CMS Pub. 100-16, ch. 7, § 70.2.1

MA uses separate models for aged/disabled (non-ESRD) community and long-term

institutional residents. CMS created the separate models because there are significant

cost differences between the community-based Medicare beneficiaries and the long-term

institutionalized beneficiaries with the same disease profile. Adjusting payment for place

of residence improves payment accuracy.

Long-term institutionalized MA enrollees are individuals residing in an institution for

more than 90 days as identified using 90-day assessments in the Minimum Data Set

(MDS). Short term institutionalized MA beneficiaries are included in the community

population.

During the payment year, CMS assigns a new enrollee factor to any beneficiary who does

not have 12 months of diagnoses to support a risk score. Operationally, CMS identifies

new enrollees as those beneficiaries with less than 12 months of Medicare Part B

entitlement during the data collection year.

Part A only enrollees are defined as beneficiaries with 12 months of entitlement to

benefits under Part A and less than 12 months of Part B enrollment during the data

collection period and are treated as new enrollees, unless the enrolling organization elects

to have them treated as a full risk enrollee.

Starting in payment year 2006, organizations may elect to have CMS determine payments

for all “Part A-only” enrollees using either new enrollee factors or full risk adjustment

factors. The organization’s decision is applied to all “Part A-only” enrollees in the plan.

Plans may not elect to move some eligible “Part A-only” enrollees into risk adjustment,

while retaining others as new enrollees.

• If an organization elects the option, it remains turned "on" until CMS is notified

otherwise. Notification must occur prior to August 31st of any successive year.

• CMS will apply the option only during final reconciliation for a payment year,

and not prospectively.

• Plans interested in the option must contact CMS at Andrew.Keenan@cms.hhs.gov

by August 31st prior to each payment year to elect the option.

Table 4 provides information on which risk adjustment factor applies to payment.

Table 4. Which Risk Adjustment Factor Applies to Payment*

Time Period Beneficiary Has

Been Enrolled in Part B

Medicare**

Time Period Beneficiary Has Been Entitled

to Benefits Under Part A Medicare**

0 - 11 months ≥ 12 months

0 – 11 months new enrollee factors Plan’s option: new enrollee

or full risk adjustment

factors

≥ 12 months full risk adjustment

factors

full risk adjustment factors

*Applies to Part C and D payments for MA plans, demonstrations, and PACE

organizations. Note that Medicare beneficiaries must be entitled to benefits under Part A

and enrolled in Part B to enroll in an MA plan.

**During data collection period. The data collection year is a lagged year for initial risk

scores and is the previous calendar year for mid-year and final risk scores.