CMS issues a trimmed down Part C and D final rule, but plans to address remaining proposals in the near future.
In an advance notice of a final rule set to publish in the Federal Register on June 2, 2020, CMS implemented changes to Medicare Part C and D prior to a contract year 2021 bid deadline as required under the Bipartisan Budget Act of 2018 (BBA of 2018) and the 21st Century Cures Act (Cures Act). Notably, the final rule implements only a subset of the proposals from an earlier proposed rule (see Access, transparency part of Medicare Part C, D changes, February 18, 2020), as CMS intends to address all of the remaining proposals in subsequent rulemaking. As such, CMS will make any provisions adopted in the subsequent, second final rule, although effective on or before January 1, 2021, applicable no earlier than January 1, 2022. The final rule also codifies several existing CMS policies and implements other technical changes.
Savings. The final rule will result in an estimated $3.65 billion net reduction in spending by the federal government over 10 years due to changes in the Part C and D Star Rating methodology, which remove outliers before calculating Star Ratings cut points and offsets costs arising from the medical loss ratio (MLR) provisions and other refinements to the MA and Part D Quality Star Ratings system.
Medicare Advantage. Beneficiaries with End-Stage Renal Disease (ESRD) are only allowed to enroll in Medicare Advantage (MA) plans in limited circumstances. The Cures Act amended the Social Security Act to allow all Medicare-eligible individuals with ESRD to enroll in MA plans beginning January 1, 2021, and the final rule will implement these provisions. ESRD patients will have access to more Medicare coverage choices and extra benefits such as transportation or home-delivered meals. The final rule also implements fee-for-service (FFS) coverage of kidney acquisition costs for MA beneficiaries and exclusion of such costs from MA benchmarks. Additionally, MA beneficiaries will be able to access additional telehealth benefits not offered under Medicare fee-for-service, including services at home, rather than requiring them to go to a health care facility.
Network adequacy and incentives. CMS has been examining its network adequacy standards overall to determine how contracted telehealth providers should be considered when evaluating the adequacy of an MA plan network. The agency will codify its existing network adequacy methodology and finalizing policies that address maximum time and distance standards in rural areas, telehealth, and certificate of need (CON) laws. The authorization of additional telehealth benefits pursuant to the BBA of 2018 will incentivize additional ways for MA plans to cover beneficiary access to health care beginning in 2020.
In order to expand access to MA plans where network development can be challenging, CMS will reduce the percentage of beneficiaries that must reside within the maximum time and distance standards in non-urban counties (Micro, Rural, and Counties with Extreme Access Considerations (CEAC) county type designations) from 90 percent to 85 percent in order for an MA plan to comply with the revised network adequacy standards. MA plans will be eligible to receive a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards when they contract with telehealth providers in the following provider specialty types: (1) dermatology, (2) psychiatry, (3) cardiology, (4) otolaryngology, (5) neurology, (6) ophthalmology, (7) allergy and immunology, (8) nephrology, (9) primary care, (10) gynecology/ OB/GYN, (11) endocrinology, and (12) infectious diseases.
Quality ratings and measures. In addition to routine measure updates and technical clarifications to the Part C and D plan star ratings, CMS will reduce the influence of outliers in its ratings by increasing measure weights for patient experience or complaints and access measures from two to four. Additionally, under the Part D program, plans do not have to disclose to CMS the measures they use to evaluate pharmacy performance in their network agreements, which impacts pharmacy reimbursements. Under the final rule, CMS will require Part D plans to disclose such information in order for the agency to track how plans are measuring and applying pharmacy performance measures. CMS will also be able to report this information publicly to increase transparency on the process.
Medical loss ratio. CMS amended the MA MLR regulations to allow MA organizations to include in the MLR numerator as "incurred claims" all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of "provider" as defined at 42 C.F.R. §422.2. In addition, CMS added a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts receiving a credibility adjustment.
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