Health Law Daily CMS issues Part II of its 2020 Advance Notice and Draft Call Letter
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Thursday, January 31, 2019

CMS issues Part II of its 2020 Advance Notice and Draft Call Letter

By Harold Bishop, J.D.

CMS’ proposals in Part II of its 2020 Advance Notice and Draft Call Letter are designed to modernize and maximize competition among Medicare Advantage (MA-Part C) and Part D plans, as well as address the opioid epidemic, provide supplemental benefits to chronically ill MA plan beneficiaries, and enhance the Part C and Part D Star Ratings Program.

CMS has released Part II of the 2020 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part D Payment Policies (Advance Notice), and Draft Call Letter. Through release of Parts I and II of its annual Advance Notice and Draft Call Letter, CMS proposes updates to the methodologies used to pay MA plans and Part D sponsors. Under the 2020 Advance Notice, Part II, the net payment impact of the proposed 2020 payment changes are expected to result in an effective MA payment growth rate of 4.59 percent, resulting in an average MA plan revenue increase of 1.59 percent over 2019 revenue.

CMS will accept comments on all proposals in Part I and Part II of its Advance Notice and Draft Call Letter through March 1, 2019. CMS plans to publish the final Rate Announcement and Call Letter by April 1, 2019.

Part I proposals. CMS released Part I of the 2020 Advance Notice and Call Letter on December 20, 2018 (see 2020 changes to the MA risk adjustment model proposed, December 21, 2018). Part I proposed a number of 2020 MA program updates, including:

  • As in 2019, the proposed 2020 MA risk adjustment model would include additional conditions for substance use disorder, mental health, and chronic kidney disease.
  • An alternative risk adjustment model that is similar to the proposed 2020 model was proposed by CMS except that it would provide additional health care condition categories for dementia and pressure ulcers.
  • If finalized in 2020, the proposed MA risk adjustment model would be phased-in over three years such that 100 percent of risk adjusted payments to MA organizations for 2022 would be based on the 2020 model.
  • For 2020, CMS would continue to phase-in the implementation of proposed changes by calculating risk scores using the sum of 50 percent of the proposed risk adjustment model and 50 percent of the model first used in 2017.
  • For 2020, CMS would calculate risk scores by adding 50 percent of the risk score calculated using diagnoses from encounter data, Medicare fee-for-service (FFS) claims, and Risk Adjustment Processing System (RAPS) inpatient records with 50 percent of the risk score calculated with diagnoses from all RAPS records and FFS claims.

Part II proposals. Part II of the Advance Notice proposes additional updates. First, a coding pattern adjustment of 5.9 percent is proposed to reflect the differences in diagnosis coding between MA organizations and Medicare FFS providers.

Second, CMS is proposing to continue the 2019 payment policy for Employer Group Waiver Plans (EGWPs), which completed the transition to administratively-set rates that were originally scheduled to be completed in 2018.

Third, because a far greater proportion of Puerto Rico’s Medicare beneficiaries receive benefits through MA plans than any state or territory, MA county rates in Puerto Rico would be based on the higher costs of Medicare FFS beneficiaries who have both Medicare Parts A and B, certain counties in Puerto Rico would continue to qualify for an increased quality bonus adjusted benchmark, and an adjustment to reflect the nationwide propensity of beneficiaries with zero claims would also be applied.

Draft Call Letter. The 2020 Draft Call Letter proposes policies to address the opioid epidemic, provide supplemental benefits to chronically ill MA beneficiaries, and enhance the Part C and Part D Star Ratings Program.

In 2019, Part D drug management programs for high risk opioid users and improved safety alerts (e.g., the 7-day supply limit for opioid naive patients) will be implemented. CMS is proposing to continue these policies in 2020 and implement additional policies encouraging: (1) MA plans to offer targeted benefits and cost-sharing reductions for patients with chronic pain or undergoing addiction treatment; and (2) Part D sponsors to provide lower cost-sharing for opioid-reversal agents, such as naloxone. CMS is also updating the opioid-related reporting measures on its display page as a first step in formally adopting these measures as part of the Star Ratings.

Beginning in 2019, CMS allowed MA plans to offer targeted supplemental benefits, including reductions from FFS Medicare-equivalent cost sharing, for specific enrollee populations based on health status or disease state. Beginning in 2020, MA plans will be able to offer supplemental benefits to chronically ill enrollees. CMS will also waive uniformity requirements in 2020, allowing MA plans to vary the supplemental benefits based on the specific medical needs of the enrollee. The Draft Call Letter provides guidance about the new special supplemental benefits for the chronically ill and CMS is asking for feedback on this guidance.

CMS is proposing a policy to adjust the 2020 Star Ratings in the event of extreme and uncontrollable circumstances, such as major weather events. In addition, CMS is proposing the removal of three measures from the 2022 Star Ratings due to poor statistical reliability: (1) Adult BMI Assessment (Part C); (2) Appeals Auto-Forward (Part D); and (3) Appeals Upheld (Part D). The temporary removal of the Controlling High Blood Pressure (Part C) measure from the 2020 and 2021 Star Ratings is also proposed, until it can be realigned with new hypertension treatment guidelines. Finally, CMS is seeking feedback on its suggestions for new Star Ratings concepts related to Part D appeals.

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