RAPS, EDPS and risk adjustment: the health plan perfect storm

Commercial and government programs have witnessed a busy year -- most notably with the first year of commercial marketplace EDGE server data submission for risk adjustment; reinsurance coming to a close at the end of April; and the draft payment report being issued at the end of June.

The timeline for PY 2015 submissions was released; the King v. Burwell Supreme Court decision upheld the premium tax credits to qualifying persons whose health insurance coverage is subject to the Patient Protection and Affordable Care Act.

The Centers for Medicare and Medicaid Services issued new rules, including the draft Medicaid uber-rule that seeks to achieve modernization for the first time in 11 years and the release of the Medicare Advantage Encounter Data Processing System (EDPS) filtering logic proposal.

To discuss in detail all of these significant happenings would take more time than for which we have space, but two of them stand out a bit more than the others.

The Ongoing Shift from the Risk Adjustment Processing System to the Encounter Data Processing System

For Medicare Advantage, the industry has been patiently waiting since the summer of 2012 for release of the filtering logic for what is risk adjustment acceptable, which accompanies the switchover from the legacy RAPS format to the greatly expanded ANSI X12 837P/I format.

In this year's PY 2015 Final Notice, CMS announced payments for 2015 will be based upon a blending of 90 percent RAPS and 10 percent EDPS risk scores. This is the first time CMS has introduced the blending, which they had envisioned occurring well before PY 2015. In fact, they had hoped the full cutover to EDPS would have been achieved by 2015.

As with any business and technical project of this magnitude, there were many unanticipated delays as CMS worked through formatting and editing issues. Thus, they very wisely approached the blending with caution, especially as the industry dealt with the shift from ICD-9 to ICD-10.

Health plans are hit especially hard by this shift, because not only do they have to contend with impact analysis and testing for the provider-to-plan revenue cycle, they also have to contend with the plan-to-regulatory entity revenue cycle for commercial and government programs.

Though the CMS EDPS proposed filtering logic (the memo that details what will be accepted for risk adjustment for each encounter) has been released and the comment period is now closed.

In the release memo, CMS introduced the logic as an attempt to promote more transparency into what is acceptable for risk adjustment than has been made available in the past with RAPS.

Historically in the Medicare Advantage program, there has been a wide disparity among individual health plan interpretations of the CMS filtration logic– largely because the Provider Enrollment, Chain, and Ownership System (PECOS) database (where the assigned provider specialty codes are stored) is not publicly available. This has resulted in a higher risk of dropped diagnoses due to a disparity between plan credentialing systems and PECOS, in addition to a large burden of rework for the health plan as they must resolve these discrepancies.

For professional claims, applying the current risk adjustment rules would still result in this burden of rework. This burden is further magnified by the increased work insurers experience due to the complexity of the EDPS data set compared to RAPS, especially with regards to error correction and the resolution of enrollment discrepancies.

Further, CMS proposes to identify acceptable diagnoses from professional encounters using a filtering method based on Healthcare Common Procedure Coding System (HCPCS) codes, with diagnoses from institutional outpatient encounters filtered based on a combination of Type of Bill and HCPCS codes and institutional inpatient encounters filtered using only Type of Bill Codes.

After a cursory analysis, there are a number of codes listed as exclusions, because they do not meet the CMS definition of a "face-to-face" encounter.

When compared to the Commercial HHS filter, there are 483 codes allowed by the HHS filter but not the Medicare EDPS filter, and about 58 percent of those are related to surgery or other invasive procedures– which logically must be conducted as a "face to face" encounter. There are many other codes that would be unreasonable to not represent a face-to-face encounter, and this discrepancy will surely prove costly for plans in the long run.

In order to prevent payment inaccuracies due to the discrepancy, CMS should reconcile the filtering lists between the HHS and Medicare logic. CMS should consider offering more transparency into provider assigned specialty codes, similar to what is offered on the NPPES file for Medicare-enrolled providers.

This visibility would ultimately enable health plans to divert energy wasted on provider type discrepancy resolution and research of dropped HCCs and apply it to ensuring complete and accurate encounter data.

This is necessary given the continued requirement of parallel submission with RAPS, the complexity of the EDPS data set, the burden of ICD-10 and other regulatory compliance issues.

Transition analytics will rightfully consume a health plan's resources during the continued EDPS/RAPS and ICD-10 transitions, and any measures taken to maximize transparency will serve to help enhance a plan's operational and financial success.

In order to ensure parity between RAPS and EDPS payments, it will be beneficial if CMS confirms the following:

1. Filtering based on provider specialty codes in PECOS would be equivalent to the filtering in RAPS according to the published specialty codes.

2. The service codes included match the list of possible services that could be provided in a face-to-face setting by the approved provider specialty codes.

No one wants to be caught off-guard. The sooner and more efficiently plans can use this intelligence, the better.

Dawn Carter is director of product analysis at Edifecs.