Surviving V28: What to Do When Members’ Medical Expenses Exceed the Capitated Payments of CMS Models
The transition from V24 to V28 of the CMS Risk Adjustment model has been challenging for many Medicare Advantage (MA) plans, Managed Care Organizations (MCOs) and provider organizations under risk contracts.
When MA members are not seen within the data collection period or when their complete diagnostic profiles are not documented or submitted on an encounter record to the Center for Medicare and Medicaid Services (CMS), there may not be premium available to cover the medical expenses incurred.
Even when the members are seen and their conditions documented, specificity is needed from the applicable coding framework to capture premium funds.
We know that CMS is systematically pulling premiums out of the system to control the expanding costs of medical care. MCOs (i.e., health plans) and providers at risk need to ensure that whatever premium their members are eligible for is captured.
There have been striking examples. Payers have sacrificed billions in a single year when MA members acquired from another insurer had inaccurate risk-adjusted factor (RAF) scores.
Now more than ever, accurate and complete revenue alignment is important.
New Year, New Rules
Looking to 2026:
- Medical costs are expected to rise 7% to 8%
- Plans are taking more financial responsibility for MA Part D, as out-of-pocket costs are capped, and exposure to catastrophic drug costs increases.
- HCC coding is affected because the CMS MRA model V28 hits the last of its three-year phase-in plan.
Additionally, this year, 100% of risk scores will be calculated using the model and its exclusive risk adjustment-eligible diagnoses.
This compression will undoubtedly mean that payers will be challenged to achieve previous margin levels. Profit margins on beneficiaries of MA, D-SNP and C-SNP plans — historically the costliest members to care for but associated with the largest premiums — will also drop, challenging many MA business models.
A Solution to the Problem of Revenue Alignment
To ensure proper risk adjustment under global capitation requires an ongoing monitoring process. FRG developed the Revenue Audit Monitoring Program, or RAMP, to do exactly this.
RAMP is a financial intelligence solution created to help payers and risk-bearing providers manage the challenges of the switch in models for medically adjusted premiums. At regular intervals, providers and plans use RAMP to analyze opportunities to improve revenue alignment and monitor progress in closing documented chronic condition gaps at the member level.
RAMP can help payers and providers manage risk with distinct treatment of CMS model V28 by:
- Modeling the impact of diagnosis capture
- Generating timely reports on dropped chronic condition codes and members not seen
- Estimating recapture opportunity for previously accepted chronic conditions
- Computing changes in Medicare risk adjustment and CMS capitated payments
FRG can help you avoid insolvency or plan budget shortfalls. With RAMP, you can:
- Build and summarize a member-level revenue accrual.
- Plan and budget for restatement panel by panel, from the bottom up.
- Distribute information to provider partners so they can help with documentation and coding specificity.
If you’re ready to engage fully transparent strategy and compliant recovery action with FRG’s experts, let’s talk.
Call 888-466-1025 for more information or email us at info@frgsystems.com.