This week, our In Focus section reviews recently announced major policy updates from the Centers for Medicare & Medicaid Services (CMS) that affect the Medicare Advantage (MA) and Part D programs. First, on January 30, CMS released the final Risk Adjustment Data Validation Final Rule, a highly anticipated and controversial policy that establishes the agency’s approach to auditing MA Organizations’ (MAOs) risk-adjustment payments and collecting overpayments as needed.
Then, on February 1, CMS published the Calendar Year (CY) 2024 Advance Notice for the MA (Part C) and Part D Prescription Drug Programs. Between these two directives and the proposed MA policy changes CMS announced in December 2022, the Administration continues its efforts to actively manage Medicare Advantage and strengthen quality and oversight of the program. HMA’s summary of the December 2022 proposed rule is available here.
Below are some highlights of the 2024 Advance Notice. By law, CMS must notify the public of planned changes in the MA capitation rate methodology and risk adjustment methodology annually. The deadline for submitting comments to CMS is Friday, March 3, 2023.
Payment Impact in MA: CMS is projecting an average increase in revenue of 1.09 percent in plan payments from last year. This percentage increase is based on a net number that reflects multiple factors including growth rates, change in STAR ratings, and risk score trends.
Risk Adjustment: CMS is seeking to make some refinements to the Part C risk-adjustment model. For example, CMS will begin using the International Classification of Diseases (ICD)-10 classification system (instead of the ICD-9 classification system) and updated underlying fee for service data years. More specifically, diagnoses data years are being updated from 2014 to 2018, and expenditure years are being updated from 2015 to 2019 to reflect changes in costs.
Star Ratings: CMS is proposing updates and refinements to the Star Ratings program, including:
- Retiring the diabetes care-kidney disease monitoring and Medication Reconciliation Post-Discharge
- Expanding the age range for colorectal cancer screening measure to 45−75 years old to align with the preventive task force
- Adding the Care for Older Adults (COA)—Functional Status Assessment measure back to the Star Ratings, and introducing Kidney Health Evaluation for Patients with Diabetes (KED), Concurrent Use of Opioids and Benzodiazepines (COB), Polypharmacy Use of Multiple Anticholinergic Medications in Older Adults (Poly-ACH), and polypharmacy Use of Multiple Central Nervous System Active Medications in Older Adults (Poly-CNS)
- Introducing a case-mix adjustment to Part D medication adherence measures for diabetes, hypertension, and cholesterol.
CMS also is seeking to potentially align measures with other CMS programs. Specifically, the agency is introducing a “Universal Foundation” of quality measures, which is a core set of metrics aligned across programs. Additional information can be found in this New England Journal of Medicine “Perspective”.
Part D Impact
The Advance Notice also notifies plans on the changes to the Part D benefit occurring in 2024 as a result of the Inflation Reduction Act (IRA), including:
- Beginning in CY 2024, CMS will eliminate cost-sharing for Part D drugs prescribed to beneficiaries in the catastrophic phase of coverage.
- Beginning in CY 2024, the Low-Income Subsidy program (LIS) under Part D will be expanded so that beneficiaries who earn 135−150 percent of the federal poverty level and meet statutory resource limit requirements will receive the full LIS subsidies that were available only to beneficiaries earning less than 135 percent of the federal poverty level prior to 2024.
- During CY 2024, CMS will prohibit Part D plans from applying the deductible to any Part D covered insulin product and from charging more than $35 for each month’s supply of a covered insulin product in the initial coverage phase and the coverage gap phase.
- During CY 2024, CMS will prohibit Part D plans from applying the deductible to an adult vaccine recommended by the Advisory Committee on Immunization Practices and from charging any cost-sharing payments at any point in the benefit for these vaccinations.
- Beginning in CY 2024, CMS will cap the growth in the Base Beneficiary Premium at 6 percent. The Base Beneficiary Premium for Part D is limited to the lesser of a 6 percent annual increase or the amount that would otherwise apply under the prior methodology had the IRA not been enacted.
The HMA Medicare team will continue to analyze these proposed changes. We have the depth and breadth of expertise to assist with tailored analysis, to model policy impacts across the multiple rules, and to support the drafting of comment letters on this notice.
If you have questions about the contents of CMS’s MA advance notice and how it will affect MA plans, providers, and patients, contact Julie Faulhaber ([email protected]), Amy Bassano ([email protected]), or Andrea Maresca ([email protected]).
