Medicare Advantage Glossary
A
- Advanced Notice
- The publication of proposed changes to the methodology used in the previous year to determine annual Medicare Advantage payment rates. Required to be announced at least 60 days prior to the annual rate announcement.
B
- Base Payment
- The portion of the federal payment to Medicare Advantage insurers that pays for the cost of providing Medicare Part A and Part B services.
- Benchmark
- The maximum amount the federal government will pay per month for an average Medicare beneficiary enrolled in a Medicare Advantage plan in a county.
- Bid
- The amount a Medicare Advantage insurer estimates it will cost to provide Medicare Part A and Part B covered services under a proposed plan benefit package for an average Medicare beneficiary.
- Bid Pricing Tool
- The forms and instructions provided by CMS to assist plans in developing and submitting the required information for each plan benefit package it proposes to offer in the upcoming year.
C
- Chart Review
- The process of reviewing a person’s medical records to determine if there are additional diagnoses that would be appropriate to include and/or if there are diagnoses that were included in information submitted to the insurer that are inaccurate and should be removed.
- Coding Intensity
- The degree to which Medicare beneficiaries’ health care conditions are documented through diagnoses codes submitted to Medicare Advantage insurers or traditional Medicare. Also used to describe the difference in coding patterns, and resulting risk scores, between groups of beneficiaries, such as those in Medicare Advantage and traditional Medicare, or those in Medicare Advantage plans sponsored by different insurers.
D
- Double Bonus Counties
- Counties where qualifying plans (those with at least a 4-star quality rating) receive a 10 percentage point increase in their benchmark. These are urban counties with lower-than-average traditional Medicare spending and historically high Medicare Advantage penetration.
H
- Health Risk Assessment (HRA)
- A tool used to evaluate a person’s health status, including their health care conditions, health history, and potential risks.
I
- Individual Plan
- A Medicare Advantage plan available for enrollment to any Medicare beneficiary with both Medicare Part A and Part B in the county where it is offered. Also referred to as conventional plans.
M
- Medical Loss Ratio
- The percentage of revenue, including federal payments and any supplemental premiums paid by enrollees, that an insurer spend on covered benefits and quality improvement activities.
N
- Normalization Factor
- The adjustment used by CMS to rescale risk scores so that the average risk score for traditional Medicare beneficiaries is equal to 1.
Q
- Quality Bonus Program
- The Affordable Care Act requires CMS to increase the benchmark for plans that are part of contracts that have at least a 4-star rating, on a 5-star scale. The increase in the benchmark is 5 percentage points in most counties and 10 percentage points in double bonus counties.
R
- Rate Announcement
- The publication of final annual Medicare Advantage capitation rates for each payment area for the upcoming year, as well as the process for adjusting these rates for the health status of enrollees and other factors, and a description of and rationale for the underlying assumptions and changes in methodology. Required to be published by the first Monday in April.
- Rate Book
- The Medicare Advantage monthly capitation rates published by CMS for local, regional, and employer group waiver plans. Rates are published by star rating.
- Rebate
- The portion of the federal payment to Medicare Advantage insurers that pays for reduced cost sharing, non-Medicare covered benefits, and to buy-down Part B and/or Part D premiums. Only plans that bid below their benchmark (which is most plans) receive a rebate.
- Risk Adjustment
- The process of increasing or decreasing the federal payment to Medicare Advantage insurers to account for an enrollee’s health status and expected health care spending.
- Risk Adjustment Data Validation Audit
- Process used to verify the accuracy and appropriateness of diagnosis information submitted by Medicare Advantage insurers for the purpose of risk adjusting payments from the federal government.
- Risk Adjustment Model
- The process used to estimate the effect of a person’s characteristics and diagnosed health conditions on their expected health care spending.
- Risk Score
- The numerical value assigned to a Medicare Advantage enrollee, using the risk adjustment model, based on their age, sex, dual status, whether they live in an institution, and their diagnosed health conditions, which is used to predict their health care spending, and the payments made to the Medicare Advantage plan in which they enroll.
S
- Special Needs Plan
- A Medicare Advantage plan that restricts enrollment to Medicare beneficiaries that meet certain criteria, including being enrolled in both Medicare and Medicaid (dual-eligible individuals), having certain chronic conditions, or requiring an institutional level of care.
- Star Rating
- The numerical value assigned to a Medicare Advantage contract, and all plans within the contract, based on performance on a set of quality measures. Star ratings range from a low of 1 for the lowest performing plan to a high of 5 for the highest performing plans.