On April 2, 2018, CMS released the 2019 Rate Announcement and Final Call Letter (Call Letter) and published an expansive final rule containing updates to policies for Medicare Advantage (MA) and the Medicare Part D Prescription Drug Program (Part D).  A Health Law Pulse summary of the proposed Annual Notice and Draft Call Letter may be found here.  The Call Letter and final rule evidence the support Medicare Advantage Organizations (MAOs) and Part D Sponsors continue to receive from Washington.  Many of the policies will ensure Medicare Advantage and Part D plans remain attractive options to beneficiaries and will support the continued trend of increasing enrollment in Medicare Advantage plans.  At the end of February, more than 1/3 of Medicare beneficiaries were enrolled in Medicare Advantage plans.  Below we highlight a few important changes in CMS policy.

Medicare Advantage and Part D final rule

The final rule, Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program,  is scheduled to be published in the Federal Register on April 16, 2018 and implements several important changes to the Medicare Advantage and Part D programs.  CMS believes the rule will save $295 million per year between 2019 and 2023.  The rule establishes an open enrollment period from January 1 to March 31 each year during which beneficiaries may switch MA plans or disenroll from an MA plan and obtain coverage through Original Medicare.  This was a requirement of the 21st Century Cures Act.  MAOs will enjoy additional flexibility when designing their plan offerings as a result of policies CMS finalized.  First, CMS eliminated the requirement that plans offered by a MAO in the same county be “meaningfully different”.  Historically, CMS would only approve bids for multiple plans in an area if the benefits were significantly different, such as differences in premiums, cost sharing, or benefits.  Critics of this policy change believe that increased plan offerings may lead to consumer confusion.  Additionally, CMS finalized relaxed uniformity requirements.  Historically, CMS interpreted the Medicare statute to require the provision of the same benefits at the same level of cost sharing to all beneficiaries.   The change in interpretation of the uniformity requirement will allow MA plans to provide reductions in cost sharing for specific benefits and the inclusion of additional benefits for certain enrollees meeting certain medical criteria. 

The final rule modifies the CMS definition of marketing in order to reduce the burden surrounding the submission of marketing materials for CMS review.  This change will reduce the burden on both MAOs and CMS.  The final rule creates a broader category of materials and activities called “communications”.   The narrowed definition of “marketing” will result in MA plans only needing to submit to CMS materials and activities that aim to influence enrollment decisions.  CMS stated it will develop sub-regulatory guidance to further clarify the distinctions between communications and marketing.

The final rule also implements provisions of the Comprehensive Addiction and Recovery Act of 2016.  CMS will implement a drug management program to permit Part D sponsors to limit at-risk beneficiaries’ coverage for frequently abused drugs, which include opioids and benzodiazepines.  The final rule states that CMS will integrate drug management programs with the Overutilization Monitoring System (OMS) and Part D Opioid Utilization Review Policy.    This will permit Part D sponsors to limit an at-risk beneficiary’s access to frequently abused drugs through a point-of-sale claim and/or requiring the beneficiary to obtain frequently abused drugs from a selected pharmacy or prescriber.  This is commonly referred to as “lock-in” and the final rule states that these programs have been a feature of many state Medicaid programs.  CMS did carve out certain categories of beneficiaries from drug management policies, such as those: currently being treated for active cancer-related pain; receiving palliative or end-of-life care; or are in hospice or long-term care.  Beneficiaries will be permitted to use the existing appeals process for at-risk determinations. 

MA organizations and Part D sponsors will now be able to include fraud prevention, detection and recovery activities and medication therapy management program spending as quality improvement activities in the medical loss ratio (MLR) numerator.  The final rule also reduces the amount of data plans must submit for MLR.   With regard to Part D, CMS will no longer allow plans to exclude a dedicated generic tier from the exceptions process and will permit Part D sponsors to substitute generic drugs for brand name drugs on the same or lower cost-sharing tier at any time during the year.  CMS also finalized clarifications that strengthen the any willing provider pharmacy provisions. 

Rate Announcement and Call Letter

Payments to MA and Part D plans will increase 3.4 percent for 2019, an increase from the 1.84 percent increase proposed in the February 1 Draft Call Letter.  CMS stated that the policies finalized in the Call Letter aim to “expand flexibilities so that plans and providers are empowered to meet the needs of Medicare beneficiaries at the local level, while increasing beneficiary choice and improving the patient/physician relationship.” 

The Call Letter finalized the expansion of the scope of primarily health related supplemental benefits a plan may make available to beneficiaries.  As supplemental benefits are one of the reasons Medicare Advantage plans have become popular among beneficiaries, this is an important change in policy that is likely to expand the popularity of these plans.  CMS will now allow supplemental benefits to be covered if they “diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization.”   CMS will release detailed guidance on this issue prior to the deadline for 2019 bid submissions. 

CMS did not finalize a risk adjustment policy proposal for 2019 that would have accounted for the number of conditions a beneficiary has in calculating risk scores, but will instead implement this policy in 2020 in order to give plans additional time.  This policy is required by the 21st Century Cures Act.  The Call Letter does finalize the incorporation of increased encounter data when calculating risk scores for 2019.  CMS will increase the proportion of encounter data used to determine beneficiary risk scores to 25 percent, with the remaining 75 percent  of the risk score coming from the risk adjustment data collection system.  This is an increase from 2018, during which CMS uses a proportion of 15 percent encounter data and 85 percent risk adjustment data collection system data.  

CMS finalized the proposal to fully transition Employer Group Waiver Plans (EGWP) to using individual plan bids instead of blending EGWP and individual bids, with an adjustment to the individual market ratios accounting for the difference in the proportion of beneficiaries enrolled in HMOs and PPOs between EGWPs and individual market plans.

CMS did not finalize a proposal that would have placed an icon on the plan finder website for plans subject to a civil monetary penalty (CMP).  The final Call Letter recognized commenters concerns that the inclusion of an icon would “create confusion among beneficiaries and that it would not accurately reflect a sponsoring organization’s current performance.”  However, the agency also received supportive comments that will be considered as they develop alternate approaches to communicate CMP information to beneficiaries.  CMS finalized their proposal to allow the compliance program effectiveness (CPE) portion of the program audit to satisfy the annual requirement to conduct an internal CPE audit the following year.  The Call Letter uses the example of a plan subject to a program audit beginning any time in 2019.  The plan would not be required to complete an internal audit until 2021.

The Call Letter states that CMS received many comments regarding enforcement of non-compliant provider directories.  While the Call Letter does not provide new provider directory guidelines, CMS provides a warning that they will bring enforcement action for “egregious instances” of provider directory non-compliance.  In the case of an inaccurate provider directory, CMPs would be imposed on a per determination basis.  The Call Letter also finalized adjustments to the 2019 and 2020 star ratings for natural disasters that occurred in 2017, including Hurricanes Harvey, Irma, and Maria, and the wildfires in California.

The deadline for bid submissions for calendar year 2019 is June 4, 2018 at 11:59 p.m.