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CMS Issues Medicare Advantage Advance Notice Part II and Draft Call Letter

On January 30, 2019, the Centers for Medicare & Medicaid Services (CMS) issued Part II of the Advance Notice of Methodological Changes for Calendar Year (CY) 2020 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2020 Draft Call Letter. The Advance Notice and Call Letter includes proposed updates to MA payment rates and guidance to plan sponsors as they prepare their bids for CY 2020. Comments are due by 6:00 PM EST on Friday, March 1, 2019. The final Announcement and Call Letter will be published on April 1, 2019.

Overall, the proposed payment updates and policy provisions in 2020 Advance Notice and Draft Call Letter reaffirm the administration’s commitment to providing opportunities for growth and innovation for MA plans. In conjunction with other recent statutory changes and proposed regulations, these proposals seek to further the administration’s stated goals of reducing overutilization of opioids, controlling drug spending, and leveraging the flexibilities of the MA program to coordinate care. Key provisions of the Advance Notice and Call Letter are highlighted below.

Advance Notice and Call Letter Highlights

  • MA Plan Payment Changes: MA plan revenues, on average, are expected to increase by 1.59 percent in 2020 compared to a 3.4 percent increase in 2019. CMS will announce the final rates on April 1. This change does not factor in CMS’ assumption for its estimate of underlying coding trend, which is expected to increase average plan risk scores by 3.3 percent. While the 2020 projected increase is lower than that of 2019, HMA expects that this payment update will produce a favorable payment environment for MA plans and will lead to increased growth in the program.
  • Continued Expansion of Opioid Utilization Initiatives: The Call Letter discusses a number of measures focused on reducing opioid abuse. CMS urges Part D plans to place opioid reversal agents on tiers with lower cost-sharing to ensure access to these drugs. CMS also encourages plans to offer supplemental benefits that provide coverage of non-opioid pain management treatments. In addition, CMS proposes to advance Star Ratings measures related to opioid use.
  • Changes to Star Ratings: CMS proposes several changes to the Star Ratings program including a policy to adjust ratings for plans experiencing “extreme and uncontrollable circumstances,” such as major weather events or natural disasters. CMS also proposes to remove several measures due to low statistical reliability, including two Part D appeals measures. CMS seeks feedback on concepts for other measures to evaluate Part D appeals.
  • Pharmacy Benefit Risk-Bearing RFI: In an effort to control MA Part B drug spending, CMS solicits feedback in a request for information (RFI) on the potential use of pharmacy benefit risk-based arrangements between MA plans and contracted providers. This signals the agency’s continued efforts to reduce Part B pharmaceutical costs through private-sector purchasing.
  • Supplemental Benefits for the Chronically Ill: CMS proposes to implement provisions of the Bipartisan Budget Act of 2018 (BBA) that allow MA plans to vary supplemental benefit offerings based on the medical conditions and needs of chronically ill enrollees. CMS also solicits input from plans and stakeholders on whether plans should have the flexibility to determine the definition of chronic conditions that meet the statutory criteria of a “chronically ill enrollee.”
  • Crackdown on D-SNP “Look-Alikes”: As CMS prepares to implement provisions of the BBA, which requires increased alignment between MA Dual Eligible Special Needs Plans (D-SNPs) and states, the agency indicates that it will increase scrutiny of conventional MA plans that offer benefit designs that mirror those of a D-SNP, but do not otherwise meet D-SNP statutory requirements. Such scrutiny may lead to a reduction of D-SNP look-alike plans.

Webinar Replay: Medicare Advantage Advance Notice Overview: Favorable Signs for Managed Care Growth, Performance

During this webinar, HMA Managing Principal and former CMS Deputy Administrator for Medicare Jonathan (Jon) Blum, joined by HMA Managing Principal Mary Hsieh, provided an overview and analysis of the proposal’s key aspects, including the level of rate increase, growing emphasis on opioids, and efforts to further integrate duals. Speakers also addressed what these changes mean for Medicare Advantage plans’ existing strategies and opportunities.

For more information or questions about Medicare or the Advance Notice and Call Letter, please contact Mary Hsieh or Jon Blum.

2020 Medicare Advantage and Part D Advance Notice Part II and Draft Call Letter