The Centers for Medicare & Medicaid Services (CMS) has just taken a significant step toward improving access to high-quality care for Medicare Advantage (MA) enrollees living with dementia. Beginning in 2020, CMS will calculate its payments to MA plans using a new risk adjustment methodology that, for the first time, accounts for dementia.

Wait...risk adjustment?

Risk adjustment is used, in a sense, to even the playing field. In fee-for-service or “traditional” Medicare, clinicians bill for each service or interaction. However, MA plans (which provide basic Medicare coverage as well as supplemental benefits often important to persons living with dementia) are paid prospectively, which means that they have to try to predict the health care costs of any given enrollee for the coming year based on last year's costs. That seems straightforward enough for healthy enrollees, but individuals living with complex—and complicating—conditions like Alzheimer's and related dementias, present greater financial risk to plans. Therefore, these methodologies are designed to mitigate or adjust for some of that risk. Hence, risk adjustment.

But why does it matter?

Risk adjustment should lead to more accurate payments and help MA plans to allocate resources appropriately. For persons living with dementia, it is critical that plans be able to anticipate as many of their needs as possible. Medicare beneficiaries with dementia are much more likely than those without dementia to have other chronic conditions: 26 percent of beneficiaries over 65 with dementia have five or more of these conditions, compared to only four percent of those without Alzheimer's or another dementia. Cognitive impairment also complicates the management of those other conditions, further adding to costs. If a MA plan can factor in a person's dementia diagnosis, it can better predict and plan for these costs, ensuring that enrollees have access to appropriate care. That's why the Alzheimer's Impact Movement (AIM) has pushed for the inclusion of dementia codes in CMS's MA risk adjustment methodology. We also discussed the importance of payment accuracy in our comments to the Senate Finance Committee's Bipartisan Chronic Care Working Group in 2015.

Previously, CMS had been hesitant to include dementia due to a concern that the broad definition of dementia could result in inaccurate payment—meaning payments would be overpredicted. We remained convinced that the costs of these enrollees were being underpredicted.

The issue was also an area of growing interest for Congress, which, through the AIM-championed 21st Century Cures Act (P.L. 114-255), required that CMS revisit its model and improve payment accuracy. The agency analyzed 10 chronic conditions not previously counted and determined that two dementia codes met the minimum requirements for inclusion in its model, and asked for public comment. The Alzheimer's Association and AIM, as well as many other commenters wrote in support of the Alternative Payment Conditions Count (APCC), which accounts for dementia. CMS just approved the APCC, and we applaud CMS for taking action. As the number of Americans with Alzheimer's and other dementias grows, it will become increasingly important that MA plans be able to anticipate and plan for the needs of our constituents.

The APCC methodology will be phased in beginning in 2020. Its implementation will lead to more accurate reimbursement to plans that serve the sickest beneficiaries, and, in turn, improve access to care. Although less visible than our legislative advocacy, AIM promotes dementia-related policies and regulatory changes like these by working with a variety of federal agencies, and we are grateful to all of the open and collaborative partners we've found in the government. The Alzheimer's Association and AIM commend CMS for its commitment to improving care for all individuals affected by dementia.