CRC Medicare Advantage Payment Methodology 1 — Questions and Answers
Question 1: What is the primary purpose of risk adjustment in Medicare Advantage?
- To reduce provider payments
- To ensure plans are paid appropriately based on enrollee health status (Correct answer)
- To eliminate duplicate claims
- To increase Medicare premiums
Correct answer: To ensure plans are paid appropriately based on enrollee health status
Risk adjustment ensures MA plans receive payments that reflect the actual health risk of their enrolled population.
Question 2: What does the CMS-HCC model use to predict?
- Patient satisfaction scores
- Future healthcare expenditures (Correct answer)
- Hospital readmission rates
- Prescription drug usage only
Correct answer: Future healthcare expenditures
The CMS-HCC model predicts future healthcare expenditures based on demographic factors and documented chronic conditions.
Question 3: Which data source does CMS primarily use to calculate risk scores for MA plans?
- Hospital discharge data only
- Fee-for-service Medicare claims only
- Encounter data submitted by MA plans only
- Both FFS claims and encounter data submitted by MA plans (Correct answer)
Correct answer: Both FFS claims and encounter data submitted by MA plans
CMS uses both fee-for-service Medicare claims and encounter data submitted by MA plans to calculate risk scores.
Question 4: What is the 'normalization factor' in Medicare Advantage risk adjustment?
- A factor applied to ensure average risk scores across the program equal 1.0 (Correct answer)
- A penalty for poor documentation
- A bonus payment for preventive care
- The standard rate for all enrollees
Correct answer: A factor applied to ensure average risk scores across the program equal 1.0
The normalization factor calibrates risk scores so that the average across all MA enrollees equals 1.0, keeping payments budget-neutral.
Question 5: What is the 'frailty adjuster' in Medicare Advantage risk adjustment?
- An additional payment for enrollees in institutional settings (Correct answer)
- A reduction in payment for healthy enrollees
- A penalty for incomplete documentation
- A bonus for preventive screenings
Correct answer: An additional payment for enrollees in institutional settings
The frailty adjuster provides additional payment for institutionalized enrollees who have higher care needs not fully captured by HCCs.
Question 6: Which year's diagnosis data is used to calculate risk scores for the following payment year in Medicare Advantage?
- Same year as payment
- One year prior to the payment year (Correct answer)
- Two years prior to the payment year
- Three years prior to the payment year
Correct answer: One year prior to the payment year
MA risk scores are calculated using diagnosis data from one year prior to the payment year, making the model prospective.
CRC Medicare Advantage Payment Methodology 1
What is the primary purpose of risk adjustment in Medicare Advantage?