CMS Pub. 100-16, ch. 8, § 70.4.2

CMS-HCC Model

(Rev. 89; Issued: 11-02-07; Effective/Implementation: 11-02-07)

From 2000 through 2005, CMS adjusted the demographic portion of the payment to MA

organizations for their MA plans with contract-level working aged (WA) factor.

CMS determined that for the risk adjusted portion of the payments, adjusting only for the

proportion of working aged enrollees is not appropriate because the risk adjustment rates

are based on combined costs for aged and disabled beneficiaries. Effective 2006, CMS

revised the prior MSP methodology for the aged (the working aged adjustment) to include

the disabled.

For CY 2006, CMS applies two contract-level MSP factors applied to adjust payments to

the MA organization:

• CMS continues to apply a contract-level working aged (WA) adjustment factor to

demographic payments; and

• CMS applies a contract-level MSP adjustment factor, based on the proportion of

WA and working disabled (WD) enrollees, to the risk adjusted payments.

Effective 2007, MA plans move to 100 percent risk-adjusted payments, so CMS applies a

single contract-level MSP factor to adjust payments based on the proportion of WA and

WD enrollees.

Each MA organization surveys a cohort of its aged and disabled members and reports to

CMS those with coverage primary to Medicare due to WA and WD status. The MSP status

of non-responders to the survey is determined from the Common Working File. Using this

information, CMS then calculates a contract-level WA/WD payment adjustment factor by

comparing prospective monthly blended payments with no WA/WD adjustment to monthly

payments with a WA/WD adjustment for those identified as MSP.