantly, Dementia HCCs (HCC 51 and 52), early stages of Kidney Disease (HCCs 141, 140, 139, 138), early stage Pressure Ulcers (HCCs 160, 159), and many common forms of polyneuropathy (found in HCC 75) are not in the Version 22 Model.

CMS contends that these lost HCCs will be compensated by a) lessening of the Normalization Factor applied to the raw risk score, b) higher Medicaid demographic risk scores because most everyone in PACE falls into the “Full Benefit” Medicaid payment, and c) a higher Frailty Factor when applied to this new model. Seeking to verify these assumptions, CMS did a calculation of the impact Version 22 would have had in Payment Year 2017 if it had been in use then. We have reviewed the data summaries of 25 of our PACE clients. It turns out that 19 of these 25 programs would have seen an increase in their revenue and only 6 clients would have lost revenue had Version 22 been in effect. Worth noting is that the programs that would have lost revenue are not necessarily those programs with a high prevalence of dementia.

A cautionary note: It is still very important that PACE providers detect, diagnose and accurately document the presence of dementia in your participants. It’s known that 50% of PACE participants have dementia, and, in addition to the clinical implications for the participant and your program, informing CMS of this prevalence on an ongoing basis is important for future considerations. Also, there is another HCC Model being implemented in Medicare Advantage this year that uses Dementia HCCs in risk score calculations. It is possible that in the future this model could be used in PACE.

It appears that the one way to impact this new model is by optimizing your Frailty Factor. With the HOS-M survey currently being sent to your participants, now is the best time to promote strategies that will allow accurate completion of the HOS-M survey by your participants.

George H. Brett, MD
Chief Medical Officer & Senior
VP, Consulting

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