Optimizing Compliance and Financial Accuracy in Medicare Advantage and Manufacturer Discount Programs

Understanding the Latest Medicare Payment Adjustments and Compliance Guidelines 

The healthcare industry continues to evolve with new compliance requirements and financial reconciliation updates. Medicare Advantage Organizations (MAOs), Prescription Drug Plans (PDPs), and manufacturers participating in discount programs must stay informed about the latest changes in payment processing and dispute resolution. This blog delves into the recent Medicare Advantage Prescription Drug (MARx) system updates and the operational instructions for the Manufacturer Discount Program Disputes, offering best practices to streamline compliance and financial reporting. 

Key Updates in Medicare Advantage/Prescription Drug System (MARx) Payments 

The April 2025 Medicare Advantage/Prescription Drug System (MARx) payment introduces several crucial adjustments: 

1. 2017 & 2018 Risk Adjustment Overpayment Rerun Cleanup 

   • Adjustments related to risk factor miscalculations for long-term institutional beneficiaries. 

   • Payment Year (PY) 2018 adjustments for closed-period deletes in RAPS and EDPS with services from January 1, 2017, to December 31, 2017. 

   • Organizations should review Monthly Membership Reports (MMRs) under ARC 25 (Part C) and ARC 37 (Part D) for these changes. 

2. CY2023 Coverage Gap Discount (CGD) Reconciliation 

   • Payment adjustments will be reflected in the Plan Payment Report (PPR) as Special CMS Adjustments (TYPE "PRS"). 

3. MARx System Migration to Amazon Web Services (AWS) 

   • The transition from mainframe architecture to AWS cloud-based infrastructure has introduced discrepancies in risk score calculations. 

   • CMS is actively addressing these issues and encourages affected plans to report concerns to the MAPD Help Desk. 

4. Sequestration Suspension and Retroactive Adjustments 

   • Retroactive payment adjustments for May 2020 through March 2022 remain exempt from sequestration. 

   • A phased approach applies sequestration at 1% for April–June 2022 adjustments and 2% for payments from July 2022 onwards. 

Navigating Manufacturer Discount Program Dispute Resolutions 

Manufacturers participating in Medicare’s Discount Program face challenges in dispute resolution, requiring strict adherence to CMS’s operational guidelines. Below are some critical considerations for handling disputes effectively: 

1. Submission Process 

   • Disputes must be submitted electronically with all required supporting documentation. 

   • Proper categorization and clear evidence increase the likelihood of successful resolutions. 

2. Timely Responses 

   • CMS imposes strict deadlines for filing and responding to disputes. Late submissions can lead to denials. 

   • Regularly monitoring submission status ensures compliance and reduces the risk of financial loss. 

3. Common Reasons for Disputes 

   • Incorrect drug classification or pricing discrepancies. 

   • Data mismatches between manufacturer records and CMS reports. 

   • Miscalculations in discount amounts applied to claims. 

4. Best Practices for Resolution 

   • Establish a standardized internal review process before submitting disputes. 

   • Maintain clear communication with CMS to expedite processing. 

   • Leverage compliance software to automate data validation and reconciliation. 

Optimizing Financial and Compliance Strategies 

To ensure financial accuracy and regulatory compliance, organizations should: 

✅ Regularly Review Payment Adjustments – Monitor MARx reports for discrepancies and validate adjustments promptly. 

✅ Enhance Data Accuracy – Use automated reconciliation tools to detect errors before submitting data to CMS. 

✅ Stay Informed on Policy Changes – Subscribe to CMS updates to remain compliant with evolving payment structures. 

✅ Leverage Technology for Compliance Management – Cloud-based solutions and AI-powered analytics can enhance accuracy in payment reconciliation and dispute handling. 

By integrating these strategies, Medicare Advantage plans, PDPs, and manufacturers can improve financial accuracy, reduce compliance risks, and ensure smoother dispute resolution processes. 

For further details on these updates, refer to the latest CMS memos and documentation available on HPMS and the CMS website.

From Submission to Compliance: How MAOs Can Optimize Encounter Data Reporting

In the dynamic realm of healthcare, effective data management remains a cornerstone for the success of Medicare Advantage (MA) programs. The submission of encounter data reports (EDRs) and claims reports (CRRs) by Medicare Advantage Organizations (MAOs) is pivotal to ensure compliance with the Centers for Medicare & Medicaid Services (CMS) regulations. This guide delves into the intricacies of the Encounter Data Submission and Processing Guide, incorporating recent updates to equip stakeholders with the knowledge and tools necessary for successful data submissions. 

Understanding the MA Companion Guide 

The MA Companion Guide serves as an indispensable resource, supplementing the Technical Report Type 3 (TR3) guides. It offers detailed instructions for electronic communications with CMS and delineates specific requirements for MA plan submissions of EDRs in the X12 837 5010 format. Structured to provide clarity, the guide ensures that MAOs can adeptly navigate the complexities of encounter data submissions.

Recent Updates in Encounter Data Submission 

CMS has recently implemented significant updates to the Encounter Data Processing System (EDPS) to enhance data accuracy and compliance. The December 2024 release introduced new edits and refinements to existing ones: Healthdatamax.com

• Edit 20160 – Incorrect TOB for Diabetes Screening: This edit ensures that diabetes screening claims align with CMS guidelines by validating submissions based on specific Healthcare Common Procedure Coding System (HCPCS) codes, associated diagnosis codes, and applicable Types of Bill (TOB). Healthdatamax.com

• Edit 20715 – Expanding AWV HCPCS Code Validation: Updated to incorporate validations for Social Determinants of Health (SDOH) Risk Assessment (HCPCS Code G0136), effective January 1, 2024. This underscores CMS’s focus on holistic health assessment in care delivery. Healthdatamax.com

• Edit 22020 – Strengthening Validation for Condition and Occurrence Codes: This refinement includes expanded TOB logic to encompass TOB 34X (Home Health) and shifts from service line to header-level validation, streamlining error identification. Healthdatamax.com

Submission of Supplemental Benefit Data 

In February 2024, CMS issued a memorandum detailing the requirements for MAOs to submit supplemental benefit encounter data through the EDPS, beginning with 2024 dates of service. This initiative aims to capture a comprehensive view of services provided to beneficiaries, including those not traditionally considered medical services. MAOs are expected to submit encounter data records (EDRs) for every type of supplemental benefit, addressing previous challenges related to reporting requirements and the absence of standardized procedure codes.

Challenges and Considerations 

The integration of supplemental benefits into encounter data submissions presents several challenges:

• Lack of Standardization: Many supplemental benefits lack standardized procedure codes, complicating the submission process. MAOs must map these benefits to appropriate codes as specified by CMS.

• Data Aggregation: Supplemental benefit data often originate from various vendors, necessitating robust strategies for data aggregation, validation, and submission.

• Quality Assurance: Establishing rigorous quality assurance processes is crucial to ensure the accuracy and completeness of submitted data, particularly given the diverse nature of supplemental benefits.

Essential Resources for MAOs 

To facilitate the submission process, several resources are available to MAOs: 

• Washington Publishing Company (WPC): Provides technical documents outlining the standards for the 837-I and 837-P formats, essential for compliant encounter data submissions.

• CMS Edit Spreadsheets: Contain technical edits for the X12 5010 file format, reflecting both general and supplemental instructions specific to Medicare. MAOs must utilize these spreadsheets alongside the MA Companion Guide for comprehensive understanding.

• User Groups and Technical Assistance: CMS conducts user groups and technical assistance webinars to keep stakeholders informed about key issues, ensuring that MAOs have access to the latest information and support.

Encounter Data Submission Statistics

Monitoring submission statistics provides insight into the performance of encounter data submissions. For instance, in the latter half of 2017, approximately 445 million encounters were received, with an acceptance rate of around 88%. These statistics underscore the significance of compliance and accuracy in submissions, directly impacting the overall performance of MAOs.

Confidentiality Considerations

The submission of encounter data involves sensitive beneficiary information. MAOs must ensure that all data handling complies with confidentiality regulations, safeguarding against unauthorized disclosure and maintaining the integrity of beneficiary information.

Conclusion

The Encounter Data Submission and Processing Guide, along with the MA Companion Guide and supplementary resources, provides a comprehensive framework for Medicare Advantage Organizations to navigate the complexities of encounter data submissions. Recent updates, particularly concerning supplemental benefits, highlight CMS's commitment to capturing a holistic view of beneficiary services. By adhering to the outlined guidelines, staying abreast of updates, and leveraging available resources, MAOs can ensure compliance with CMS requirements and enhance the quality of care provided to beneficiaries.

In the competitive landscape of healthcare, staying informed about these guidelines and continuously improving submission practices is crucial for the success of Medicare Advantage Organizations. By prioritizing data accuracy and compliance, MAOs can contribute to a more effective and efficient healthcare system.

The Evolution of Risk Adjustment Eligible Procedure Codes: What Gets Dropped and Why It Matters

Each year, the Centers for Medicare & Medicaid Services (CMS) updates the list of eligible CPT/HCPCS codes for risk adjustment. Some codes are added, while others are dropped. The latest updates for 2025 have been published and this presents a great opportunity to examine the types of codes that have been removed over the years and their potential implications. 

Understanding the Dropped Codes 

A closer look at historical data shows that approximately 50 codes per year are removed from risk adjustment eligibility. While this might seem concerning, it’s important to note that a significant number of new eligible CPT/HCPCS codes are added annually. Overall, the number of eligible procedure codes has been steadily growing. 

Why Are These Codes Dropped? 

The removal of codes from risk adjustment eligibility can happen for various reasons, but one primary factor is the prevalence of "temporary codes"—specifically, Category III codes for emerging technologies. These codes are initially introduced to track the usage of new medical procedures and innovations. However, once these procedures become more established or reassessed, their eligibility for risk adjustment may be reconsidered. 

This means that at one point, claims for these emerging technology procedures were risk-adjustment eligible. However, once the codes are dropped, plans no longer receive risk-adjusted payments for these services, even if they continue to be widely used. 

Financial Implications for Medicare Advantage Plans 

One crucial aspect to consider is the financial impact of these changes. Many of the emerging technology codes that get dropped are associated with high-cost procedures. This creates a potential financial misalignment for Medicare Advantage (MA) plans, as they must continue covering these costly services without receiving the corresponding risk adjustment revenue that previously helped offset their costs. 

This impact is especially significant for specialty Medicare Advantage plans that cater to populations with higher utilization of emerging technology procedures. Plans specializing in areas like advanced cardiac care, oncology, or neurological interventions may feel the financial strain more acutely. Without proper adjustments, the loss of risk adjustment revenue for these procedures could lead to increased financial pressure on plans serving high-risk populations. 

How Are Medicare Advantage Organizations Adapting? 

A key question arises: how do Medicare Advantage organizations track these added and dropped codes and assess their impact on balancing risk-adjusted capitation and expenditure? 

• Do MA plans have dedicated teams monitoring these changes? 

• How do they adjust their financial models when previously eligible codes are removed? 

• Are there strategic shifts in care management or reimbursement structures to account for these losses? 

Final Thoughts 

The evolution of risk adjustment eligible procedure codes is an ongoing process, reflecting advancements in medical technology, shifts in healthcare policy, and financial considerations within the Medicare Advantage space. As these changes continue, it’s critical for MA plans, healthcare providers, and policymakers to stay ahead of the curve and develop proactive strategies for managing their financial and operational impact. 

What are your thoughts on these changes? How does your organization monitor and adapt to shifts in risk adjustment eligibility? Let us know in the comments! 

Exploring CMS’s 2026 Advance Notice: Key Updates for Medicare Advantage and Part D Programs

The Centers for Medicare & Medicaid Services (CMS) has released the Advance Notice of Methodological Changes for Calendar Year 2026, unveiling updates to payment methodologies for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. These changes are designed to refine payment accuracy, improve beneficiary outcomes, and align with evolving healthcare needs. Below, we summarize the key highlights and their significance. 

Key Highlights of the 2026 Advance Notice 

1. Medicare Advantage Capitation Rates 

• Growth Rate: CMS proposes a 5.93% effective growth rate, reflecting increases in Fee-for-Service (FFS) trends. This rate is the highest in nine years, addressing higher claims costs and loss ratios experienced by Medicare carriers. 

• Risk Adjustment Model Transition: CMS will fully implement the 2024 CMS-HCC model for risk score calculations, ensuring improved accuracy in diagnosing and predicting costs. 

• Medical Education Costs: The phase-in of adjustments for indirect medical education (IME) costs will be completed in 2026. While this reduces growth rates slightly, it enhances payment precision. 

2. Part D Program Updates 

• Annual Out-of-Pocket (OOP) Cap: CMS will introduce a $2,100 cap on annual OOP prescription drug costs for beneficiaries, as mandated by the Inflation Reduction Act (IRA). This provides significant financial relief for enrollees. 

• Manufacturer Discount Program: Replacing the Coverage Gap Discount Program, manufacturers will now provide a 10% discount in the initial coverage phase and a 20% discount in the catastrophic phase for applicable drugs. 

• Risk Adjustment Updates: Adjustments to the Part D risk model reflect the updated benefit design, aligning scores with the $2,100 OOP threshold and incorporating changes to manufacturer discounts. 

3. Star Ratings Enhancements 

CMS plans updates to Star Ratings to prioritize clinical care, outcomes, and patient experience. 

• New Measures: The Kidney Health Evaluation for Patients with Diabetes measure will debut in 2026. 

• Returning Measures: “Improving or Maintaining Physical and Mental Health” metrics will return with increased weights in subsequent years. 

• Weight Adjustments: Patient experience and complaints measures will see their weight reduced from 4x to 2x, reflecting a shift towards clinical outcomes. 

4. PACE (Programs of All-Inclusive Care for the Elderly) Adjustments 

CMS proposes a gradual transition for PACE organizations to adopt the updated CMS-HCC model fully by CY 2029, starting with a 10% blend of the 2024 model in 2026. This ensures a smoother shift while maintaining payment stability for these organizations. 

5. Data Systems and Normalization Factors 

• Migration to AWS: The MARx system's transition to a cloud-based infrastructure is enhancing efficiency and scalability, though CMS acknowledges discrepancies in payment calculations, with fixes prioritized. 

• Normalization Factors: CMS will use updated methodologies to calculate factors for Part C and Part D risk adjustment models, incorporating trends from both pre- and post-COVID-19 periods. 

Implications for Stakeholders 

These updates have far-reaching implications for Medicare plans: 

1. Enhanced Payment Accuracy: By refining growth rates, risk adjustment models, and normalization factors, CMS ensures payments better reflect the needs of beneficiaries. 

1. Increased Beneficiary Protections: The IRA-driven OOP cap and manufacturer discounts alleviate financial burdens for enrollees. 

1. Focus on Quality: Updates to Star Ratings emphasize outcomes and equity, encouraging plans to prioritize patient-centered care. 

Next Steps for Organizations 

1. Review and Analyze: Plans should evaluate the potential impact of proposed changes on operations, payment models, and beneficiary engagement. 

1. Submit Feedback: CMS invites public comments on the Advance Notice by February 10, 2025, with final policies expected by April 7, 2025. Feedback can be submitted via Regulations.gov. 

1. Prepare for Transition: Organizations should align operations to adopt new risk adjustment models and payment structures effectively. 

Conclusion 

The 2026 Advance Notice represents CMS’s commitment to improving Medicare Advantage and Part D programs through precise payment methodologies, innovative benefit designs, and a stronger focus on equity and outcomes. For stakeholders, these updates present opportunities to enhance care delivery while navigating new regulatory landscapes. 

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Understanding the Proposed Updates to Part D Risk Scores for 2026

On January 10, 2025, the Centers for Medicare & Medicaid Services (CMS) published its Advance Notice of Methodological Changes for Calendar Year (CY) 2026. This update proposes adjustments to the RxHCC Risk Adjustment Models for Medicare Part D. These updates are critical for Medicare Advantage plans, 1876 Cost Plans, Prescription Drug Plans, and PACE organizations, as they directly impact payment policies and risk calculations. 

Here’s a breakdown of the key highlights from the memo and their implications. 

What Are Part D Risk Scores? 

Part D Risk Scores are a measure used to determine the health status of beneficiaries and the corresponding financial risk to plans. These scores are calculated based on diagnoses and claims data, ensuring fair payments to Medicare Advantage and Prescription Drug Plans. 

Key Updates in the 2026 Advance Notice 

1. Risk Scores Posted on HPMS 

1. CMS has made plan-level Part D risk scores available on the Health Plan Management System (HPMS). 

1. These scores are calculated using the RxHCC models proposed in the CY 2026 Advance Notice. 

1. Scores can be accessed under: 

HPMS > Risk Adjustment Module > Proposed Risk Scores > Proposed PY 2026 Part D Model Risk Scores 

Plans can enter their Contract ID to retrieve specific contract data. 

1. Data Used for Risk Score Calculations 

1. The posted scores are based on PY 2023 data, using diagnoses from 2022 dates of service. 

1. These calculations provide insights into how the proposed models will affect payments and risk adjustments. 

1. Distinct Models for Non-PACE and PACE Organizations 

1. Non-PACE Organizations: Scores are calculated using: 

1. The 2025 RxHCC model currently in use. 

1. Proposed and alternate RxHCC models outlined in the 2026 Advance Notice. 

1. Diagnoses from encounter data and FFS claims, filtered with HCPCS-based filtering logic. 

1. PACE Organizations: Scores use: 

1. The 2025 RxHCC model for PACE. 

1. Proposed and alternate models specific to PACE. 

1. Diagnoses from RAPS, encounter data, and FFS claims, filtered with specialty-based filtering logic. 

Opportunities for Feedback 

CMS invites stakeholders to provide feedback on the proposed updates to the risk adjustment models. To submit comments: 

• Visit Regulations.gov. 

• Enter the docket number CMS-2024-0360 in the search field. 

• Follow the instructions to submit electronic comments. 

Why These Updates Matter 

1. Improved Accuracy: The proposed updates refine how diagnoses are categorized and filtered, improving the accuracy of risk calculations. 

1. Fair Payment Adjustments: By using multiple data sources (e.g., encounter data, FFS claims, and RAPS), the models ensure plans are fairly compensated based on the risk they manage. 

1. Enhanced Support for PACE Organizations: Specialty-based filtering logic addresses the unique needs of PACE participants, who often require specialized care. 

Next Steps for Organizations 

1. Access Your Plan Data: Retrieve your organization’s Part D risk scores from HPMS and analyze how the proposed changes impact your payments. 

1. Engage with CMS: For technical questions, email riskadjustmentpolicy@cms.hhs.gov with the subject line: 2026 Advance Notice Part D Risk Scores. 

1. Submit Feedback: Share your insights and concerns with CMS through Regulations.gov before the deadline for public comments. 

Conclusion 

The 2026 Advance Notice introduces critical updates to the Part D Risk Adjustment Models, emphasizing accuracy and fairness. Medicare Advantage and Prescription Drug Plans should review these changes carefully, as they play a pivotal role in determining financial risks and ensuring equitable payments. Engaging with CMS through feedback channels can further refine these models to better serve beneficiaries and stakeholders. 

Stay informed, analyze your risk scores, and contribute to shaping the future of Medicare payments! 

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Medicare Advantage and Prescription Drug System: January 2025 Payment Updates

As we welcome the new year, the Centers for Medicare & Medicaid Services (CMS) has released crucial updates regarding the January 2025 payment cycle for Medicare Advantage and Prescription Drug Plans. Here’s everything you need to know about the latest developments and actions required. 

1. Reopening of the 2019 Final Part D Payment Reconciliation 

CMS has finalized the reopening of the 2019 Final Part D Payment Reconciliation, and the results are reflected in the January 2025 payments. You can find these adjustments under the Plan Payment Report (PPR), categorized as a special adjustment type labeled “PRS.” 

This update ensures that calculations from the 2019 reconciliation align with current standards, offering greater accuracy and fairness in reimbursements. 

2. MARx Data Cleanup: Payments Out of Sync with Enrollments 

A major data cleanup was conducted to resolve instances where payments were out of sync with enrollments. During late 2023 and early 2024, some beneficiaries who switched plans caused payments to incorrectly flow to their previous plan for the first month of enrollment in the new plan. 

Key Details: 

• Adjustments for these discrepancies are included in the January 2025 Monthly Membership Report (MMR). 

• They are marked with Adjustment Reason Code (ARC) 94 and Cleanup ID CS1975228. 

These corrections aim to restore alignment between enrollment data and payment distributions. 

3. Premium Withhold and Reduction Fixes 

CMS identified an issue with the MARx system where updates to the Premium Payment Option (PPO) for Part C/D premiums and Part B premium reductions were not properly sent to the Social Security Administration (SSA). This resulted in incorrect premium amounts being withheld from beneficiaries in 2024 and January 2025. 

What to Expect: 

• CMS is actively addressing this issue, and corrected updates will reflect in beneficiaries’ SSA benefits by February or March 2025. 

• Most beneficiaries affected by this will receive a refund, which CMS anticipates will be credited to their SSA benefits. 

4. National Medicare Education Campaign (NMEC) User Fees for 2025 

In accordance with the Social Security Act (Section 1857(e)(2)), CMS will begin collecting National Medicare Education Campaign (NMEC) user fees in the January payment cycle. These fees are designed to cover costs associated with enrollment-related activities. 

• MA-PD Plans: Fee rate set at 0.023%, with a total collection of $111.1 million. 

• PDPs: Fee rate set at 0.024%, with a total collection of $9.7 million. 

These fees ensure that CMS continues to provide education and resources for beneficiaries and organizations alike. 

5. MARx Migration to Amazon Web Services (AWS) 

In July 2023, the MARx system transitioned to a cloud-based infrastructure on Amazon Web Services (AWS). This migration enhanced the system’s ability to process enrollment, premium, and payment data efficiently. 

However, CMS has acknowledged discrepancies in the calculation of Part C and Part D risk scores during this transition. To address this: 

• Ongoing software fixes and data cleanups are being prioritized. 

• Plans impacted by these issues are being tracked through master tickets to assess the scale and expedite resolutions. 

Questions regarding the MARx system can be directed to mapdhelp@cms.hhs.gov. 

6. Sequestration Suspension Adjustments 

While the suspension of sequestration has officially ended, CMS continues to apply sequestration rules for retroactive payment adjustments: 

• Payments from May 2020 to March 2022 are not subject to sequestration. 

• Adjustments for April to June 2022 include a 1% sequestration. 

• Payments from July 2022 onward include a 2% sequestration. 

These rules ensure consistency and compliance with statutory requirements. 

By staying informed about these updates, Medicare Advantage and Prescription Drug Plan organizations can better align their operations with CMS standards, ensuring smoother processes and improved beneficiary outcomes in 2025. 

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Understanding Medicare Advantage Encounter Data Report Cards

Since 2019, the Centers for Medicare & Medicaid Services (CMS) have been issuing Encounter Data Report Cards to Medicare Advantage Organizations (MAOs). These report cards are essential tools that help MAOs assess the completeness and accuracy of their encounter data submissions. By highlighting areas where submission patterns may be below expectations, CMS provides MAOs with the opportunity to enhance their data reporting processes, ensuring compliance and improving the quality of care provided to beneficiaries. 

The Medicare Advantage Encounter Data Submission Performance Reports for the third quarter of 2024 are now accessible. These reports offer detailed insights into each organization's data submission performance, enabling MAOs to identify specific areas for improvement. Regular review of these reports is crucial for maintaining data integrity and aligning with CMS standards. 

To access your organization's Q3 2024 report, navigate through the Health Plan Management System (HPMS) as follows: 

1. Log in to HPMS: Ensure you have the necessary credentials to access the system. 

1. Navigate to the Encounter Data Section: 

1. Risk Adjustment > Encounter Data > Submission Performance > 2024 November Update 

This pathway will lead you to the latest submission performance reports. 

For detailed guidance on accessing and interpreting these reports, CMS provides a comprehensive job aid, which can be found here: 

Cssc Operations 

If you have any questions or require further assistance regarding your Submission Performance Report, please reach out to CMS directly. You can email the Risk Adjustment Operations team at RiskAdjustmentOperations@cms.hhs.gov. To ensure a prompt and accurate response, include the subject line: "Encounter Data Submission Performance Report, Q3 2024 Update." 

Regular analysis of these reports is vital for MAOs to maintain compliance with CMS requirements and to enhance the quality of data submissions. By proactively addressing any identified issues, organizations can contribute to the overall effectiveness and efficiency of the Medicare Advantage program. 

For more information on best practices for encounter data submission, CMS offers guidance to assist organizations in meeting submission requirements: 

HHS.gov 

Staying informed and utilizing these resources will aid in ensuring the accuracy and completeness of your encounter data submissions. 

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CMS December 2024 Encounter Data Software Updates

Introduction 

The Centers for Medicare & Medicaid Services (CMS) has introduced significant updates to its Encounter Data Processing System (EDPS) as part of its December 2024 release. These improvements are pivotal for Medicare Advantage (MA) organizations, ensuring better alignment with regulatory standards and enhancing the accuracy of encounter data submissions. In this blog, we’ll unpack the details of these updates, explore their implications, and highlight the value they bring to data processing workflows. 

Key Highlights of the December 2024 Release 

CMS continues its commitment to improving data accuracy and reliability. The December 2024 updates focus on both the introduction of new edits and refinements to existing ones. Let’s dive into the specifics. 

New Edit: Ensuring Proper Billing for Diabetes Screenings 

Edit 20160 – Incorrect TOB for Diabetes Screening 

This newly implemented edit, Edit 20160, is designed to ensure diabetes screening claims align with CMS guidelines. It validates submissions based on the presence of specific Healthcare Common Procedure Coding System (HCPCS) codes, associated diagnosis codes, and applicable Types of Bill (TOB). 

Validation Rules: 

1. HCPCS Codes: Applies to diabetes screening HCPCS codes (82947, 82950, 82951, and 83036). 

1. Diagnosis Codes: Checks for ICD-9 code V77.1 or ICD-10 code Z13.1. 

1. Date of Service: Validates based on the ICD-10 implementation date (on or after October 1, 2016) and specific updates for 2024. 

1. TOB Restrictions: Excludes TOBs 12X, 13X, 14X, 22X, 23X, and 85X. 

This enhancement ensures that billing for diabetes screenings is both compliant and precise, helping organizations mitigate errors that could disrupt claims processing. 

Updates to Existing Edits 

1. Edit 20715 – Expanding AWV HCPCS Code Validation 

This update to Edit 20715 now incorporates validations for Social Determinants of Health (SDOH) Risk Assessment (HCPCS Code G0136). Effective January 1, 2024, it requires the following: 

• Correct TOB submission for HCPCS codes G0438, G0439, and G0136. 

• Date of Service validations for SDOH risk assessments. 

The inclusion of SDOH underscores CMS’s broader focus on holistic health assessment in care delivery. 

2. Edit 22020 – Strengthening Validation for Condition and Occurrence Codes 

Edit 22020 has undergone critical updates: 

• Expanded TOB Logic: Now includes TOB 34X (Home Health). 

• Header-Level Posting: Shifts from service line to header-level validation, streamlining error identification. 

These refinements ensure claims involving condition code ‘C3’ and occurrence span code ‘M0’ are meticulously validated, reducing conflicts and promoting smoother adjudication. 

The Broader Impact 

These updates emphasize CMS’s ongoing effort to ensure accurate, comprehensive, and error-free data submissions. By aligning edits with the Fee-for-Service (FFS) Change Requests and incorporating modernized billing practices, CMS is paving the way for a more robust Medicare Advantage ecosystem. 

Organizations submitting encounter data should review these changes closely and adjust their systems to meet the new standards. This proactive approach will prevent errors, reduce claim rejections, and foster compliance. 

Appendix: Leveraging the UB-04 Data Specifications 

The updates also underscore the importance of adhering to the National Uniform Billing Code (NUBC) standards. CMS, in collaboration with the American Hospital Association (AHA), ensures these standards are seamlessly integrated into encounter data systems. However, as per the AHA’s copyright notice, proper licensing and compliance with their usage terms remain essential. 

FAQs 

1. When will the new and updated edits take effect? 

The changes will be effective for submissions starting December 13, 2024. 

2. How can organizations prepare for these updates? 

By reviewing the updated CMS guidelines, aligning internal systems, and ensuring staff are trained on new requirements. 

Final Thoughts 

The December 2024 updates to the CMS EDPS mark a critical step toward enhancing data integrity and compliance in the Medicare Advantage landscape. By addressing common data issues and introducing robust validation mechanisms, CMS aims to streamline claims processing and improve healthcare outcomes. 

Stay informed and prepared to embrace these changes—your commitment to compliance ensures the delivery of high-quality care under the Medicare Advantage program. 

For more detailed information, you can access the official CMS document: Encounter Data Software Release Updates: December 2024 in Memos of Health Plan Management System Home Page

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Streamlining CMS Submissions with AI-Enabled Risk Adjustment Solutions

Introduction: Navigating the Complexities of Risk Adjustment Audits 

The Centers for Medicare & Medicaid Services (CMS) Risk Adjustment Data Validation (RADV) audits are critical for ensuring compliance and validating risk-adjusted payments for Medicare Advantage Organizations (MAOs). These audits are rigorous, requiring meticulous documentation and precise validation of diagnosis codes. For health plans, navigating these audits is challenging, especially with increasing scrutiny on overpayments and regulatory compliance.  

AI-enabled risk adjustment coding software offers a transformative approach to simplifying this process. By validating CMS submissions against members' medical records, this technology ensures accuracy, reduces audit risks, and streamlines operations. 

Key Challenges in Risk Adjustment Audits 

1. Data Complexity: Submissions must align with CMS's detailed requirements, including accurate mapping of diagnoses to Hierarchical Condition Categories (HCCs).  

2. Documentation Errors: Invalid or incomplete medical records can lead to significant overpayments and penalties.  

3. Extrapolation Risks: CMS extrapolates errors identified in sampled enrollees, potentially amplifying financial impacts across the contract population.  

4. Time Sensitivity: Meeting submission deadlines while ensuring accuracy is a perennial challenge. 

AI-Driven Solutions: A Game-Changer for Health Plans 

AI-enabled risk adjustment software automates and enhances critical processes, providing unparalleled support in CMS submissions. Here’s how:  

1. Automated Data Validation:  AI systems can rapidly cross-check diagnosis codes from submitted medical records against CMS requirements, reducing errors and ensuring compliance. 

2. Streamlined Record Review:  Natural Language Processing (NLP) enables the software to analyze and extract relevant data from unstructured medical records, eliminating manual bottlenecks. 

3. Real-Time Feedback and Correction:  With built-in feedback loops, the software highlights potential discrepancies in documentation, enabling proactive resolution before submission. 

4. Enhanced Audit Preparation:  The solution organizes and validates records, ensuring all necessary documentation, such as medical attestations, is prepared according to CMS guidelines. 

Real-World Impact: Why Health Plans Need This Technology 

1. Error Reduction: By automating diagnosis code abstraction and validation, plans significantly lower the likelihood of discrepancies flagged during audits.  

2. Cost Savings: Avoid extrapolated penalties resulting from minor errors in sampled data.  

3. Operational Efficiency: Automating labor-intensive tasks allows staff to focus on higher-value activities.  

4. Compliance Assurance: Stay ahead of CMS’s evolving standards with adaptive software that incorporates the latest regulatory updates. 

Embracing the Future of Risk Adjustment 

For health plans, the stakes in CMS submissions and RADV audits have never been higher. Adopting AI-enabled risk adjustment coding software is no longer optional—it's essential for staying competitive and compliant.  

Let us help you revolutionize your approach to risk adjustment. Contact us today to learn how our AI-powered solution can transform your CMS submission process.  

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November 2024 Medicare Advantage and Prescription Drug System Updates: Essential Information

As we near the end of the year, CMS has rolled out important updates for Medicare Advantage and Prescription Drug Plans. These adjustments impact payments, risk adjustment reconciliations, and processing systems, and there’s a lot to unpack. Here’s a breakdown of what these changes mean for plan sponsors, plus tips for adapting smoothly. 

1. Risk Adjustment Reconciliation: Fixing Payment Errors 

In mid-2024, CMS identified an issue in their MARx software, which mistakenly used the wrong risk factors for certain payments to long-term institutional (LTI) beneficiaries. Payments for these beneficiaries should have reflected an LTI risk factor, but a community risk factor was used instead, leading to incorrect payment amounts: 

• Overpayments and Underpayments: For Part C (medical), LTI beneficiaries were often overpaid due to higher community risk factors. Conversely, for Part D (prescription drug), these beneficiaries were underpaid. CMS is addressing these discrepancies with payment adjustments. 

• What to Expect in November Payments: Plan sponsors will see adjustments in the November 2024 Monthly Membership Report (MMR), which will retroactively correct payments from January through October 2024. These corrections mean reduced payments overall for Part C overpayments and increased payments for Part D underpayments. 

2. Delay in 2023 Final Part D Payment Adjustments 

CMS completed the 2023 Part D payment reconciliation in September, which would typically have been included in the November payments. However, due to unforeseen circumstances, these payment adjustments are now scheduled to appear in the December 2024 payment cycle. 

• Impact on Sponsors: Plan sponsors should prepare for these changes and adjust their financial planning for the coming months to account for the December adjustments. 

3. MARx System Migration to AWS and Data Accuracy 

CMS successfully migrated the MARx system to Amazon Web Services (AWS) in July 2023. The shift to a cloud-based environment aims to improve the processing of enrollments, premiums, and payments. While the migration was successful, CMS has noted some inaccuracies in Part C and Part D risk scores due to data discrepancies: 

• Current Fixes in Progress: CMS is working to resolve these issues with software updates and data cleanups, prioritizing fixes based on the impact on payment accuracy. 

• What Sponsors Need to Know: CMS will notify plans as these cleanups are completed. If your plan has already submitted a trouble ticket, no further action is required. For broader issues affecting multiple organizations, CMS has created “master tickets” to streamline communication and prioritize fixes. 

4. Sequestration Suspension and Adjustments 

The sequestration suspension, a policy that temporarily halted Medicare payment cuts, has ended. However, CMS continues to honor sequestration suspensions for certain retroactive payment adjustments from May 2020 to March 2022. Here’s a quick breakdown of the impact: 

• Suspension Periods: Payments for May 2020 to March 2022 remain unaffected by sequestration. For April to June 2022, a 1% sequestration applies, and starting from July 2022 onward, a 2% sequestration will be applied. 

• Ongoing Adjustments: These rules will continue to apply to all retroactive payment adjustments, ensuring that sponsors receive accurate, policy-compliant payments. 

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Key CMS HPMS Updates from Summer 2024: What You Need to Know

Staying updated with the latest CMS (Centers for Medicare & Medicaid Services) releases is crucial for ensuring compliance and accuracy in Medicare Advantage and Prescription Drug Plans. Over the past few months, CMS has introduced a range of updates through HPMS, including essential corrections to model notices, changes to the 2025 RxHCC Risk Adjustment model, and adjustments to normalization factors. These updates, which will come into effect starting in 2025, ensure that plans reflect the evolving healthcare landscape, particularly around chronic conditions and beneficiary risk scores. Let’s dive into the key highlights from recent CMS releases! 

Key CMS HPMS Updates from Summer 2024: What You Need to Know 

1. 2025 RxHCC Risk Adjustment Model 

The CMS updated its Risk Adjustment model for 2025, focusing on accurate payment adjustments for Medicare Part D beneficiaries. The RxHCC model, based on 2021 diagnoses, brings significant changes to risk scoring, improving how payments reflect health conditions like diabetes and heart disease. MA-PD and PACE plans will see these changes starting January 2025. 

2. Correction to ANOC and EOC Models 

In August 2024, CMS issued corrections to several model notices for Contract Year (CY) 2025. Notable changes include: 

• Updates to inpatient hospital costs for Cost Plans. 

• Removal of telehealth service references for physical therapists, occupational therapists, and audiologists in several plan types. 

• Clarifications on appeals, emphasizing timelines and proper contact points for enrollees. 

• Adjustments to LIS Riders to eliminate unnecessary references to deductibles

3. Normalization Factors 

CMS announced updates for normalizing risk scores for MA-PD and PDP beneficiaries for 2025. This ensures that payments reflect recent changes in health care utilization and costs, ensuring fairness in payments. 

4. Updated Communication Tools 

To better serve plans, CMS has also updated the Monthly Membership Reports (MMRs) and Model Output Reports (MORs). This ensures that plan sponsors have accurate data regarding beneficiary risk scores. 

Preparing for 2025: 

With these updates, Medicare Advantage and Prescription Drug Plan sponsors must adjust their systems and communications accordingly. Compliance with these new rules and timely communication to beneficiaries is essential for a smooth transition. 

For detailed guidance, review the recent CMS releases through HPMS and ensure that your organization stays compliant with these evolving standards. 

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Navigating the 2025 RxHCC Risk Adjustment Model: Key Updates and Implications

Introduction: The 2025 RxHCC Risk Adjustment model introduces pivotal changes aimed at enhancing risk accuracy in Medicare Advantage and Prescription Drug Plans. These updates focus on refining diagnoses for chronic conditions, especially in elderly populations. 

Why the Update Matters: Risk adjustment ensures fair payments by accurately reflecting patient health status. The 2025 model's updates include significant adjustments in hierarchical condition categories (HCCs) to better capture high-risk patient profiles. 

Key Changes: 

• Increased Emphasis on Chronic Conditions: Conditions such as diabetes, heart failure, and renal disease see heightened focus, with expanded diagnosis codes capturing subtler nuances in disease progression. 

• Refined Demographic Factors: Gender, age, and other demographic variables now play a stronger role in determining risk scores. 

• Enhanced Validation Protocols: New methods ensure diagnosis integrity, reducing potential overpayments and improving overall system integrity. 

Implementation Timeline: Medicare Advantage plans must adopt these changes by January 1, 2025. Preparation should involve re-training staff on new coding practices and investing in robust diagnosis validation mechanisms. 

Impact on Medicare Advantage Providers: The changes will lead to: 

• Better Resource Allocation: More accurate payment adjustments ensure high-risk patients receive adequate care funding. 

• Compliance Complexity: The new codes and validation requirements may increase the administrative burden, prompting the need for stronger compliance frameworks. 

Conclusion: Adapting to the 2025 RxHCC model will require careful planning and execution. Providers must focus on improving coding accuracy and ensuring compliance to avoid financial risks and penalties.  

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Navigating Medicare’s Latest Data Updates: What’s New in September 2024

In the fast-evolving world of healthcare, staying up to date with the latest regulations is not just a task—it's essential for smooth operations. This September, the Centers for Medicare & Medicaid Services (CMS) is introducing a series of software updates that will impact how encounter data is processed. These changes will affect Medicare Advantage, Cost, PACE, and Demonstration organizations starting September 13, 2024. 

But don’t worry! We’ve broken down the updates for you, so you’ll be well-prepared to navigate them with ease. 

1. New Checks for Mental Health Providers: Ensuring Compliance Made Simple 

Let’s face it: healthcare is all about being in the right place at the right time—especially for providers. Edit 25080 is designed to ensure that Marriage and Family Therapists (MFTs) and Mental Health Counselors (MHCs) are practicing in the correct settings. This edit makes sure that claims from these specialists are only allowed in appropriate places like outpatient clinics. 

So, if an MFT is mistakenly registered as working in an inpatient hospital, psychiatric facility, or rehabilitation center, the system will flag it. Why does this matter? Simple—incorrect submissions can delay claim processing. Avoid the hassle by ensuring your submissions reflect the right service location for MFTs and MHCs. 

2. Social Determinants of Health: An Important Addition to Annual Wellness Visits 

We all know how important it is to capture the full picture of a patient’s health. CMS is now emphasizing the Social Determinants of Health (SDOH)—those factors like living conditions, income, and social connections that impact well-being. 

Edit 25095 ensures that when an SDOH risk assessment is done (with code G0136), it’s paired with an Annual Wellness Visit (AWV). This update means the assessment can’t be billed on its own—it needs to accompany an AWV. Why? Because integrating this with the AWV provides a more holistic view of patient care. 

Make sure both are billed together to avoid errors and deliver more comprehensive patient evaluations. 

3. Getting the Billing Right for Wellness Visits 

CMS is tightening the rules for Annual Wellness Visits (AWVs), and Edit 20715 ensures that your billing matches the allowed types of bills (TOBs). It’s a bit like ensuring you’ve picked the right form for the right process. 

AWVs should only be billed under certain categories like 12X, 13X, and 85X. If you submit the wrong one, expect delays. It’s another reason why precision in billing pays off! 

4. Home Health Claims: Don’t Forget the Details! 

For home health service providers, Edit 22510 adds an extra step to verify that claims include the correct state and county information. This helps ensure that home health encounters are accurately categorized by location. 

Starting October 1, 2024, make sure you add Value Code 85 (which identifies the state and county where services were rendered) to avoid rejected claims. Even though it’s a small detail, missing this can create significant delays, so double-check before submitting! 

5. Updated Rules for CPT Codes: Better Safe than Sorry 

Lastly, Edit 25000 focuses on the Correct Coding Initiative (CCI), which has been updated to prevent claims with certain CPT codes from being processed incorrectly. Now, even if you’ve added a modifier like 59 or XE, the system will take a closer look to ensure everything is in line. 

What’s the takeaway? Be sure your CPT codes—particularly 77427, 92012-92014, and 99201-99499—follow the latest guidelines. Submissions that don’t meet the mark will trigger an error and delay payment. 

How to Stay Ahead of These Changes 

While these updates may seem like small tweaks, they have big implications for data accuracy and payment efficiency. The good news? It’s easy to stay on top of these changes with a few proactive steps: 

• Update Your Systems: Ensure that your billing software is programmed to handle the new edits. 

• Train Your Team: Make sure your staff knows the new rules so that submissions are flawless. 

• Monitor Your Submissions: Check your claims closely, especially after September 13, to catch any errors early. 

Conclusion: Adapting to a New Normal 

As CMS continues to fine-tune its processes, healthcare organizations must stay agile and informed. These new edits are here to make encounter data more accurate and ensure the smooth flow of claims processing. By adjusting now, you can avoid headaches later and keep your data submissions running smoothly. 

The September 2024 software release is just one of many steps CMS is taking to improve the Medicare program. And with a little preparation, your organization can continue delivering excellent care without missing a beat. 

Stay compliant, stay informed, and you’ll be ready for whatever comes next!

CMS Risk Adjustment Submission Deadlines

It’s that time of year again—submission deadlines for risk adjustment data are just around the corner. Let's dive into the essentials, with a twist of fun to keep you awake! 

The Why and Who 

CMS (Centers for Medicare & Medicaid Services) is reminding all Medicare Advantage Organizations, PACE Organizations, Medicare-Medicaid Plans, Cost Contractors, and demonstration plans about the crucial deadlines for submitting risk adjustment data for Payment Years (PY) 2024, 2025, and 2026. If you fit into one of these categories, keep reading! 

The What 

Risk adjustment data, including both RAPS (Risk Adjustment Processing System) Data and EDS (Encounter Data System) Data, needs to be submitted on time. And by on time, we mean by 8 PM ET on the deadline day. Any data submitted after this deadline won't be included in the respective risk score run—no exceptions! 

The How 

Here's the plan to stay ahead of the game: 

1. Initial Run: Submit your data by the initial deadline to be included in the initial risk score calculation. 

1. Mid-Year Run: Missed the initial deadline? No worries, you can still submit by the mid-year deadline to be included in this run. 

1. Final Run: Ensure all data corrections and updates are done before the final deadline, as CMS won't accept new diagnoses after this point—only deletions. 

The When 

Mark your calendars with these key dates: 

• 2025 Initial: Data from 07/01/2023 – 06/30/2024 is due by 09/06/2024 

• 2024 Final Run: Data from 01/01/2023 – 12/31/2023 is due by 01/31/2025 

• 2025 Mid-Year: Data from 01/01/2024 – 12/31/2024 is due by 03/07/2025 

• 2026 Initial: Data from 07/01/2024 – 06/30/2025 is due by 09/05/2025 

• 2025 Final Run: Data from 01/01/2024 – 12/31/2024 is due by 02/02/2026 

Next Deadline Alert! 

Heads up! The next critical deadline is for the 2025 Initial Run. Make sure your data from 07/01/2023 – 06/30/2024 is submitted by September 6, 2024. Don't let this sneak up on you—set your reminders now! 

Pro Tips for Submission Success 

• Early Bird Gets the Worm: Submit your data early to handle any potential issues like validation errors or data rejections. 

• Double-Check: Make sure your data is accurate and complete before submission deadlines to avoid last-minute scrambles. 

• Stay Updated: Keep an eye on communication from CMS for any updates or changes to submission guidelines. 

Got Questions? 

For any burning questions, email riskadjustmentpolicy@cms.hhs.gov. Make sure to use the subject line: "HPMS Memo- Deadline for Submitting Risk Adjustment Data for Use in Risk Score Calculation Runs for Payment Years 2024, 2025, and 2026." 

Remember, staying organized and ahead of deadlines can save a lot of stress—and possibly your sanity. Happy submitting! 

CMS Releases Proposal to Streamline Medicare Advantage and Part D

The Biden administration recently proposed a rule to simplify Medicare Advantage (MA) and Part D plan prior authorization and increase health equity requirements in star ratings. The Centers for Medicare & Medicaid Services (CMS) released a proposed rule for the 2024 coverage year, which includes provisions governing prior authorization, utilization management, and medical necessity determinations. The rule also limits MAOs' discretion to require the use of alternate services or settings and regulates the use of prior authorization. Additionally, CMS seeks to establish a utilization management committee and require relevant expertise for coverage determinations. The proposals are in response to concerns raised by the Office of Inspector General and Congress regarding prior authorization and aim to address the administrative burden for doctors while cracking down on misleading marketing. Overall, the proposed rule strives to improve healthcare access and quality for Medicare beneficiaries.

The proposed rule also includes a provision to add health equity requirements to the MA and Part D star ratings. CMS proposes to add a new measure to the star ratings that assesses whether a plan has taken steps to reduce disparities in healthcare outcomes and experiences among enrollees based on race, ethnicity, and other socio-economic factors. The proposed measure would be used in the calculation of the overall star rating and would incentivize plans to prioritize health equity in their operations and strategies.

In addition, the proposed rule implements several drug price provisions of the Inflation Reduction Act, including requiring drug manufacturers to provide rebates to Part D plans for price increases that exceed inflation and capping the amount that beneficiaries pay for insulin at $35 per month. This is expected to save Medicare beneficiaries significantly.

Overall, the proposed rule seeks to address some of the key challenges faced by Medicare Advantage and Part D plans, including prior authorization and health equity, while also implementing provisions to reduce drug prices and improve access to care for beneficiaries. The proposal is open for public comment until February 14, 2023, and CMS is expected to release a final rule later in the year.