CMS planning to further grow its use of encounter data in MA risk adjustment

Medicare Advantage
The Centers for Medicare & Medicaid Services has released the first part of its annual advance notice for Medicare Advantage. (Getty/designer491)

The Centers for Medicare & Medicaid Services (CMS) is planning to increase the amount of encounter data it uses to calculate Medicare Advantage (MA) risk scores to 75% from 50%, the agency said Monday.

CMS issued the first part of its 2021 MA Advance Notice—which focuses on risk adjustment—with the policies to be finalized no later than April 6 in the agency's annual rate notice.

CMS previously increased the amount of encounter data it uses in such calculations to 50% for the 2020 plan year. It was a move that drew ire from the insurance industry, so Monday's notice is also likely to draw scrutiny.

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MA plans warned in 2019 that encounter data, or information on patients' medical conditions that comes from hospitals and physicians, are often incomplete or inaccurate. CMS has been gathering such data since 2012.

If the data used in risk adjustment have gaps or errors, it could lower risk scores and thus unfairly lower federal payments to MA plans, the insurers said. 

CMS has incrementally increased the amount of encounter data it uses in its risk score calculations. It phased in encounter data beginning in 2016, where it accounted for 10% of the data used for risk adjustment. It accounted for 25% of data used to calculate risk scores for the 2019 plan year.