On February 1, 2018, the Centers for Medicare & Medicaid Services (CMS) proposed changes to the Medicare Advantage and Part D programs through the Advance Notice and Draft Call Letter (Advance Notice) for calendar year 2019. As required by section 1853(b) of the Social Security Act, CMS publishes annually the Advance Notice at least 60 days prior to the publication of the final rate announcement. The Advance Notice has become increasingly important as Medicare Advantage enrollment continues to grow annually. According to CMS, close to 1/3 of Medicare beneficiaries are now enrolled in Medicare Advantage Plans.
CMS notes that the proposed policies and updates for 2019 are intended to “remove barriers to innovation and foster greater transparency, flexibility, and program simplification.” CMS proposes an average rate increase of 1.84%, and factoring in plan coding practices CMS estimates a net payment increase of 4.94% for 2019. As a result of the proposed rate increase, along with the recent suspension in the Tax Cuts and Jobs Act of the Affordable Care Act’s health insurance tax, there should be a positive outlook for Medicare Advantage sponsors in 2019.
The Advance Notice is a wide-ranging and comprehensive guidance document. Some of the major changes include:
- Health Related Supplemental Benefits – Medicare Advantage plans can offer beneficiaries supplemental benefits not otherwise covered by traditional Medicare. Previously, CMS has not allowed supplemental benefits when the primary purpose is daily maintenance. CMS seeks to expand the scope of services or items that are primarily health related to include benefits that compensate for physical impairments, ameliorate the impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization. The agency believes this change will “allow MA plans more flexibility in offering supplemental benefits that can enhance beneficiaries’ quality of life and improve health outcomes.” CMS intends to provide detailed guidance in the future, which will be informed by earlier stakeholder feedback and comments received by the Advance Notice.
- Uniformity Flexibility – CMS has determined that providing services or cost sharing related to health status or disease is consistent with the uniformity regulatory requirement. CMS caveats that similarly situated enrollees must be treated the same and have the same access to the targeted benefits. Benefits may not be designed to discriminate against beneficiaries. The Advance Notice includes the example of an Medicare Advantage plan using cost sharing or supplemental benefits for a large number of conditions while excluding high-cost conditions. The proposed change appears similar to the Medicare Advantage value-based insurance design model currently offered by the Center for Medicare and Medicaid Innovation in ten states: Alabama, Arizona, Indiana, Iowa, Massachusetts, Michigan, Oregon, Pennsylvania, Tennessee, and Texas.
- Employer Group Waiver Plans (EGWP) – CMS proposes to fully transition to only using individual plan bids instead of blending EGWP and individual bids. This had been proposed for 2018, but then implementation was delayed. Such a change is expected to reduce payments to EGWPs.
- Publicly Identifying Imposition of Civil Monetary Penalties (CMPs) – CMS proposes to identify sponsoring organizations that have received CMPs by displaying an icon or other type of notice on Plan Finder. The agency believes this would be consistent with the requirement to provide information that enables beneficiaries to make informed decisions.
- Audit of Compliance Program – CMS proposes to treat sponsoring organizations that have undergone a program audit to have met the annual compliance program audit requirement. Compliance with the requirement would be one year from the date of the CMS program audit. This proposal would align with the Trump administration’s overall goal of reducing regulatory burden and will be welcomed by sponsoring organizations undergoing a program audit.
- Provider Directories – CMS indicates that Civil Money Penalties (CMPs) and other enforcement actions could be imposed against Medicare Advantage Organizations that receive compliance notices for uncorrected violations related to provider directories. The agency notes that CMPs would be calculated on a per determination basis. This is a timely proposal because the most recent review of Medicare Advantage plans’ provider directories found that 52.2% of location information contained inaccurate information. CMS indicated that based on the results of the latest review, the agency issued 23 Notices of Non-Compliance, 19 Warning Letters, and 12 Warning Letters with a request for a Business Plan. CMS is in the process of conducting the third round of provider directory review.
- Meaningful Difference – CMS reiterates their proposal to eliminate the meaningful difference requirement beginning with the 2019 calendar year. Historically, Medicare Advantage Organizations offering more than one plan in a service area had to ensure plans were substantially different, to avoid consumer confusion. Comments on the proposed rule were due by January 16, 2018. A final rule is expected later this year.
- Opioids – CMS reminds plan sponsors they should (1) retrospectively perform enhanced drug utilization review to identify over-utilizers and provide appropriate case management aimed at coordinated care, and (2) prospectively manage utilization with real-time safety alerts at the time of dispensing to ensure prescribers are aware that potentially high risk levels of prescription opioids will be dispensed. CMS will continue to use the Oversight Monitoring System (OMS) to identify beneficiaries at significant risk of opioid abuse. The agency requests feedback on several proposals, including: a formulary-level cumulative safety edit at the point of sale of 90 morphine milligram equivalents per day, with a 7-day supply allowance; implementing a day’s supply limit for initial fills of opioids for the treatment of acute pain with or without a daily dose maximum; and enhancing the OMS by adding flags for high risk beneficiaries using “potentiator” drugs (defined as a chemical, herb, or other drug that is used to increase the effects of a substance) and consequently, increasing both the substance and the “potentiators abuse potential” drugs in combination with prescription opioids.
- Special Needs Plans (SNPs) – CMS acknowledges that Congress needs to reauthorize SNPs for contract year 2019. Without authorization CMS lacks the authority to allow SNPs to be offered. In anticipation of congressional action, the agency will accept bids and may sign contracts for calendar year 2019 to ensure that SNPs may be offered without interruption.
- Natural Disasters – Recognizing the impact of natural disasters, CMS proposes to modify star ratings for 2019 and 2020 for affected areas related to Hurricanes Harvey, Irma, and Maria, and the wildfires in California.
- The All-Payer Combination Option – CMS highlights the All-Payer Combination Option and the ability for eligible clinicians to include Medicare Advantage alternative payment arrangements when applying to become qualifying participants under the Quality Payment Program.
CMS is accepting comments through 6:00 PM Eastern Standard Time on Monday March 5, 2018. The final Medicare Advantage Notice and Call Letter for 2019 will be released on April 2, 2018.