February 7, 2020

Trump admin looks to bolster price transparency, coverage for MA and Part D

Daily Briefing

    CMS on Wednesday released a proposed rule and the second part of an advanced notice that together call for several changes for Medicare Advantage (MA) and Part D plans in 2021, including proposals related to network adequacy standards, prescription drug prices, and more.

    Slide decks: Health Insurance 101

    Proposed changes for MA plans

    Changes to payment rates

    CMS in the advanced notice said it plans to increase total payments to MA plans by an average of 0.93% in 2021 after taking various proposed policy and payment adjustments into account—including changes CMS proposed in the first portion of the advanced notice, which the agency released last month.

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    In the first part of the advanced notice, CMS said it plans to move forward with a proposal to use more data from health care providers' encounters with patients to calculate risk-adjustment payments for MA plans. Specifically, the agency proposed basing:

    • 75% of a beneficiary's 2021 risk score on encounter data; and
    • 25% of a beneficiary's 2021 risk score on fee-for-service data.

    The agency then will calculate MA plans' 2021 risk-adjustment payments using the sum of:

    • 75% of the risk-adjustment payment model criteria the agency used to determine 2020 risk-adjustment payments; and
    • 25% of the risk-adjustment model criteria the agency used to determine 2017 risk-adjustment payments.

    CMS in a fact sheet released Wednesday projected that the risk model revisions would lead to a 0.25% average payment increase, which would be folded in with other changes to account for the overall 0.93% average payment increase for MA plans in 2021.

    But the agency also noted that the projected 0.93% increase doesn't include rebasing adjustments, nor does it include "an adjustment for underlying coding trend." CMS said, "For 2021, CMS expects the underlying coding trend to increase risk scores, on average, by 3.56%." Those adjustments could further affect MA plans' payment rates for 2021.

    Expanding MA coverage to seniors with ESRD

    CMS in the proposed rule said it plans to implement changes called for under the 21st Century Cures Act to allow all Medicare beneficiaries with End-Stage Renal Disease (ESRD) to enroll in MA plans starting in 2021. Currently, individuals with ESRD who qualify for Medicare may enroll only in a traditional fee-for-service Medicare plan, and are not permitted to enroll in MA plans unless they were diagnosed with ESRD after they already were covered by MA. CMS said the proposed change "will give patients with ESRD access to more affordable Medicare coverage choices and extra benefits such as transportation or home-delivered meals."

    Proposed changes to network adequacy standards

    CMS proposed allowing some MA plans to count telehealth providers in certain specialty areas toward the plans' network adequacy standards. Specifically, for rural coverage areas, CMS proposed reducing the required percentage of beneficiaries that must reside within the maximum distance and time standards for affected specialties from 90% to 85%. In addition, CMS proposed that MA plans get "a 10% credit towar[d] the percentage of beneficiaries that must reside within required time and distance standards when the plan contracts with telehealth providers for [d]ermatology, [p]sychiatry, [c]ardiology, [o]tolaryngology, and [n]eurology."

    CMS said the proposed changes would build on past rules that have broadened the types of telehealth services MA plans can cover by promoting the use of telehealth services and providing beneficiaries with more treatment options.

    CMS also said it is seeking comments on whether the agency should expand the proposed credit to other specialty types.

    Other proposed changes

    CMS in the proposed rule also called for adding certain special enrollment periods for MA plans and changing some factors used to calculate MA plans' medical loss ratios. In addition, the proposed rule would allow CMS to refuse to contract with dual-eligible special needs plan (D-SNP)"look-alikes" when an actual D-SNP is available in a state.

    Proposed changes for Part D plans

    Changes related to prescription drug prices

    CMS proposed several changes intended to increase transparency and lower the prices and out-of-pocket costs for prescription drugs covered by Medicare Part D.

    For example, CMS under the proposed rule would require Part D plans to launch real-time price comparison tools for beneficiaries beginning Jan. 1, 2022. CMS said the tools would help beneficiaries shop around for the lowest-cost treatments and know their out-of-pocket costs ahead of time.

    The proposed rule also would allow Part D plans to establish a "preferred" tier on their drug formularies for specialty drugs, which typically are among the highest-cost treatments. CMS said the preferred tier would provide Part D plans with more leverage in negotiations with drugmakers. Plans then could direct beneficiaries toward drugs on the preferred tier by offering lower cost-sharing amounts for those treatments.

    Further, CMS in the advanced notice said it is looking to encourage plans to guide beneficiaries toward using more generic and biosimilar drugs, which typically cost less than their brand-name counterparts. CMS said it is seeking comments on whether to develop generic and biosimilar utilization metrics that would be used to calculate a Part D plans' star rating.

    Other proposed changes

    Under the proposed rule, CMS also would implement changes called for by the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act. For example, the proposed rule would require Part D plans to provide beneficiaries with access to educational resources to learn about alternative pain treatments, risks associated with using prescription opioids, and the safe disposal of opioid drugs. The proposed rule also would require Part D plans to expand drug management programs and medication therapy management programs.

    CMS estimated that the changes included in the proposed rule and advanced notice would save the federal government $4.4 billion over the next decade, with a majority of the savings coming from changes to the MA and Part D star ratings systems.

    Next steps

    CMS said it will collect public comments on parts I and II of the advanced notice until March 6. The agency plans to publish its final 2021 rate announcement for MA and Part D plans by April 6.

    CMS said it will collect public comments on the proposed rule, which it issued instead of a Call Letter for 2021, until April 6.

    The agency said it will "separately issue Part C and Part D bidding instructions and information previously provided through the Call Letter" (Owens, "Vitals," Axios, 2/6; Minemyer, FierceHealthcare, 2/5; Waddill, HealthPayerIntelligence, 2/5; CMS proposed rule fact sheet, 2/5; CMS advanced notice fact sheet, 2/5; CMS release, 2/5; Brady, "Transformation Hub," Modern Healthcare, 2/5; Humer/O'Donnell, Reuters, 2/5; Stein, Inside Health Policy, 2/5 [subscription required]; Cirruzzo, Inside Health Policy, 2/5 [subscription required]; CMS proposed rule, 2/5).

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