2019 Medicare Advantage and Part D Rate Announcement and Call Letter

CMS is committed to unleashing and strengthening the Medicare Advantage and Part D programs by giving Medicare beneficiaries flexibility so that they can make informed healthcare choices. The policies adopted through the Rate Announcement and Call Letter provide more choices for beneficiaries, a greater number of affordable options, and new benefits to meet their unique health needs. CMS is also finalizing policies to combat the opioid epidemic, empower patients through access to data, and increase flexibility to foster innovation in benefit design.

On April 2, 2018, the Centers for Medicare & Medicaid Services (CMS) released final policy and payment updates to the Medicare Advantage (MA) and Part D programs through the 2019 Rate Announcement and Call Letter. The Advance Notice was posted in two parts, on December 27, 2017 and on February 1, 2018, when the Draft Call Letter was also posted. CMS accepted comments on all proposals through March 5, 2018.

2019 Rate Announcement

Through the 2019 Rate Announcement, CMS is finalizing the updates to the methodologies used to pay Medicare Advantage plans and Part D sponsors.

Net Payment Impact

The chart below indicates the impact of the policy changes on plan payments relative to last year. The per capita cost growth in Medicare Fee-For-Service has grown over the past year. Because the Medicare Advantage growth rates are linked to the overall Medicare Fee-For-Service per capita growth rate, the Fee-for-Service trend carries over to Medicare Advantage plans.

Year-to-Year Percentage Change in Payment1

Impact 2019 Advance Notice 2019 Rate Announcement Effective Growth Rate 4.35% 5.28% Rebasing/Re-pricing N/A 0.49% Change in Star Ratings -0.2% -0.26% Medicare Advantage coding intensity adjustment 0.01% 0.01% Risk Model Revision 0.28% 0.28% Encounter Data Transition -0.04% -0.04% Employer Group Waiver Plan Payment Policy -0.3% -0.1% Normalization -2.26% -2.26% Expected Average Change in Revenue 1.84% 3.40%

1This table does not project the effect of underlying coding trend on risk scores.

The Expected Average Change in Revenue reported above does not include an adjustment for underlying coding trend. For 2019, CMS expects the underlying coding trend to increase risk scores, on average, by 3.1%.

2019 Part C Risk Adjustment Model

CMS proposed changes to the CMS-HCC Risk Adjustment model that is used to pay for beneficiaries enrolled in Medicare Advantage plans. For 2019, CMS is finalizing an updated model that incorporates most of the proposed changes to the Part C risk adjustment model, such as adding mental health, substance use disorder, and chronic kidney disease conditions to the risk adjustment model, as well as a variety of additional technical updates. CMS is not finalizing a model for 2019 that takes into account the number of conditions an individual beneficiary may have in order to provide stakeholders more time to understand its implications, but announced it plans to begin implementing the “Payment Condition Count Model” in 2020 in accordance with the 21st Century Cures Act requirements.

Using Encounter Data

The quality of encounter data has improved, and CMS is committed to continuing to drive improvement in the data. As noted above, the risk adjustment model we are finalizing makes technical updates, including calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and supplementing encounter data used in payment with inpatient data submitted to the historical risk adjustment data collection system (the Risk Adjustment Processing System (RAPS)).

CMS calculates risk scores using diagnoses for each beneficiary, whether they were enrolled in Medicare Fee-For-Service (FFS) or Medicare Advantage. Historically, CMS has used Medicare Advantage diagnoses submitted into CMS’s RAPS. In recent years, CMS began collecting encounter data from Medicare Advantage organizations, which also includes diagnostic information. In 2016, CMS used diagnoses from encounter data to calculate risk scores, by blending 10% of the encounter data-based risk scores with 90% of the RAPS-based risk scores. For 2017 and 2018, CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25% encounter data and 75% RAPS in 2017, and 15% encounter data and 85% RAPS in 2018. For 2019, CMS is finalizing the proposal to calculate risk scores by adding 25% of the risk score calculated using diagnoses from encounter data and FFS diagnoses with 75% of the risk score calculated with diagnoses from RAPS and FFS diagnoses. Since the quality of the encounter data has improved, CMS believes it is appropriate to move forward with the proposed increased percentage of encounter data in the blend. CMS will also calculate the encounter data-based risk scores exclusively with the new risk adjustment model, as proposed, while maintaining use of the current risk adjustment model for calculating risk scores with RAPS data.

Coding Pattern Adjustment

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between Medicare Advantage organizations and FFS providers. In CY 2019, CMS is finalizing the proposal to apply a coding pattern adjustment of 5.90 percent.

Medicare Employer Retiree Plans

Medicare Employer Retiree Plans (Employer Group Waiver Plans or EGWPs) serve specific employer groups, and are either offered through negotiated arrangements between Medicare Advantage plans and employer groups or by the employer directly. CMS supports an MA program that includes robust participation of Part C EGWPs that are accurately reimbursed for their services. To address concerns raised by commenters, for 2019, we will finalize the 100% phase in with adjustments based on the proportion of EGWP enrollment in PPOs vs. HMOs. CMS intends to seek comment on modifications to this policy for 2020 that include adjustments for regional PPOs and rural local PPOs. We are concerned that if we were to not incorporate an adjustment to account for this differential between the markets it could lead to the unintended consequence of underpaying EGWP PPOs for their actual costs, which could result in fewer of these offerings in future years.

Puerto Rico

In Puerto Rico, a far greater proportion of Medicare beneficiaries receive benefits through Medicare Advantage than in any state or territory. The policies finalized for 2019 will continue to provide stability for the Medicare Advantage program in the Commonwealth and to Medicare beneficiaries in Puerto Rico who are enrolled in MA plans. These continued policies include basing the Medicare Advantage county rates on the relatively higher costs of beneficiaries in fee-for-service Medicare who have both Medicare Parts A and B, interpreting the criteria used to determine which counties qualify for an increased quality bonus adjusted benchmark, and applying an adjustment to reflect the nationwide propensity of beneficiaries with zero claims. In addition, in recognition of the impact that recent natural disasters might have on the underlying operational and clinical systems that CMS relies on for accurate performance measurement in the Star Ratings program, CMS is finalizing a variety of strategies to address Star Ratings issues related to contracts impacted by extreme and uncontrollable circumstances, in Puerto Rico and elsewhere. This includes adjusting the 2019 and 2020 Star Ratings to take into account the effects of extreme and uncontrollable circumstances that occurred during the 2017 performance period, such as Hurricanes Harvey, Irma, and Maria, and the wildfires in California.

2019 Final Call Letter

Improving Drug Utilization Review Controls (Opioids)

Opioid medications (“opioids”) have serious risks such as addiction, overdose, and death. CMS is deeply concerned about the magnitude of the opioid misuse epidemic and its impact on our communities, and is committed to a comprehensive and multi-pronged strategy to combat this public health emergency. It is a top priority of this Administration to address the opioid epidemic.

Given the urgency and scope of the continuing national prescription opioid epidemic, CMS is finalizing a number of new policies for 2019 to further help Medicare plan sponsors prevent and combat prescription opioid overuse. While the strategies collectively work towards the same goal, an overall reduction in opioid overuse and overdoses, we have tailored each approach to address the distinct populations of Medicare Part D prescription opioid users (e.g., new opioid users; chronic users; those with uncoordinated care; those that concurrently use opioids with benzodiazepines, etc.).

We also recommend that beneficiaries who are residents of a long-term care facility, in hospice care or receiving palliative or end-of-life care, or being treated for active cancer-related pain are excluded from these interventions. In addition, it is also very important that beneficiaries’ access to medication-assisted treatment (MAT), such as buprenorphine, is not impacted.

Opioid naïve patients: To reduce the potential for chronic opioid use or misuse, we expect all Part D sponsors to implement a hard safety edit to limit initial opioid prescription fills for the treatment of acute pain to no more than a 7 days’ supply.

High risk opioid users: We are building upon and expanding the Overutilization Monitoring System (OMS), which has already significantly reduced the number of high risk beneficiaries. The OMS retrospectively identifies those beneficiaries we consider at significant risk (using high levels of opioids from multiple prescribers and pharmacies). Sponsors review these cases and perform case management with the beneficiaries’ prescribers.

Through parallel rule-making, we proposed to implement the Comprehensive Addiction and Recovery Act of 2016 (CARA) drug management program in 2019 and integrating those policies with the OMS process. Under the proposal, Part D sponsors will be able to limit at-risk beneficiaries’ coverage for frequently abused drugs to certain prescribers and pharmacies (“lock-in”) and apply beneficiary-specific point-of-sale (POS) claim edits. The OMS will also be enhanced to include revised metrics to track high opioid overuse and to provide additional information to sponsors about high risk beneficiaries who take opioids and “potentiator” drugs (which when taken with an opioid increase the risk of an adverse event).

Chronic opioid users: We expect all sponsors to implement real-time safety alerts at the time of dispensing as a proactive step to engage both patients and prescribers about overdose risk and prevention.

CMS recognizes that a tailored approach is needed to better address chronic opioid overuse at the POS. We expect all sponsors to implement an opioid care coordination edit at 90 morphine milligram equivalent (MME) per day. This formulary-level safety edit should trigger when a beneficiary’s cumulative MME per day across their opioid prescriptions reaches or exceeds 90 MME. In implementing this edit, sponsors should instruct the pharmacist to consult with the prescriber, document the discussion, and if the prescriber confirms intent, use an override code that specifically states that the prescriber has been consulted. Sponsors will have the flexibility to include a prescriber and/or pharmacy count in the opioid care coordination edit. Sponsors will also have the flexibility to implement hard safety edits (which can only be overridden by the sponsor) and set the threshold at 200 MME or more and may include prescriber/pharmacy counts.

The care coordination edit and other opioid-related strategies implemented for Part D beneficiaries discussed in this Call Letter support adoption of the CDC Guideline for Prescribing Opioids for Chronic Pain. CMS believes it is important that MA-PDs set expectations for prescribers to implement the CDC’s recommendations as a best practice through their provider contracts. PDPs should also reinforce these messages through interactions with prescribers as an integral component of sponsors’ drug utilization management program.

Opioid users also taking duplicate or key potentiator drugs: Lastly, we expect sponsors to implement additional soft safety edits to alert the pharmacist about duplicative opioid therapy and concurrent use of opioids and benzodiazepines.

All opioid users: CMS also uses quality measures to track trends in opioid overuse across the Medicare Part D program. To drive performance improvement among plan sponsors, CMS will implement technical revisions to the Pharmacy Quality Alliance (PQA) opioid overuse measures and add a new PQA measure, Concurrent Use of Opioids and Benzodiazepines.

Driving Patient Engagement

CMS is encouraging plans to adopt data release platforms for their enrollees that meet or exceed the capabilities of CMS’s Blue Button 2.0. This would enable enrollees in MA plans to connect their claims data to the applications, services and research programs they trust. CMS is also signaling that we are contemplating future rulemaking in this area to potentially require the adoption of such platforms by MA plans in 2020.

Star Ratings Enhancements

Each year, CMS provides updates to the Part C and D Star Ratings through the Call Letter, including new measures and changes in existing measure specifications.

The more significant changes include adding the following new measures to the 2019 Star Ratings: Statin Use in Persons with Diabetes (Part D) and Statin Therapy for Patients with Cardiovascular Disease (Part C). These measures have previously been announced. Also previously announced, CMS will remove from the 2019 Star Ratings the Beneficiary Access and Performance Problems measure. As has been done in the past, the updated Categorical Adjustment Index values will be finalized in the Call Letter with analyses based on the 2018 Star Ratings data. Finally, based on feedback from plans, CMS will implement scaled reductions for data completeness issues for the Part C and D appeals measures. The scaled reductions will avoid potentially disparate impacts on plans and will ensure that the impact on plans is more commensurate with the identified issue.

Fostering Innovation in Benefit Design: Expanding Health Related Supplemental Benefits

The policy change announced in the Call Letter will help drive patient access to types of services they do not have today. Some Medicare Advantage plans offer supplemental benefits so that enrollees have more healthcare benefits and options than what they would receive under the Medicare FFS Program. Medicare Advantage plans use rebate dollars and plan premiums to fund supplemental benefit offerings. The statute limits supplemental benefits to health care benefits; CMS interprets “supplemental healthcare benefit” as an item or service (1) not covered by Original Medicare, (2) that is primarily health related, and (3) for which the Medicare Advantage plan must incur a direct medical cost.

Previously, CMS has not allowed an item or service to be eligible as a supplemental benefit if the primary purpose includes daily maintenance. However, in the final Call Letter, CMS discusses a reinterpretation of the statute to expand the scope of the primarily health-related supplemental benefit standard. Under this reinterpretation, CMS would allow supplemental benefits if they are used to diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization. This expansion will effectively increase the number of allowable supplemental benefit options and provide patients with benefits and services that may improve their quality of life and health outcomes.

Uniformity Flexibility

The final Call Letter reminds plans that CMS has determined that plans can provide certain enrollees with access to different benefits and services. Specifically, Medicare Advantage plans can offer targeted cost sharing and supplemental benefits for specific enrollee populations based on health status or disease state in a manner that ensures that similarly situated individuals are treated uniformly. This flexibility helps Medicare Advantage plans better manage health care services. CMS previously announced this new interpretation in the preamble to the Part C and D proposed rule for 2019, released on November 28, 2017.

The 2019 Rate Announcement and Call Letter, and the Request for Information may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and selecting “2019 Announcement.”

Ratebooks and supporting calculation data may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Ratebooks-and-Supporting-Data.html and selecting “2019.”

The 2012-2016 FFS data used in the ratebook calculations may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/FFS-Data.html.

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