Health plans that participate in the Medicare Advantage program receive monthly capitation payments for each Medicare enrollee. Each capitated payment is the product of two general parts: 1) A base rate which reflects the payment if a Medicare Advantage enrollee has the health status of the national average beneficiary, and 2) A risk score which indicates how costly the enrollee is expected to be relative to the national average beneficiary. For each year, the raw (not normalized) risk scores were divided by the average risk score for that year to produce risk scores below which average out to 1.0. The purpose of the risk scores is to adjust Medicare Advantage payments so that they accurately reflect how much each Medicare Advantage enrollee would be expected to cost. Key components of the 2017 Medicare Advantage rates include: 1) Revision to the risk-adjustment model to better account for fully dual eligible beneficiaries. 2) Adjustment to certain measures within the Star Ratings program for socioeconomic status. 3) Update to the blended risk scores using 75 percent of the risk score calculated using data from the Risk Adjustment Processing System (RAPS) and 25 percent of the risk score calculated using encounter data. 4) Incentives to Medicare Advantage organizations to offer plans with lower maximum out-of-pocket limits.
The Programs of All-Inclusive Care for the Elderly (PACE) is a unique capitated managed care benefit for the frail elderly provided by a not-for-profit or public entity. The PACE program features a comprehensive medical and social service delivery system using an interdisciplinary team approach in an adult day health center that is supplemented by in-home and referral services in accordance with participants’ needs.