As part of the California Advancing and Innovating Medi-Cal (CalAIM) initiative, a transformative effort to coordinate and expand health services for the most vulnerable populations in California, the Department of Health Care Services (DHCS) is directing Medi-Cal managed care plans to establish D-SNPs by 2026. Medi-Cal programs entering the Medicare Advantage market for the first time will face substantial challenges during the first benefit year. From a revenue perspective, Medicare Advantage reimbursement is heavily influenced by risk adjustment, with 80-85% of top line revenue being risk adjustable. New entrants to the MA market will need to be ready with a strong implementation and operational plan to prevent financial headwinds disrupting subsequent years.

Medicare Advantage Risk Adjustment
Risk Adjustment is the process by which the Centers for Medicare & Medicaid Services (CMS) reimburses health plans for the cost of patient care. CMS accomplishes this through the assignment of risk scores as a predictor of a population’s approximate cost of care for the following year. Under the CMS-HCC risk adjustment model, which is designed to compensate for health complexity across populations, a higher risk score indicates higher anticipated health expenditures. Dual-eligible beneficiaries exist at an intersection of social, economic, and health factors leading to a higher prevalence of chronic conditions and increased care needs; it follows that the average risk score for D-SNP populations is typically 50% higher than risk scores for general MA plan membership—1.5 vs 1.0. A higher average risk score should signal that more resources and effort will be required not only to manage members’ care but to ensure the documentation of complete and accurate health statuses of the members. Failure to do so will lead to insufficient CMS reimbursement to meet the needs and consumption of the enrolled population.

Key Risk Adjustment Focus Areas for the First Year
Medicare Advantage Organizations (MAOs) have 25 months from the start of a new risk adjustment cycle (launches on the first day of the year) until the final submission deadline. However, only in the first 12 months (calendar year) can qualifying medical encounters occur from which diagnoses are extracted for risk adjustment. MAOs may use the remaining 13 months in the cycle to review and change diagnoses or find previous unsubmitted diagnoses in the medical record, but they cannot use medical visits outside the 12-month period to submit additional data. Therefore, the focus of a new DSNP plan is to connect members to providers for comprehensive evaluation and treatment planning immediately, especially those members found to have moderate to severe acuity.

There are 5 strategies which best-in-class risk adjustment team utilize to facilitate the comprehensive evaluation and documentation of member’s health status.

1. Incentivize Providers and Members to complete their Annual Wellness Visit.
   The Annual Wellness Visit is a qualifying risk adjustable medical encounter which encourages primary care providers to wholistically evaluate a member. The purpose of the visit is for providers to accurately diagnose and document all health conditions and environmental factors impacting their well-being for treatment planning. All relevant diagnostic codes for historic and current conditions should be submitted on the medical encounter claim.
2. High Health Risk Assessment Completion Rates with Effective Results Sharing
   Health Risk Assessments conducted by a care manager, if done well, will provide a rich understanding of a member’s current health status. Care managers are not qualifying risk adjustment medical providers, however that does not mean this information is not valuable to risk adjustment operations. A new MAO may not have the historical data on members to identify those in greatest need of connectedness to care. The findings from an HRA will enable the risk adjustment team to steer resources, such as an in-home medical assessment, to those members to engage them in care and accurately capture their health status.
3. Prospective Risk Adjustment Analytics
   Every relevant diagnosis code describing the member’s current health status must be submitted each benefit year for inclusion in the risk adjustment model. MAOs invest in prospective analytics technology to quickly identify coding gaps from historical claims experience, emerging medical information, or previously unreported health conditions. The value of this analysis is to quickly identify the potential HCC gaps and work collaboratively with the members’ providers to assess and document the appropriate diagnosis codes within the benefit year. There are two types of analytics, HCC recapture and HCC suspecting. Recapture analytics process historical claims data to identify diagnoses which are expected to persist into the new benefit year. HCC suspecting analyzes claims, electronic medical record (EMR), and health information exchange (HIE) for patterns of healthcare consumption, indicating an undocumented condition may exist. Both types of analytics are highly encouraged for MAOs in their first year.
4. In-Home Medical Evaluations
   There are numerous reasons and barriers which prevent patients from seeking medical care. In-home medical evaluations are a stop gap measure to engage with members, assess their health, and make provider and care management referrals. These interventions, when completed by a physician, nurse practitioner, or physician assistant, enable the diagnoses codes of the confirmed conditions to be submitted to CMS for risk adjustment.
5. Electronic Data Interchange (EDI) and Claims Calibration
   For diagnoses codes to be accepted by CMS to incorporate in the risk adjustment model runs they must meet rigorous data standards, otherwise the encounter data will fall out as errors. While health plans may work with providers to fix and resubmit those errors, the easiest approach is to avoid them all together. Diligent observation of the EDI and claims platforms will prevent health plans for reimbursing claims which do not meet CMS risk adjustment submission standards. Establishing processes early on to quickly identify and fix EDI and claims processing issues will save the plan time and resources by making sure claims data is correctly submitted and processed the first time and claims that fail to meet CMS standards will not be paid.

Successfully Navigating Year One
It is expected that most health plan decision makers and operators might be feeling more overwhelmed than confident by this point in the article. Risk adjustment is one of many factors to consider when launching a new health plan, each with their own unique success criteria and pitfalls. COPE Health Solutions (CHS) has proven platform and toolkit solutions powered by experts and “feet on the street” for all 5 of the key success factors listed above. If you are feeling overwhelmed, listed below is how we are positioned to help:

1. Value-Based Payment Roadmap consulting engagements will craft an incentive structure for providers and patients to positively influence important behaviors for the members well-being while managing total cost of care, quality, and risk adjustment performance metrics.
2. Care management staffing service and the care management module within the Analytics for Risk Contracting (ARC) platform can be rapidly deployed to address HRA requirements for DSNP
3. ARC platform offers prospective analytics in the form of HCC recapture, suspecting and targeting to quickly alert physicians of the possible coding gaps.
4. CHS medical is actively completing in-person home medical evaluations, coordinated with an innovative home, community and office blend primary care home model, in the California market.
5. Risk Adjustment analytics, integrated with quality, total cost of care and related population health analytics and care management tools with expert consulting advisory and implementation to support improved performance of health plan risk adjustment and overall operations.

The DSNP policies changes in the California market will be a significant step towards the improvement of patient care. While Medicare Advantage may seem daunting to some new entrants to the market, it should be viewed as a great opportunity.

COPE Health Solutions is standing by to navigate California health plans successfully through all the requirements for a successful first year of D-SNP in 2026. Contact us at info@copehealthsolutions.com to learn more.