It’s no secret that implementing the encounter data reporting and validation continues to be a challenge for regulators and health plans. However, a Medicare advisory panel wants to ratchet up the pressure on plans to submit accurate data by withholding a portion of their payments if the information that they submit is inaccurate or incomplete. In this article, RISE looks at the Medicare Payment Advisory Commission’s (MedPAC) proposal for encounter data and what it could mean for MA plans if the Centers for Medicare & Medicaid Services (CMS) adopts the recommendation.

MedPAC last week voted to recommend that CMS hold back a percentage of each plan’s monthly payments for inaccurate and incomplete data and only return funds in proportion to the amount and quality of the data submitted. The panel didn’t specify the percentage that CMS should take from the payments but suggested that plans could get the money back if they met certain standards and performance metrics. MedPAC recommended that CMS begin to withhold payments in 2021 but eventually phase them out once the data submitted was complete and accurate.

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The new performance metrics would add measures based on comparisons to external and plan-generated data, according to MedPAC, and CMS would provide feedback to improve the performance of all plans and expand public reporting.

In addition, the panel recommends that CMS allow MA plans to voluntarily use a Medicare Administrative Contractor (MAC) to collect encounter data. The use of MACs would only be mandatory if individual plans fail to meet thresholds or for all MA plans if program-wide thresholds are not met. The MAC thresholds would take effect in payment year 2022.

Only one MedPAC commissioner voted against the proposal, according to Modern Healthcare. Karen DeSalvo, the former national coordinator for health information technology and former acting assistant secretary for health at the Department of Health and Human Services, objected because the recommendation is too broad and doesn’t focus on Medicare Advantage plans with the worst encounter data records.

Industry reaction

Sean Creighton, a managing director at Avalere Health, who also serves as a RISE board member and chairs the RISE Risk Adjustment Policy Advisory Committee, said that although it is important that health plans submit comprehensive encounter, the MedPAC proposal seems “premature.”

The recommendation is based on previous programs, such as the physician EHR Meaningful Use, and doesn’t recognize the complexity of MA contracting and data collection from certain sites of care, such as post-acute care, according to Creighton. As MedPAC has acknowledged, CMS hasn’t published benchmarks for submission by type of service or place of service or its assumptions/data about the rates of utilization underlying such benchmarks, he said.

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The MedPAC recommendation comes in the wake of CMS’ announcement that it would use a higher percentage of encounter data in 2020 to calculate risk scores. CMS intends to blend 50 percent of the risk score calculated using diagnoses from the encounter data with the other 50 percent of the risk score calculated with diagnoses from the Risk Adjustment Process System (RAPS).

Three years ago, CMS switched from the long-standing use of RAPS data submission to an encounter data processing system (EDPS) to calculate the risk adjustment factor that calibrates the CMS monthly premiums to MA organizations (MAOs).  The yearly updates to the risk adjustment program are part of the annual final notice that impacts the CMS bid each year.  The transition has been a phase-in of the EDPS process and phase-out of the RAPS process through applying different weights to RAPS versus EDPS each year. 

A research study sponsored by the RISE Association and conducted by Inovalon/Avalere found that based on 2015 data, the EDPS methodology to create RAF scores could produce a significant shortfall in CMS payment rates.

At the time, CMS and MAOs were continuing to wrestle with the complexities of implementing the encounter data system.  CMS has since made significant progress in developing the system and communicating its requirements.  Most MAOs have improved their data submission quality on encounter data and CMS payment operations are more transparent with the publication of MAO-04 updates, according to Kevin Mowll, executive director of RISE.

Nevertheless, he said, there is still wide variation in the final data quality from MAOs, which impacts the ability to plan premium levels. For example, a recent RISE webinar revealed that MA plans continue to find funding differences between encounter data and RAPS even when CMS validates their submissions that will only get worse when CMS shifts to the 50-50 weighting system in 2020.

“From a RISE point of view, there are already weighty financial penalties for MAOs that are not reporting clean and accurate encounter data due to the downgrading of their RAF scores and final payment amounts,” said Mowll. “It does not seem necessary to add more financial penalties on top of these shortfalls to make the point that the encounter data quality needs to be improved: plans are already suffering revenue setbacks in direct proportion to the level of completeness of their data submissions.”