With an eye to making improvements to plans and providing high quality of care for the most vulnerable enrollees, CMS finalized most of the changes to the Medicare Advantage (MA) and Part D Prescription Drug Programs for calendar year (CY) 2017 that were proposed earlier this
year in an Advance Release and Draft Call Letter. Several proposals, such as the revised risk adjustment model, were aimed at low-income individuals and Medicare and Medicaid dual eligible beneficiaries. The final updates included the 2017 MA capitation rates and the MA and Part D payment policies and Final Call Letter.
Proposed changes. The Advance Notice and Draft Call Letter, which was released on February 19, 2016, called for an increase in payments to MA plans, the implementation of a new risk adjustment model, a statutory minimum coding pattern adjustment, the continued use of encounter data to calculate risk scores, and the creation of a new waiver and payment policy for employer group waiver plans. The proposal also included an adjustment to the MA and Part D plan star rating system, which would allow for the inclusion of socioeconomic status, as well a reduction of cost-sharing limits for some scenarios and an update of the Part D program drug utilization rules. The February proposed changes also included an initiative to address the growing opioid abuse problem (see CMS proposes 2017 Medicare Advantage and Part D Program changes, February 22, 2016).
In the announcement of the finalization of the proposed changes, CMS noted that most of the proposals remain but some were slightly changed due to feedback from the public comment period. In general, according to CMS, the expected revenue change due to these policies’ revisions is 0.85 percent; that does not account for the 2.2 percent expected growth acuity that may add another 2.2 percent. This growth is on point with last year’s growth and is part of a pattern of consistency in Medicare fee-for-service (FFS) spending.
Rate announcement. In terms of rates of payment, CMS is finalizing a collection of MA and Part D plan revisions that are focused on improving precise payments and encouraging quality. At the same time, CMS wants to ensure continued protection of beneficiaries against premiums and out-of-pocket costs. As such, CMS is finalizing the rate adjustment model, which has separate coefficients for partial-benefit dually eligible, full-benefit dually eligible, and non-dually eligible beneficiaries. It is also adopting the proposed implementation of the statutory minimum adjustment to reflect differences in diagnosis coding between MA organizations and fee-for-service (FFS) providers.
While CMS will continue to use encounter data-based risk scores as it had announced in the proposed changes, as a response to stakeholder feedback, it will use a lower percentage of such scores than was originally proposed. Further, and as a response to comments received from stakeholders, CMS will employ an alternate policy to employer group waiver plans (EGWPs) for Medicare Employer Retiree Plans in 2017. This alternate payment policy will be phased in over a two-year period.
Final call letter. Pursuant to the 2017 Final Call Letter, CMS finalized improvements in the following areas: the star rating system, use of opioids in Part D, medication-assisted treatment, and drug utilization. For the updates to the star rating system, the agency will begin to implement an interim analytical adjustment that will account for low-income, dual eligible, or disability status. In terms of targeting the growing misuse of opioids, CMS will enact a number of improvements aimed at reducing the unsafe utilization of opioids throughout the Part D program. In regard to medication-assisted treatment, CMS “will continue to review the utilization management strategies and formulary tiering "for such treatment.”
Finally, CMS’ finalized improvements include a collection of strategies aimed at addressing drug overutilization, including: Part D plan accounting that includes limitation of beneficiaries’ initial fills of certain drugs; encouraging sponsors to inform beneficiaries of the availability of additional formulary drugs mid-year, since some drugs might be of better quality and more value; and adding a link to the Medicare Drug Spending Dashboard to the Medicare Plan Finder to raise cost awareness.
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