Effect of PACE on Costs, Nursing Home Admissions, and Mortality: 2006-2011. APPENDIX A. DESCRIPTION OF CHANGES IN MEDICARE'S CAPITATION PAYMENT CALCULATIONS FOR PACE DURING 2004-2012

03/01/2015

Table A.1 shows the formula used by CMS for calculating the Medicare capitation payment to PACE plans. The Medicaid capitation payment to PACE plans is negotiated between the provider and the state with some federal oversight. The Medicare HCC-adjusted payment to PACE plans since 2008 has been based on the CMS-HCC model and a plan-level frailty factor. The CMS-HCC model adjusts payments for enrollees' demographic characteristics and diagnoses. The plan-level frailty factor aims to account for Medicare expenditures for a community-based, functionally impaired population that are not explained by the CMS-HCC risk adjustment model. The plan-level frailty factor is calculated by CMS, based on PACE enrollees' responses to the Health Outcomes Survey-Modified, and as shown in Table A.1, it was a blend of the pre-2008 (uniform) frailty factor and the most recently calibrated plan-specific frailty factor plan until 2012, when it transitioned to being based solely on the most recently calibrated plan-level frailty factor.

TABLE A.1. Changes in the Calculation of Medicare's Capitation Payment for Beneficiaries Enrolled in PACE: 2004-2012
  Year   Payment Formula Frailty Adjuster/Factor
2004   (10% of HCC-adjusted payment + 90% of the Medicare+ Choice county rate) * uniform PACE frailty adjuster   2.39
2005 (30% of HCC-adjusted payment + 70% of the Medicare+ Choice county rate) * uniform PACE frailty adjuster
2006 (50% of HCC-adjusted payment + 50% of the Medicare+ Choice county rate) * uniform PACE frailty adjuster
2007 (75% of HCC-adjusted payment + 25% of the Medicare+ Choice county rate) * uniform PACE frailty adjuster
2008 100% HCC-adjusted payment * plan-level frailty factor   90% of the pre-2008 frailty factor + 10% of the 2008 frailty factor  
2009 70% of the pre-2008 frailty factor + 30% of the 2009 frailty factor
2010 50% of the pre-2008 frailty factor + 50% of the 2009 frailty factor
2011 25% of the pre-2008 frailty factor + 75% of the 2011 frailty factor
2012 100% of the most recently calibrated frailty factor
SOURCES: National PACE Association (http://www.npaonline.org/website/article.asp?id=808); Centers for Medicare and Medicaid Services (http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/downloads/Advance2011.pdf).

 

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