The 2020 Advance Notice and Final Call Letter for MA & Part D

On January 30, 2019, the Centers for Medicare & Medicaid Services (CMS) released Part II of its 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. This follows Part I, released December 30, 2018, which provided CMS’ proposed updates to risk adjustment methodology. The deadline for stakeholder comments is Friday, March 1, 2019, at 6:00 pm EST. The final Announcement and Call Letter will be published on April 1, 2019.

Parts I and II of the Advance Notice reflect a continuation of the theme we have seen over the past several years, particularly increasing benefit flexibility, attention to the opioid crisis, administrative cost reduction, and changes in risk adjustment to reflect greater reliance on encounter data and implementation of the requirements of the 21st Century Cures Act.

The 2020 projection once again provides a favorable payment outlook for MA plans. CMS projects a 1.59% aggregate increase in Part C payments, inclusive of trend and methodology changes. Although this is below 2019’s final increase of 3.4%, it’s only slightly less than the 2019 Advance Notice estimate of 1.84%. The projection reflects a 4.59% payment trend, better than the preliminary estimate, which is offset by payment methodology changes. We could see an even better outlook when the final rates are published, and, for example, rebasing, which is not published until the Announcement, typically provides an increase of 0.1% to 0.5%. In addition to the predicted trend and methodology impact, CMS estimates plans will realize an average 3.3% increase in 2020 as a result of coding. Note, the CMS outlook reflects an aggregate projection, and the actual payment outlook may vary significantly between counties due to rebasing and plans due to coding and Star Ratings performance.

Further highlights from Parts I and II are provided below. Our detailed white paper analysis is coming soon. In the meantime, register for our upcoming webinar on the Trends & Major Implications of the 2020 MA Draft Call Letter on Thursday, February 21, 2019, from 1:00-2:00 pm ET.

Part C Updates

Programs to Reduce Opioid Dependence – CMS is encouraging plans to take advantage of the new flexibilities to offer targeted benefits, including pain management and complementary and integrative treatments, for patients with chronic pain or undergoing addiction treatment. Additionally, plans will need to comply with the Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act and establish opioid use disorder treatment services furnished by Opioid Treatment Programs (OTPs) as a Medicare Part B service. Opioid use disorder treatment services include FDA-approved opioid agonist and antagonist treatment medications and the dispensing and administration of such medications; substance use counseling; individual and group therapy; toxicology testing; and other items and services CMS determines appropriate (excluding meals and transportation).

Programs for Chronically Ill Members – Plans have been provided a broad discretion in developing their programs with the expectation that the services or items offered have a reasonable expectation of improving or maintaining the health or overall function of the enrollee’s chronic disease. The major limitation placed on plans is that these benefits may not include capital or structural improvements to the member’s home so as not to increase property value. Beginning in 2020, CMS will waive the uniformity requirements for Separate Individual Benefits for the Chronically Ill (SSBCI) but maintains that programs offered may not be used to induce membership.

Cost-Sharing Standards – CMS proposes to add cost-sharing standards for cardiac rehabilitation, intensive cardiac rehabilitation, pulmonary rehabilitation, and supervised exercise therapy (SET) for peripheral artery disease (PAD) services for CY 2020.

Part D Updates

Proposed Rule for Drug Rebate Transparency – Separate from the Advance Notice, the administration has proposed removing the safe-harbor exemption for drug rebate payments to pharmacy benefit managers (PBMs) and managed care plans. This will have a significant impact on how plans approach their Part D bids and PBM contracts.

Coverage Gap Cost-Sharing – Plans’ Part D bid spend will increase as coverage gap cost-sharing is fully phased in for 2020. Beneficiary coinsurance for non-applicable drugs in 2020 is 25% compared to 37% in 2019 (applicable drug cost-sharing changes were fully phased in during 2019).

Formulary Tiering – In line with the administration’s goal to reduce the medication cost burden, CMS is considering discouraging or prohibiting mixed tier formularies. Going forward, generics would be part of generic formulary tiers and brands would be part of brand formulary tiers. CMS also believes this tier structure would reduce confusion to beneficiaries.

Discontinuation of Some Part D Audits – CMS has retired the Transition Monitoring Program Audits (TMPAs) and Pricing Accuracy Audit (PAA) in Medicare Plan Finder display measure for 2020 and has discontinued these audits, along with Formulary Administration Audits (FAAs), for CY2019 as they have been viewed as duplicative of other oversight monitoring projects.

Risk Adjustment

Encounter Data Transition – CMS is proposing to accelerate the transition from reliance on Risk Adjustment Processing System (RAPS) to Encounter Data System (EDS) submissions for risk adjustment. The Advance Notice proposes a significant increase from 25% to 50% EDS for 2019. The impact on plan payments will vary significantly based on how plans have prepared for this transition, and poorly prepared plans may experience revenue decreases attributable to the transition.

21st Century Cures Act – CMS has requested comment on two proposed Patient Condition Count (PCC) models – one originally proposed in 2019 (but not adopted to allow for further analysis) and an alternate model, which adds additional diagnostic categories for dementia and peptic ulcer. The PCC phase-in continues – weighting of the 2017 model will decrease from 75% to 50%, while the PCC model will increase from 25% to 50%.

Normalization Factor – For payment year 2020, CMS proposes to calculate two normalization factors for Part C, blending the factor based on the 2017 CMS-HCC [Hierarchical Condition Category] model with the factor used to normalize the risk score calculated with the proposed PCC model. For 2017, these are estimated at 1.075 and 1.069, respectively. It’s noteworthy that the revenue impact of normalization is the largest offset to projected rate increase. Further, normalization has consistently trended up in recent years.

Star Ratings

Measure Changes – CMS’ policy claims of programmatic stability are a bit misleading with reminders offered of the impending, including the following:

• Patient access and experience measure weight increases from 1.5x to 2x beginning with the 2019 measurement year

• Removal of the Adult BMI [Body Mass Index] Assessment and both Part D Appeals measures citing “low reliability” beginning with the 2020 measurement year (2022 Star Ratings)

• Increased weighting of the Statin Use in Persons with Diabetes (SUPD) measure to 3x weight beginning with the 2020 Star Ratings

• Controlling Blood Pressure measure will retire from the 2020 and 2021 ratings

• Plan All-Cause Readmissions measure will retire from the 2021 and 2022 ratings

• Transitions of Care measure expected to be added as a new 2020 display measure; Medication Reconciliation Post-Discharge to be 1 of 4 measure elements

• Medication Adherence measures may be risk adjusted for various socio-demographic characteristics beginning with 2018 calculations

• MPF [Medicare Plan Finder] Price Accuracy measure changes will be implemented through the display page for the 2020 and 2021 ratings

• Potential adjustments to OMW [Osteoporosis Management in Women Who Had a Fracture] and COA-FSA [Care for Older Adults ‒ Functional Status Assessment] are under consideration

• CMS reminds plans that certain Star Ratings measures have been purposely designed to require data/technological interoperability for sustained success, including the Healthcare Effectiveness Data and Information Set (HEDIS®) measures of Transitions of Care and Post-Discharge Medication Reconciliation and the CAHPS® Care Coordination measure

Opioid-Related Measures – CMS proposes adding new measures to the display page for the 2019 and 2020 measurement years. With CMS’ encouragement for plans to offer targeted benefits and cost-sharing reductions to patients with chronic pain or undergoing addiction treatment, the Consumer Assessment of Healthcare Providers and Systems (CAHPS®) impacts of effective opioid strategies and support will likely filter through to Star Ratings immediately.

Measures for High-Visibility Issues – The National Committee for Quality Assurance (NCQA) is also considering development or expansion of measures to address high-visibility topics such as pain management and the opioid crisis, adherence to antipsychotic medications, excessive prescribing of antibiotics for respiratory conditions, overtreatment of diabetes as it pertains to intensive A1c targets, and the overarching theme of medication reconciliation.

Other Updates

Dual Eligible Special Needs Plan (D-SNP) “Look-alikes” – CMS is targeting non-SNP MA plans with high proportions of dual-eligible enrollees. These plans, approved by CMS as conventional MA products, are characterized by high cost-sharing for Medicare Parts A and B benefits that most dual-eligible beneficiaries are not required to pay and Part D premiums and deductibles that are covered by the Part D Low Income Subsidy.

Electronic Clinical Data – CMS and NCQA continue to strive to utilize technology to enhance HEDIS® measures. This includes a push for Part C measure digitalization as well as driving for interoperability to enhance the exchange of data and use of electronic health information. CMS is seeking comment on ways to measure health plans’ progress in maximizing their capabilities to exchange health information with other plans, healthcare providers, and others to expand access to health data. This reminder comes as a harsh reality for plans that have deployed human capital in recent years to “block and tackle” areas CMS designed to be solved through technology and scale, including the HEDIS® measures of Transitions of Care and Post-Discharge Medication Reconciliation and the CAHPS® Care Coordination measure.

Provider Directory Accuracy – As CMS concluded the third year of online provider directory reviews, the results continued to demonstrate an overall lack of improvement. While insight has been gained on the common drivers of deficiencies and CMS acknowledges the efforts of MA plans and vendors to address the issue, the depth of inaccuracies has called into question the impact on a member’s access to care as well as the validity of an MA plan’s provider network adequacy. The industry has expressed the lack of a central repository or “source of truth” and a key factor in ensuring data integrity and concern that the current validation process places an undue administrative burden on providers, especially providers participating in multiple MA plans, when they receive a large number of requests to validate the same information. CMS will continue its focus on provider directories and work with stakeholders to address this complex issue.

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Jeff Fox
Jeff Fox

Jeff Fox is President of Gorman Health Group (GHG). In this role as a member of GHG’s senior leadership team for more than a decade, he is intimately involved with aspects of both business development and client engagement management. Jeff brings GHG clients more than 25 years of experience as one of the nation’s leading experts on government-sponsored programs as well as a passion for health insurance sales, marketing, and product development.

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