This week, our In Focus reviews the Announcement of Calendar Year (CY) 2020 Medicare Advantage Capitation Rates and Medicare Advantage (MA) and Part D Payment Policies (Rate Announcement) and Final Call Letter, issued by the Centers for Medicare & Medicaid Services (CMS) on April 1, 2019. The Rate Announcement and Call Letter includes final updates to MA payment rates and guidance to plan sponsors as they prepare their bids for CY 2020. Bids for CY 2020 are due to CMS on or before Monday June 3, 2019. It is important to note that the Announcement and final Call Letter does not take into consideration the Health and Human Services (HHS) Office of Inspector General (OIG) proposed rule which seeks to remove anti-kickback protection for prescription drug rebates, which, if finalized as proposed, could have significant impacts on Part D plans’ bids. While the administration has not provided any guidance on how plans should construct their 2020 bids in response to the rebate changes, HHS could decide to delay the rule’s effective date to 2021 or CMS may allow plans to update their 2020 bids later this year.
Overall, the Rate Announcement and Final Call Letter signals the Trump Administration’s continued support to expand enrollment in MA. While CMS adopted many of its original proposals, the agency demonstrated receptiveness to feedback from the plan community in its final policies. Further, the net payment update is nearly 1.0 percentage point greater than its proposals, which should enable most plans to offer attractive benefit packages and premium stability for 2020. Key polices, including changes between the Advance Notice and Draft Call Letter (ANCL) and Rate Announcement and Final Call Letter, are highlighted below. HMA’s analysis of the ANCL for CY 2020, as well as well as other proposed regulations impacting Part C and Part D policies can be found .
Rate Announcement and Final Call Letter Highlights
- Increase in MA Payment Rates: 2020 MA plan revenues, on average, are expected to increase by 2.53 percent in 2020, up from the 1.59 percent estimated as a part of the ANCL, in large part resulting from an increase in the effective growth rate. Consistent with prior years, the CY 2020 expected change in plan revenues does not incorporate CMS’ estimate of underlying coding change, which is expected to increase average plan risk scores by 3.3 percent on average. Although the 2020 payment increase is smaller than the 3.4 percent net increase in 2019, it is a large increase relative to historical trends. HMA continues to expect this payment update will produce a favorable payment environment for MA plans and will lead to increased enrollment growth in the program.
- Enhancement of the Risk Adjustment Model: In accordance with the 21st Century Cures Act, which requires that CMS update the 2020 risk adjustment model to take into account the number of beneficiary conditions, CMS adopted its “alternative payment condition count model” (APCC) which incorporates additional diagnoses into the model, including dementia and ulcers. As proposed in the ANCL, CMS will calculate risk scores by blending data equally (50/50) from the existing 2017 CMS Hierarchical Condition Categories (CMS-HCC) model and the new APCC. In addition, CMS made final its proposal to increase the weight of encounter data in calculating the risk score. Consistent with its proposal, CMS will use 50% encounter data and fee-for-service (FFS) diagnoses (with inpatient Risk Adjustment Processing System (RAPS) data to supplement encounter data) and 50 percent RAPS and FFS diagnoses.
- Refinements to Special Supplemental Benefits for the Chronically Ill (SSBCI): CMS made final its proposal to implement provisions of the Bipartisan Budget Act of 2018 (BBA) that permit MA plans to vary supplemental benefit offerings based on the medical conditions and needs of chronically ill enrollees. However, in a reversal from its initial proposal, and in response to stakeholder feedback, CMS will permit plans for 2020 to offer items and services that include capital or structural home improvements (e.g., permanent ramps) so long as those items and services have a “reasonable expectation” of improving or maintaining overall function. CMS also solicited comments regarding whether or not the agency should permit consideration of social risk factors to determine permissible supplemental benefits for future policy making. While CMS received comments in support of using social determinants, the agency clarifies that statute limits SSBCI to only those that are chronically ill. The extent to which plans will offer these supplemental benefits in 2020 is unclear, but these additional flexibilities and benefits may present opportunities for plans and non-traditional service providers to pursue partnerships to offer innovative benefit design.
- Emphasis on Opioid Utilization: CMS made final a number of its provisions focused on reducing opioid abuse and provided additional guidance to plans. First, CMS reiterated that, beginning January 1, 2020, MA plans must cover opioid use disorder treatment services furnished by Opioid Treatment Programs (OTPs) as a Medicare Part B benefit. With regard to OTPs, commenters requested additional clarity with respect to bid preparations, eligible providers, drug policy, and compliance. In response, CMS indicated that additional guidance, including how to arrange for services, is forthcoming. Second, CMS emphasized that, in addition to the new OTP benefit, plans should offer supplemental benefits that provide coverage of non-opioid pain management treatments. Third, CMS restated that Part D plans should offer opioid-reversal agents (i.e., naloxone) on generic tiers. Some stakeholders expressed concerns that the inclusion of all forms of naloxone on generic tiers would limit plans’ ability to negotiate with manufacturers, potentially leading to an increase in naloxone list prices and, in turn, higher premiums. In response, CMS will encourage sponsors to include “at least one” naloxone product on a generic tier.
- Investigation of Dual-eligible Special Needs Plan (D-SNP) Lookalikes: In the ANCL, CMS indicated that it will increase its scrutiny and oversight of conventional MA plans that offer benefit designs that mirror those of a D-SNP, but do not otherwise meet D-SNP statutory requirements. CMS also requested comments on the extent to which these plans impact informed enrollee choice, competition, meaningful care coordination, and provider burden. Based on stakeholder feedback, CMS identified three areas for further investigation and potential future regulatory changes related to D-SNP lookalikes: 1) benefit design and nondiscrimination, 2) beneficiary education, marketing, and broker compensation, and 3) enhanced requirements for MA plans with high proportions of dual-eligible beneficiaries.
- Maintaining Existing Part D Tier Composition Requirements: In response to “overwhelming opposition” from plan sponsors, CMS has elected to maintain the existing Part D plan tier composition policy and will not prohibit placement of generics on brand tiers (and vice versa) or eliminate the non-preferred tier. Plans will continue to have the ability to maintain a maximum threshold of 25 percent generic composition for the non-preferred drug tier. However, CMS will continue to monitor the extent to which current tier composition policies have an adverse impact on beneficiary access to generic alternatives.
- Modifications to Part D Auto-ship Policy: As proposed in the ANCL, CMS will replace its current policy requiring plans receive affirmative consent prior to shipping or delivering a new or refill prescription and will permit Part D sponsors to permit their network pharmacies to offer a voluntary auto-ship program. In response to stakeholder feedback, CMS will: remove the requirement that a beneficiary use a drug for four continuous months in order to qualify, eliminate the requirement for obtaining consent on an annual basis, permit plans to provide an approximate shipping date range rather than an exact date for reminders, and permit plans to provide beneficiaries with information on how to determine cost-sharing of an upcoming shipment rather than requiring the exact amount. CMS also clarified that pharmacies may request the enrollee return unwanted medications, but they cannot require return as a condition of a refund.
- Future Direction of Provider Directories: While CMS did not include any specific proposals regarding MA plan provider directories in the ANCL, the agency acknowledged a lack of improvement in accuracy as well as the challenges in collecting and maintaining accurate and timely information. In the final Call Letter, CMS stated that the agency received several comments from plan stakeholders expressing support for an industry-wide solution for improving provider directories. CMS indicated that the agency agrees with these comments and is researching options for assisting plans and providers in identifying a single source for demographic provider directory data.
- Changes to Star Ratings: CMS made final several proposed changes to the Star Ratings program including a policy to adjust 2020 Star Ratings for plans experiencing “extreme and uncontrollable circumstances,” such as major weather events or natural disasters, using a policy similar to the one adopted for the 2019 Star Ratings. CMS also made final its proposal to remove measures with low statistical reliability, including two Part D appeals measures, starting in 2022. In addition, CMS made final a measure set used for the 2020 Categorical Adjustment Index and it made final the inclusion of measures including a Transitions of Care Measure (Part C) and a measure of Follow-up after Emergency Department Visit for Patients with Multiple Chronic Conditions (Part C). Consistent with its policy for adopting new measures, CMS will first add these measures to the display page in CY 2020. In addition, in response to industry concerns, CMS will maintain the measure of Statin Use in Persons with Diabetes (SUPD) (Part D) with a weight of 1.
HMA continues to analyze these provisions and others included in the CY 2020 Announcement and Call Letter. For more information or questions about HMA’s Medicare Practice or the MA Announcement and Call Letter, please contact Mary Hsieh or Jon Blum.