PopHealthCare Summary of the 2020 Advance Notice and Draft Call Letter
The estimated Medicare Advantage and FeeforService (FFS) effective growth rate is approximately 5.62 percent. Overall, the expected change in revenue is predicted to be 2.53 percent, with significant variances depending on county and plan.
YeartoYear Percentage Change in Payment 

Impact 
2020 Rate Announcement 
Effective Growth Rate 
5.62% 
Rebasing 
0.02% 
Change in Star Rating 
0.14% 
MA Coding Intensity 
0.0% 
Risk Model Revision 
0.21% 
Encounter Data Transition 
0.06% 
EGWP Payment Policy 
0.0% 
Normalization 
3.08% 
Expected Average Change in Revenue 
2.53% 
MA CODING PATTERN ADJUSTMENT
As dictated by law, CMS is required to annually adjust plan payments to reflect the variance in diagnosis between MA plans and FFS providers. In the 2020 Announcement, CMS stated they will implement an MA coding pattern difference adjustment of 5.90 percent. This value remains constant from the prior year.
NORMALIZATION FACTORS
A normalization factor is a vehicle used to account for the fact that historical data and a different population of data (FFS) is used to calibrate the model. To account for more recent data, coding, and population changes a normalization factor is applied. The normalization factor ensures that the average FFS risk score for the payment year is 1.0. By definition, the factor predicts the average FFS risk score for a model payment year. This is important for two reasons:
 The FFS risk score needs to be kept at 1.0, so that the risk scores support with the FFS rates.
 The normalization factor is used to stabilize payments between model calibrations.
CMS is updating the normalization factors as follows.
Model 
2020 Rate Announcement 
2017 CMSHCC/PACE 
1.075 
2020 APCC 
1.069 
Dialysis/Transplant 
1.059 
Functioning Graft 
1.084 
RxHCC 
1.043 
CHANGES IN PART C PAYMENT METHODOLOGY FOR CY2020
The 21st Century Cures Act requires CMS to make improvements to risk adjustment, including:
 Additional diagnosis codes related to mental health and substance abuse
 Including the severity of chronic kidney disease
 Consider the total number of conditions of an individual enrolled in MA
 Phasein any changes over a 3year period
For 2020, CMS will use the alternative payment condition count (APCC) model for the blended risk score calculation. This model is an 86 HCC model and includes HCCs for Dementia (HCC51 & HCC52) and Pressure Ulcers (HCC159) as well as considers the number of conditions the beneficiary has.
CMS is altering the blend of RAPS/EDPS from 75/25 to 50/50. CMS will blend 50% of the risk score using the 2017 CMSHCC model, using diagnoses from RAPS and FFS, summed with 50% of the risk score using the alternative payment condition count model, using diagnoses from encounter data, RAPS inpatient records, and FFS.
CHANGES IN ESRD/PACE PAYMENT METHODOLOGY FOR CY2020
CMS will implement an updated ESRD dialysis and ESRD functioning graft risk adjustment model. For CY2020, the risk score will be a blend of 50% of the risk score using the 2019 ESRD models, using diagnoses from RAPS and FFS, and 50% of the risk score using the 2020 ESRD models, using diagnoses from encounter data, RAPS inpatient records, and FFS.
For PACE organizations, CMS will continue to use ESRD risk scores using the 2019 ESRD dialysis and ESRD functioning graft models.
CHANGES IN MA EGWP PAYMENT METHODOLOGY FOR CY2020
Medicare Employer Group Waiver Plans (EGWPs) serve specific employer groups and are offered either through the employer directly or through negotiated arrangements between MA plans and employer groups. CMS is continuing to waive the requirements for EGWPs to submit bids. By doing so, CMS believes this will establish high quality coverage for Medicare eligible retirees by avoiding the cost and administrative burden of submitting complex bids.
For 2020, CMS is allowing MA EGWPs to buydown Part B premiums for their enrollees using a portion of the Part C payment.
CHANGES IN CMSHCC RISK ADJUSTMENT MODEL USED FOR PACE ORGANIZATIONS IN CY2020
CMS will use the 2017 CMSHCC risk adjustment model and associated frailty factors to calculate the risk scores for PACE Organizations. CMS will continue the same method for calculating risk scores as in the prior year, which is to pool riskadjustment eligible diagnoses from the following sources to calculate a single risk score (with no weighting):
 Encounter data
 RAPS
 FFS Claims
CMS RXHCC RISK ADJUSTMENT MODEL FOR 2020
FOR CY2020, CMS will implement the RxHCC risk adjustment model recalibrated with 2014/2015 data.