The 2020 Rate Announcement & Final Call Letter for MA & Part D


On April 1, 2019, the Centers for Medicare & Medicaid Services (CMS) released final policy and payment updates to the Medicare Advantage (MA) and Part D programs through the 2020 Rate Announcement and Call Letter. In its conference call with stakeholders on April 3, 2019, CMS stated its intent for the release is to “strengthen Medicare and unleash innovation.”

The Announcement and Call Letter reflect adoption of nearly all CMS proposals as presented in the Part I and Part II Advance Notice, although it does not provide insight into how CMS will address the proposed Part D safe harbor rule affecting drug rebates, which, if finalized, could have a significant impact on plan bids.

The pervasive theme of the Call Letter is a continuation of CMS’ emphasis on greater flexibility and beneficiary choice. Several provisions allow plans greater flexibility for supplemental benefits and benefits for chronically ill individuals. Additionally, all Advance Notice proposals to address the opioid crisis have been adopted, with implications for Part D, Star Ratings, and targeted benefits.

Read the complete Announcement and Call Letter here:

2020 Rate Announcement & Call Letter


The announced county benchmark rates reflect a fee-for-service (FFS) trend, which is 103 basis points higher than the estimate presented with the Advance Notice. All-in, CMS estimates an aggregate increase in MA payments of 2.53%, 94 basis points higher than estimated, although lower than 2019’s aggregate increase of 3.4%.

The rates reflect an adjustment to the FFS base for beneficiaries enrolled in Puerto Rico to reflect the higher proportion of zero-dollar beneficiaries as compared to nationwide. This resulted in an increase of 4.7% to standardized FFS costs for the period 2013-2017 used for 2020 rate development. For rates overall, inclusion of certain fees paid in CMS Innovation Center models are also being reflected in FFS experience.


The Announcement does not address the administration’s proposed rule to eliminate the safe harbor under the anti-kickback protection as it pertains to Part D sponsors and drug rebates. If finalized as proposed, the rule would be effective January 1, 2020, and could significantly impact Part D plan bids. There has been no guidance on how plans should construct their 2020 bids in response to the rebate changes, however, the U.S. Department of Health and Human Services (HHS) could decide to delay the rule’s effective date, or CMS may permit plans to update their 2020 bids later this year.

AKS makes it a crime to pay or receive anything of value as an incentive or inducement to use a healthcare service that is reimbursable by a federal healthcare program. This would make a rebate paid to encourage an MA plan, a Part D plan, or a Medicaid managed care plan for the purpose of favoring a particular drug a violation of the AKS, provided there is evidence of the requisite intent.

Provisions of the proposed rule for MA and Part D sponsors include elimination of the current AKS protection for manufacturer rebates paid to Prescription Drug Plans (PDPs), Medicare Advantage Prescription Drug Plans (MA-PDs), Pharmacy Benefit Managers (PBMs), and Medicaid Managed Care Organizations (MCOs), creation of a new safe harbor for PBM service fees (effective 60 days after final rule in 2020), and protection of certain fixed payment service fees paid by manufacturers to PBMs for services rendered to manufacturers. Plan sponsors will be impacted by the loss of rebate dollars, loss of the rebate offset for premiums, and cost sharing under Part D.


Addressing the Opioid Epidemic

  • CMS has again emphasized its commitment to a comprehensive and multi-pronged strategy to combat the over-utilization and abuse of opioid pain medication with a three-pronged approach: 1) prevention of new cases of opioid use disorder (OUD), 2) treatment of patients who have already become dependent on or addicted to opioids, and 3) utilization of data from across the country to better target prevention and treatment activities. Policies implemented in 2019, including Part D drug management programs for high-risk opioid users and improved safety alerts such as the 7-day supply limit for opioid naïve patients, will be continued in 2020.
  • For 2020, CMS is encouraging plans to take advantage of the new flexibilities to offer targeted benefits and cost-sharing reductions for pain management and complementary and integrative treatment benefits for patients with chronic pain or undergoing addiction treatment.
  • To increase access to Opioid Reversal Agents, CMS is strongly encouraging Part D sponsors to provide lower cost sharing for opioid-reversal agents, such as naloxone, and increased access to medication assisted treatment (MAT) plans.
  • The Star Ratings development process reflects changes to Medicare Part D opioid-related measures, including updating specifications for the Use of Opioids at High Dosage and/or from Multiple Providers, and Concurrent Use of Opioids and Benzodiazepines measures, and adding them to the Display Page. This is a necessary first step before measures can be formally adopted as part of Star Ratings.

Supplemental Benefits

  • CMS clarified and further expanded its guidance for supplemental benefits, which must be: 1) not covered by Original Medicare, 2) primarily health related, and 3) the plan must incur a non-zero direct medical cost in furnishing or covering it. CMS expanded its interpretation of the criterion that supplemental benefits be “primarily health related” to consider an item or service as primarily health related if it is used to diagnose, compensate for physical impairments, acts to ameliorate the functional/psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization.
  • The provision for Special Supplemental Benefits for the Chronically Ill (SSBCI) gives plans an almost blank slate to develop programs for the chronically ill. Items and services may include but are not limited to: meals furnished to the enrollee beyond a limited basis, transportation for non-medical needs, pest control, indoor air quality equipment and services, and benefits to address social needs, so long as such items and services have a reasonable expectation of improving or maintaining the health or overall function of an individual as it relates to his or her chronic condition or illness. CMS reversed its position from the Advance Notice and will allow plans to include capital or structural improvements to the member’s home.

Plan Benefits

  • Maximum Out-of-Pocket (MOOP) for Part D is significantly increased for 2020: $6,350 versus $5,100 in 2019, driven by a change in formula as set forth by Congress. This could cause a significant strain on beneficiaries taking high-cost medications as the catastrophic threshold will take much longer to reach and will need to be considered in plan bids.
  • CMS signaled potential changes to the Part C MOOP limits for 2021 – currently set at $0 – $3,400 (voluntary MOOP) and $3,401 – $6,700 (mandatory MOOP). CMS is considering an intermediate MOOP from $3,401 – $5,000 that has a less restrictive set of cost-sharing limits than the mandatory MOOP cost-sharing limits. For plans that are already in this MOOP range, it would most likely have a positive impact to the Total Beneficiary Cost (TBC) and Medicare Plan Finder (MPF) models and allow plans more flexibility in increasing cost sharing.
  • Cost-Sharing Standards – CMS added cost-sharing standards for cardiac rehabilitation, intensive cardiac rehabilitation, pulmonary rehabilitation, and supervised exercise therapy (SET) for peripheral artery disease (PAD) services for Calendar Year (CY) 2020.
  • Beginning in 2020, CMS will waive the uniformity requirements for SSBCI but maintains that programs offered may not be used to induce membership.

Risk Adjustment

  • Continuing implementation of the 21st Century Cures Act, 2020 risk scores will reflect a blend of 50% from the CMS-Hierarchical Condition Category (HCC) model (using diagnoses from Risk Adjustment Processing System (RAPS) and FFS) and 50% calculated using the alternative payment condition count (APCC) model. The APCC model for the blended risk score calculation model includes additional HCCs for dementia and pressure ulcers as well as variables that take into account the number of conditions a beneficiary may have.
  • Despite extensive comments from stakeholders, CMS adopted its proposal to accelerate the transition from reliance on RAPS to Encounter Data System (EDS) submissions for risk adjustment by increasing the proportion of risk scores derived from EDS from 25% to 50%. 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.
  • As proposed in the Advance Notice, CMS maintained the coding intensity adjustment at the statutory minimum of 5.9%.

Special Needs Plans

  • CMS confirmed its intention to crack down on Dual Eligible Special Needs Plan (D-SNP) “look-alikes” – non-SNP MA plans with high proportions of dual-eligible enrollees. The concern is these products undermine the efforts of the integration of Medicare and Medicaid to improve the experience of the dual-eligible individual, coordinate care, reduce institutionalization, and enhance opportunities for community living.
  • SNPs may offer the physical exam supplemental benefit that is currently available to non-SNP MA plans.
  • D-SNPs are allowed to integrate coverage of Medicare and Medicaid benefits into the Summary of Benefits and other member materials. D-SNPs with membership exclusively comprised of dual-eligible individuals who are exempt from Medicare cost sharing now have the opportunity for plan materials and the MPF on to reflect $0 for all benefits covered by Medicare Parts A and B.

Star Ratings

The 2020 Star Ratings will be the final year when all changes to the methodology for calculating the ratings and any changes in the measurement set will be addressed using the Call Letter. Beginning with the 2021 Star Ratings, any changes to the methodology will be proposed and finalized through rulemaking. In parallel with CMS’ release of the final Call Letter, additional program changes were released through rulemaking via a 2019 Final Rule.

Noteworthy changes to the 2020 Star Ratings include the following:

  • Temporary retirement of Controlling Blood Pressure to the display page due to new treatment guidelines and structural measure changes.
  • Maintaining the Statin Use in Persons with Diabetes as a 1x-weighted measure despite previously announced plans to triple weight the measure.

Potential measure changes for the 2021 Star Ratings, introduced through the combination of the Call Letter and additional rulemaking, include the following:

  • Temporary retirement of Controlling Blood Pressure to the display page due to new treatment guidelines and structural measure changes.
  • Temporary retirement of Plan All Cause Readmissions to the display page due to substantive measure changes.
  • Reminder that Patients’ Experience and Complaints and Access measures will receive 2x-weighting beginning with 2021 ratings.
  • Use of the 2021 cut points as the starting point for applying guardrails in the 2022 ratings.
  • Current plans to retain Medication Reconciliation Post-Discharge as a standalone measure.

Noteworthy changes for the 2022 Star Ratings, introduced through the combination of the Call Letter and rulemaking, include the following:

  • Addition of measure-specific cut point caps in both directions to provide guardrails so the measure threshold-specific cut points do not increase or decrease more than 5% for measures on a 0 to 100 scale (or more than a 5% restricted range cap for measures not on a 0 to 100 scale) for non-Consumer Assessment of Healthcare Providers and Systems (CAHPS®) measures in the program for more than 3 years.
  • Addition of mean resampling of the current year’s data to the current cut point clustering algorithm to attenuate the effect of outliers.
  • Return of Controlling Blood Pressure to Star Ratings with 1x weight during the initial year of reintroduction.
  • Temporary retirement of Plan All Cause Readmissions to the display page due to substantive measure changes.
  • Temporary retirement of Care of Older Adults – Functional Status Assessment to the display page for the 2022 and 2023 ratings due to substantive measure changes.
  • Removal of Adult BMI Assessment and both Part D Appeals measures.
  • Adoption of new MPF Price Accuracy measure specifications.

Also noteworthy are the following Star Ratings updates:

  • Addition of several Opioid Management measures to the 2021 and 2022 display page, with indication of CMS’ potential to add all or some measures as early as the 2023 Star Ratings.
  • New policy of assigning a rating of 1 star to the applicable appeal(s) measures if a contract fails to submit Timeliness Monitoring Project (TMP) data for CMS’ review to ensure the completeness of the contract’s Independent Review Entity (IRE) data.


The Call Letter provides a Parts C and D Annual Calendar, which details important dates for Calendar Year 2020. Some key deadlines are provided below:


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