2021 MA and Part D Rate Announcement

April 8, 2020

On April 6, the Centers for Medicare & Medicaid Services (CMS) finalized Medicare Advantage (MA) and Part D payment methodologies for calendar year (CY) 2021.

Rate Update: The net impact relative to 2020, is expected to be an increase of 1.66% in plan payments. CMS will continue phasing-in the 2020 CMS-Hierarchical Condition Categories (HCC) model, which is used to risk adjust payments to MA organizations. The CY 2021 risk score is calculated by combining the CMS-HCC models from 2020 (75% of the score) and 2017 (25% of the score).

CMS will adjust CY 2021 plan payments by 5.9% to reflect differences in diagnosis coding between MA organizations and FFS providers, representing the minimum adjustment for coding intensity required by statute. Additionally, the finalized MA end-stage renal disease (ESRD) state-level trend factor for CY 2021 is 4.04%.

Finally, beginning Jan. 1, 2021 all Medicare-eligible individuals with ESRD are allowed to enroll in MA plans. Effective Jan. 1, 2021, MA organizations will no longer be responsible for organ acquisition costs for MA beneficiary kidney transplants. These costs will be excluded from MA benchmarks and covered, instead, by the Medicare FFS program.

Medicare Part C and D Star Ratings: CMS adopted several changes to the 2021 Star Ratings to account for disrupted data collection and plan performance in 2020 caused by the COVID-19 pandemic. Specifically, the Medicare and Medicaid Programs: Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency Interim Final Rule (CMS-1744-IFC) eliminated the 2020 collection of data from the Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare Consumer Assessment of Healthcare Providers and Systems (CAHPS). Measures based on these data will be replaced with earlier values from 2020 Star Ratings that are unaffected by COVID-19. The interim final rule also addresses how CMS will assign 2021 Star Ratings in the event that COVID-19 continues to prevent the collection of valid data or results in systemic data integrity issues, or if CMS’s functions become focused on only essential agency functions due to the pandemic.

Additional provisions of the interim final rule include:

  • The removal of guardrails and expansion of hold harmless provisions for Part C and D improvement measures to include all contracts for 2022 Star Ratings;   
  • The finalization of June 30, 2020 as the date by which plans must submit their requests for review of the appeals and complaints measures data;   
  • Measures included in the Part C and D improvement measures; and   
  • The values for the Categorical Adjustment Index for the 2021 Star Ratings.

See CMS’ fact sheet for more information.