On Monday, April 2, 2018, the Centers for Medicare & Medicaid Services (CMS) released the Announcement of Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter.
“The final Medicare Advantage (MA) Call Letter is even better than expected, coming in 160 basis points better than the draft,” said John Gorman, Gorman Health Group’s Founder & Executive Chairman. “Revenues will be up in 2019 by 6.4%, the best increase we’ve seen in 15 years, since W’s Medicare Modernization Act in 2003. It affirms our expectations for 8% MA growth in 2018 and 9% in 2019 and that the program remains the only safe game in health insurance under Trump.”
Our distinguished team of experts collaborated to provide initial thoughts and a brief overview on the final regulation below:
- Expected average change in revenue from Part C Methodology is higher than expected, coming in at 3.4%.
- Even better than Advance Notice due to higher trend, positive effect of rebasing, and tweak to Employer Group Waiver Plans (EGWPs).
- CMS adopted the alternative adjustment for EGWPs, which mitigates the hit to EGWPs. The change here is fairly small because it’s the impact on ALL plans, but a big deal for EGWPs (approximate 1.0% v. 0.1%).
- No change in coding intensity adjustment. Since we have fully phased in the Affordable Care Act (ACA) adjustment, CMS has some discretion now, and the Medicare Payment Advisory Commission (MedPAC), et al., keep talking about the need, so it’s a “win” they didn’t do anything here for 2019.
- In the past, CMS has included a line to show a greater increase in Part C revenue to plans based on CMS’ estimate of the impact of coding programs; there has been criticism of this in prior years. So for the Advance Notice, they didn’t include it, and it doesn’t appear here, so it may be gone for good.
- Star Ratings: No notable difference from what was announced in the draft.
- The expanded definition of health-related supplemental benefits stayed in, which opens the door to a lot of opportunity.
- The proposed Civil Money Penalty (CMP) icon for Medicare Plan Finder (MPF) will not be implemented at this time due to “concerns that the CMP icon would create confusion among beneficiaries and that it would not accurately reflect a sponsoring organization’s current performance.” However, CMS said there were a few strong supportive comments for this item, and since transparency is important, they plan on considering alternate approaches to communicate CMP information to beneficiaries. This bears watching to ensure whatever approach CMS develops does not fall subject to the same pitfalls
- CMS is allowing the Compliance Program Effectiveness (CPE) portion of the program audit to satisfy their annual requirement to conduct a CPE audit the following year. The example they provide is if a program audit begins at any point in 2019, the plan doesn’t have to conduct an internal CPE audit until 2021. The time period to conduct a CPE audit is typically the previous year.
Food for thought: Will they allow this for plans getting audited this year? For the CPE audit item, CMS mentioned they will be making changes to the sub-regulatory manuals. Without clarification, the exemption would be effective starting in 2019.
- Encounter data: This is essentially paid claims information. The share of the payment formula based on this data increased from 15% to 25%. Not ideal due to the common inaccuracy of the data.
Our team will continue to examine the Rate Notice and Call Letter in the next several days. Stay tuned for our detailed white paper for further analysis and join us at our Forum this month. Download our agenda here for more details.
Gorman Health Group’s summary and analysis of the 2019 Advance Notice and Draft Call Letter for Medicare Advantage and Part D is now available. Download now
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