Medicare Advantage Payments Demystified
One element of Medicare Risk Management success is simply understanding the timetable.
During the first half of each year (January through June) payments from CMS to your plan are an estimate, based on your member's risk adjustment scores from data submitted by the previous September, covering dates of service for 12 months ending the previous June.
Example: your January, 2007 payment was based on risk adjustment scores from data submitted by September 1, 2006 (the previous September) covering dates of service from July 1, 2005 through June 30, 2006 (the previous June).
On July first each year, you begin receiving the "correct" payment for the current year, based on dates of service in the previous year. At that time (actually in August), you also receive a payment to correct what you should have been paid in January through June.
Example: your July, 2007 payment will be based on risk information from dates of service between January 1, 2006 and December 31, 2006, submitted by March 2, 2007 (about 2 weeks from now).
If you are paid X dollars per month from January through June as an estimate, and the correct monthly payment to your plan is Y (based on the prior year's dates of service), you will be paid 6X (January through June), plus 6Y (July through December) plus a check for 6(Y-X) in August, which all adds up to 12Y (or 12 months of the "correct" monthly amount) over the course of the year.
Note that 6(Y-X) can be negative, which means you have to pay money back to CMS.
Finally, you can submit codes for 2006 dates of service (affecting payment in 2007) up until January 31, 2008. If the correct monthly payment to your plan should have been Z (based on these additional ICD-9 codes), then in September of 2008 you will receive a check for 12(Z - Y), representing the amount your plan was underpaid.
Note again that 12(Z-Y) can also be negative, indicating an overpayment by CMS.
If this all seems like old news, congratulations - you have a good basic understanding of Medicare Advantage payment methodology!
During the first half of each year (January through June) payments from CMS to your plan are an estimate, based on your member's risk adjustment scores from data submitted by the previous September, covering dates of service for 12 months ending the previous June.
Example: your January, 2007 payment was based on risk adjustment scores from data submitted by September 1, 2006 (the previous September) covering dates of service from July 1, 2005 through June 30, 2006 (the previous June).
On July first each year, you begin receiving the "correct" payment for the current year, based on dates of service in the previous year. At that time (actually in August), you also receive a payment to correct what you should have been paid in January through June.
Example: your July, 2007 payment will be based on risk information from dates of service between January 1, 2006 and December 31, 2006, submitted by March 2, 2007 (about 2 weeks from now).
If you are paid X dollars per month from January through June as an estimate, and the correct monthly payment to your plan is Y (based on the prior year's dates of service), you will be paid 6X (January through June), plus 6Y (July through December) plus a check for 6(Y-X) in August, which all adds up to 12Y (or 12 months of the "correct" monthly amount) over the course of the year.
Note that 6(Y-X) can be negative, which means you have to pay money back to CMS.
Finally, you can submit codes for 2006 dates of service (affecting payment in 2007) up until January 31, 2008. If the correct monthly payment to your plan should have been Z (based on these additional ICD-9 codes), then in September of 2008 you will receive a check for 12(Z - Y), representing the amount your plan was underpaid.
Note again that 12(Z-Y) can also be negative, indicating an overpayment by CMS.
If this all seems like old news, congratulations - you have a good basic understanding of Medicare Advantage payment methodology!
posted by Leprechaun Staff at 4:38 PM
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