CMS has released its 2017 Medicare Advantage and Part D Advance Notice of Payment Policies and Draft Call Letter, which proposes changes to the Medicare Advantage (MA) and Part D prescription drug programs for calendar year (CY) 2017. The proposed payment policy changes would increase payments to MA plans by an average of 1.35 percent, implement a new risk adjustment model, provide a statutory minimum coding pattern adjustment, continue the use of encounter data to calculate risk scores, and create a new waiver and payment policy for employer group waiver plans.
The proposal also calls for comments on CMS’ plans to adjust the MA and Part D star rating system to allow for socioeconomic status, reduce the cost-sharing limit for skilled nursing facility stays and cost-sharing flexibilities for other service categories, update the drug utilization rules in the Part D program, and address the growing problem of opioid abuse.
Payment changes. CMS believes that the proposed payment changes will improve payment precision, encourage quality of care, and protect beneficiaries from increases in premiums and out-of-pocket costs. The payment changes can be summarized as follows:
- Risk adjustment model. CMS has researched and released a description of potential revisions to the risk adjustment model based on industry comments indicating that the current model does not capture the full cost to MA plans serving dually eligible beneficiaries (i.e., Medicare and Medicaid eligible). The new model proposes separate coefficients for partial benefit dually eligible beneficiaries, full benefit dually eligible beneficiaries, and non-dually eligible beneficiaries. CMS hopes that these changes will not only improve the precision of the payments made to plans, but increase payments for plans serving full benefit dually eligible beneficiaries.
- Coding pattern adjustment. For 2017, CMS proposes to update the MA coding adjustment factor to the statutory minimum of 5.66 percent. The adjustment reflects the differences in diagnosis coding between MA organizations and Medicare fee-for-service (FFS) providers.
- Encounter data. In CY 2016, CMS began using diagnoses from MA encounter data to calculate risk scores, by blending encounter data-based risk scores with Risk Adjustment Processing System-based risk scores. For CY 2017, CMS proposes continuing to use this blend methodology, but by using a higher percentage of encounter data-based risk scores.
- Employer Group Waiver Plans (EGWP). Because EGWPs serve specific employer groups and do not compete against other plans, CMS previously waived bidding requirements for Part D for EGWPs and set payment amounts for Part D plans based on the competitive bids submitted for non-EGWP Part D plans. For 2017, CMS is proposing a similar waiver and payment policy for EGWP Medicare Advantage plans.
Draft call letter. CMS is also calling for comments on its plans to more accurately reflect true plan performance, incentivize MA plans with lower maximum out-of-pocket costs, improve drug utilization by reducing waste, and prevent opioid overutilization as the point-of-sale. These proposals can be summarized as follows:
- Star ratings. MA and Part D plans have raised concerns that the current star rating system creates a disincentive for plans to serve dually eligible or low income beneficiaries. CMS proposes a new subset of star rating measures to adjust for plans serving dually eligible enrollees, enrollees receiving the low income subsidy, and enrollees with disabilities.
- Cost-sharing requirements based on service category. While CMS has afforded plans that adopt a lower, voluntary maximum out-of-pocket (MOOP) limit greater flexibility in establishing Parts A and B cost sharing, the number of MA plans with lower, voluntary MOOPs has decreased in recent years. CMS is thereby proposing to reduce the cost sharing limit for skilled nursing facility stays (days 1 through 20) in CY 2017 and CY 2018, and to reduce cost sharing flexibilities for other service categories. CMS is also requesting comments about other incentives for MA organizations to offer plans with a lower voluntary MOOP for enrollees.
- Part D drug utilization updates. To address prescription drug waste, CMS proposes allowing Part D plans to designate specific drugs for which a beneficiary’s initial fill could be limited to a one month supply. CMS believes that this will eliminate waste when the beneficiary’s initial dose may change or if they are removed from the therapy due to side effects, adverse reactions, or lack of clinical response. CMS also encourages sponsors to inform beneficiaries directly of additional formulary drugs that become available mid-year, and plans to add a link from the Medicare Plan Finder website to the Medicare Drug Spending Dashboard to raise beneficiary awareness.
- Opioid Use. CMS is proposing expectations for Part D plans to implement edits to prevent opioid overutilization at point-of-sale. That said, CMS also reminds Part D sponsors that formulary and plan benefit designs that hinder access to medication-assisted treatment (MAT), either through overly restrictive utilization management strategies or high cost-sharing, will not be approved.
Comments. Comments on the proposals contained in the Advance Notice and Draft Call Letter must be submitted by March 4, 2016. The final 2017 MA and Part D Rate Announcement and Call Letter will be published by CMS no later than April 4, 2016.
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