COVID-19’s impact on MA risk scores: How insurers can protect themselves

Introduction

The COVID-19 pandemic has brought unprecedented stress and challenges to the healthcare industry. Based on the nature of the Medicare Advantage (MA) program and the predominantly elderly population it serves, Medicare Advantage organizations (MAOs) in particular face unique challenges. Beginning in early 2020, portions of the country implemented social distancing, with periods of closures or reduced capacity for many healthcare professional offices, and postponement of non-urgent procedures at hospitals. Due to greater susceptibility, seniors may continue social distancing for additional time and may be more hesitant to continue with normal societal interactions, including receiving routine healthcare services. MAOs need to be aware of the possible negative implications of these realities on their business and address any issues now while there is still time to impact financial performance in 2021.

Financial threats

The reduction of clinical services due to the COVID-19 pandemic has been widely reported.¹ While this reduction may have a direct positive financial impact on health insurer expenses, MAOs may find themselves facing negative financial consequences as well, including:

• Members who avoid medical care may have fewer documented chronic conditions in 2020, which would lead to a decrease in risk scores and revenue in 2021. Milliman performed an analysis of the impact on risk scores of removing a portion of diagnosis codes from several months of a year due to deferred or avoided care. The results indicate that plausible deferral and avoidance scenarios may lead to a material decrease in risk scores.
• Medical expenses in 2020 may be lower than anticipated, resulting in MAOs paying refunds to the Centers for Medicare and Medicaid Services (CMS), based on an 85% medical loss ratio (MLR) requirement.
• Some members may not have annual visits during 2020, leading to delays in the identification of emerging conditions (e.g., pre-diabetes) or delays in treating existing conditions. This has the potential to cause worse health outcomes and decreased member satisfaction and star ratings.

Response

The response to addressing the first threat is to ensure members receive care continuously in ways that allow diagnosis data to be accurately captured for risk adjustment. Two of the best ways to achieve this are appropriate use of telehealth services and member outreach. Appropriate focus in these areas may also help with the MLR, member outcomes, member satisfaction, and star rating issues.

Telehealth services

The use of telehealth services has grown significantly since the start of the COVID-19 outbreak. To ensure effective use of telehealth services, MAOs need to consider the following:

• MAOs should understand what healthcare services qualify for risk adjustment purposes. CMS recently approved the use of diagnoses recorded during telehealth visits in the risk score calculation. Diagnoses recorded during these telehealth visits are only eligible for risk adjustment when certain conditions are met, including a face-to-face (video) component for the visit.² For example, a member calling a primary care physician (PCP) for a prescription renewal of high blood pressure medication would not qualify for risk adjustment purposes.
• Members may use telehealth services to address specific ailments rather than an annual wellness visit. For example, a member may have questions about symptoms for an existing condition. Assuming the visit meets the telehealth requirements, this would count for risk adjustment purposes. However, this type of visit may not be an appropriate replacement for a comprehensive annual wellness visit, which may be more likely to identify any new or worsening conditions a member may have. Telehealth visits are a great option and tool for enhancing access to healthcare services, especially during a pandemic, but they may not be as effective as in-person annual wellness visits.
• Additional consideration should be given to the following questions:
• Do members have access to equipment such as a laptop computer or smartphone to have a qualifying telehealth visit?
• Are there operational challenges to performing chart reviews for telehealth visits?
• Are there communication hurdles to overcome between a telehealth vendor and other providers for streamlined treatment?
• If telehealth visits are paid on a fee-for-service (FFS) basis, is there less incentive to accurately code diagnoses? Are there visit eligibility or coding quality issues for telehealth visits?
• Does the telehealth provider have a relationship with the patient? Do telehealth providers have access to a member's medical history?
• What is the availability of in-person and virtual providers as healthcare staffing levels are adjusted based on the demand for services and available revenue?

The expanded flexibility for telehealth and other treatments and coding practices will need to be tracked as they may expire or change depending on the status of the public health emergency. The U.S. Department of Health and Human Services (HHS), CMS, and Congress are actively reviewing the way telehealth is delivered and the rules for how it is paid for³ and MAOs should remain up to date on emerging rules.

Member outreach

MAOs are accustomed to reaching out to members to ensure they all have annual wellness visits and treatment plans. MAOs should reevaluate their member outreach strategies in light of the current COVID-19 environment. MAOs should consider the following when determining which members to contact:

• Which members have already had a PCP or specialist visit this year? Have they had a comprehensive wellness visit? A telehealth visit?
• What diagnoses have been identified for 2020, relative to diagnoses for that member from 2019 or 2018?
• Which members have end-stage renal disease (ESRD), are on hospice, or are new to Medicare (age/sex risk score only)?
• Will members attend in-person visits? Does the MAO need to provide multiple options to members such as telehealth visits (including providing equipment) or in-home visits and assessments?
• Are members continuing to fill their maintenance drug prescriptions? Have there been any lapses in fills?
• Are there different issues for high-risk members, including members with preexisting conditions or other COVID-19 risk factors?
• Is COVID-19 significantly affecting the MAO’s service area? Has the MAO considered the impact of social distancing and continued closures through 2020? The impact may vary county to county within an MAO’s service area. Consideration will need to be given to specific local circumstances to ensure an effective response and outreach program.

Conclusion

MAOs face various financial risks because of the COVID-19 pandemic. Deferred or avoided care in 2020 can cause lower risk scores and revenue in 2021, can result in MLR refunds in 2020, and can lead to gaps in care for vulnerable members. MAOs can work to mitigate these risks through the appropriate use of telehealth services and member outreach. MAOs should plan now while there is still time left in 2020 to react to the pandemic.

¹Rogers, H., Mills, C., & Kramer, M. (April 2020). Estimating the impact of COVID-19 on healthcare costs in 2020: Key factors of the cost trajectory. Milliman white paper. Retrieved on August 3, 2020, from https://us.milliman.com/en/insight/Estimating-the-impact-of-COVID19-on-healthcare-costs-in-2020.

²CMS (April 10, 2020). Applicability of Diagnoses From Telehealth Services for Risk Adjustment. Retrieved on July 22, 2020, from https://www.cms.gov/files/document/applicability-diagnoses-telehealth-services-risk-adjustment-4102020.pdf.

³Mills-Gregg, D. (July 9, 2020). HHS secretary says telehealth here to stay. Inside Health Policy. Retrieved on July 22, 2020, from https://insidehealthpolicy.com/daily-news/hhs-secretary-says-telehealth-here-stay?s=cms (subscription required).