Summary of provisions and impacts
The Centers for Medicare and Medicaid Services (CMS) released its Advance Notice of Methodological Changes for Calendar Year (CY) 2018 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2018 Draft Call Letter on February 1, 2017.
The purpose of the Advance Notice and draft Call Letter was to notify Medicare Advantage Organizations (MAO) and Part D sponsors of proposed changes to the Part C and Part D programs for the following plan year, including but not limited to:
- Planned changes in the MA capitation rate methodology and risk adjustment methodology applied under Part C for CY 2018
- Proposed changes in the Part D payment methodology for CY 2018
- Proposed changes to the quality rating system and information the MAOs and Part D sponsors should consider while preparing their 2018 bids
CMS received many submissions in response to the request for comments on the Advance Notice and released final updates to MA and Part D Prescription Drug Programs for 2018 on April 3, 2017.
As it has in previous years, CMS recently released updates to MA and Part D Prescription Drug Programs for 2018. Through these annual updates CMS tries to bolster benefit flexibility and efficiency that permits Medicare enrollees to pick the care that best fits their well-being and needs.
The final rules are similar to those proposed in the Advance Notice and draft Call Letter in February 2017. However, input received during the public comment period did lead to a few consolidation changes. By and large, plans can expect an “average increase in revenue of 0.45 percent“1, however singular encounters will differ. When representing the normal development in coding acuity, plans can expect an “average increase in revenue with coding trend of 2.95 percent”2. Plans that enhance the nature of care they convey to enrollees may see higher updates and can improve the advantages they offer to enrollees.
The updated policies provide additional flexibility and incentives to encourage organizations to develop new plan offerings with innovative provider network arrangements that may further encourage enrollee use of, and improved access to, high quality health care services. CMS expects that the updated policies will allow for an increased variety of MA and Part D plans from which enrollees can choose.
The policy updates in the 2018 Announcement give incentives for plans to submit complete encounter data. CMS will calculate 2018 risk scores by adding 15% of the risk score calculated using encounter data and Fee-for-Service (FFS) diagnoses with 85% of the risk score calculated using Risk Adjustment Processing System (RAPS) and FFS diagnoses without an adjuster.
CMS is also finalizing policies intended to further combat opioid overutilization by encouraging safeguards before an opioid prescription is dispensed at the pharmacy. At the same time, their goal is to ensure that Part D Medicare enrollees have access to the needed medication and are not adversely affected. CMS expects all Part D sponsors to focus on improving the coordination of care among the enrollees using high dosage of opioids, and in particular, MA plans that include prescription drug coverage should consider expanding the care management they provide to enrollees.
CMS is releasing a Request for Information to welcome continued feedback on MA and Part D and is accepting comments through April 24, 2018. Specifically CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice, and procedural changes to better accomplish transparency, flexibility, program simplification, and innovation in MA and Part D.
Attachments I-V: CY 2018 Advance Notice
MA growth percentage
The final estimate of the national per capita MA growth percentage for aged and disabled enrollees combined in CY 2018 is 2.53%. This estimate reflects an underlying trend change for CY 2017 in per capita cost of 2.76%.
For CY 2018, counties will be fully transitioned to the new rate methodology. For 2017, MA county rates are based on the specified amount. The benchmark (increased by quality bonus percentages where applicable) will be capped at the level of the applicable amount.
Fee-for-Service (FFS) growth percentage
The final estimate of the National Per Capita MA growth percentage for combined aged and disabled beneficiaries is 2.53%. The final estimate of the change in the National Medicare FFS MA growth percentage for aged and disabled Non-End Stage Renal Disease (Non-ESRD) is 2.73%.
Since counties in 2017 will be fully transitioned to the new rate methodology, this trend is representative of the expected increase in the benchmark if other factors were held equal.
Quality Bonus Payments (QBPs)
For 2018, MA plans with a Star Rating of fewer than 4 stars will bid against service area benchmarks that do not include QBP add-ons to the county rates, with the exceptions of new MA plans and low Medication Reconciliation Post Discharge (Part C) Enrollment plans.
For CY 2018 payments, plans with fewer than 4 stars will not receive a QBP percentage increase to the county rates, and plans with four or more stars will receive a 5% QBP percentage increase to the county rates.
Employer Group Waiver Plans (EGWPs)
As was the case in 2017, for 2018 there will be no Part C Regional Preferred Provider Organization (PPO) EGWP bids to include in the calculation of the MA regional benchmarks. CMS will also continue to publish the final MA regional standardized A/B benchmarks in late summer, which will reflect the average bid component of the regional benchmark based on non-EGWP bid submissions.
CMS finalized that each 3-star EGWP in a given county should receive the same payment amount that includes the same rebate amount, multiplied by their beneficiaries’ risk scores. MA EGWPs would not be able to distinguish between the amount they are paid for basic benefits and the amount they are paid for rebates. In light of this, CMS will continue to waive the requirement for MA EGWPs to allocate rebate dollars to any specific purpose for 2018; further, MA EGWPs would also not be permitted to buy down Part B premiums for their enrollees from the Part C payment.
CMS will use the same methodology and ratios described in the 2018 Advance Notice to calculate the EGWP county payment rates that were applied in calculating the 2017 MA EGWP payment rates. That is, the ratio used to set MA EGWP payment rates will continue to reflect a blend of individual market plan bids from 2016 and EGWP bids from 2016, with individual market plan bids weighted by 50 percent and EGWP bids weighted by 50 percent.
Coding adjustment factor
Each year, CMS implements an across-the-board adjustment to offset the effects of higher levels of coding intensity in MA. For 2018, CMS has finalized the MA coding adjustment factor to the statutory minimum of 5.91%. This is an increase from 5.66% for CY 2017.
FFS normalization factor
In addition to the coding adjustment factor, each year CMS applies a normalization factor to adjust beneficiary risk scores so that the average risk score in FFS is held to 1.0 in subsequent years. The preliminary normalization factor for the CMS-HCC model implemented in 2018 is 1.017. This is an increase from 0.993 for CY 2017. The normalization factor for the ESRD dialysis model is being updated to 1.015.
Normalization for the RxHCC model
For 2018, CMS has finalized an updated version of the RxHCC risk adjustment model used to adjust direct subsidy payments for Part D benefits offered by stand-alone Prescription Drug Plans (PDPs) and Medicare Advantage-Prescription Drug Plans (MA-PDs). CMS recalibrated the RxHCC risk adjustment model to reflect the 2018 benefit structure. This update involved making adjustments to the Prescription Drug Event (PDE) data from the prediction year to approximate the 2018 benefit structure. For 2018, plan liability for non-LIS beneficiaries in the coverage gap will be 56 percent for non-applicable (generic) drugs and 15 percent plan liability for applicable (brand) drugs in the coverage gap. In order to calculate risk scores for payment for CY 2018, the dollar coefficients used to create relative factors for all the segments of the model was increased to $1,047.96. Final 2018 Normalization factor for RxHCC model is 1.005.
Encounter data as a diagnosis source
CMS will calculate 2018 risk scores by adding 15% of the risk score calculated using encounter data and FFS diagnoses with 85% of the risk score calculated using RAPS and FFS diagnoses without an adjuster for Non- Programs of All-Inclusive Care for the Elderly (Non-PACE) organizations. As proposed, CMS will continue to calculate risk scores for PACE organizations by pooling risk adjustment-eligible diagnoses from encounter data, RAPS and FFS claims (with no weighting) to calculate a single risk score.
Attachment VI: 2018 Draft Call Letter Section I – Parts C and D
New and returning Star Ratings measures
Medication reconciliation post discharge (Part C): CMS included this measure on the 2017 display page. Going forward and depending on the performance of the wider range of plans, CMS is considering combining this indicator with other measures into a more comprehensive measure of care transitions. This measure will be weighted one for the 2018 Star Ratings, and the 2019 Star Ratings.
Improving bladder control (Part C): CMS will move this measure from the display page and return it to the Star Ratings beginning in 2018. For the 2018 Star Ratings, this process measure will revert to the original weight of one.
Changes to measures for 2018
CMS is enhancing the Star Ratings program for CY 2018 to better align with stated policy goals. As part of those enhancements, CMS will change the rating methodology for several measures, including the following:
Removal of measures from Star Ratings
High Risk Medication (Part D) – High Risk Medication (HRM) measure calculates the percentage of Medicare Part D beneficiaries 65 years and older who received two or more prescription fills for the same HRM drug with a high risk of serious side effects in the elderly. CMS will move this measure to the display page for 2018 (based on 2016 data) and continue to provide HRM measure reports to Part D sponsors through the Patient Safety Analysis website and to identify outliers.
Adjusting Star Ratings for audits and enforcement actions
Beneficiary Access and Performance Problems Measure (BAPP)
CMS will retain the current BAPP measure in the 2018 Star Ratings. CMS is not reinstating the reduction in the overall and summary Star Ratings of contracts that are under sanction for the 2018 Star Ratings.
In response to the comments to decouple audits and enforcement actions from Star Ratings, a revised BAPP measure will be on the display page for 2019, which removes all enforcement actions, including civil money penalties (CMPs) and the reduction for plans under sanction. For 2019, CMS intends to remove enforcement actions and the reduction for plans under sanction due to audit from this measure. As a result of this change, CMS would retire the current BAPP measure for the 2019 Star Ratings. CMS expects to introduce a revised BAPP measure on the 2019 display page.
Data integrity policy
Despite signaling a potential change to its data integrity policy in the November 2016 Request for Comments, CMS will continue to impose the automatic reduction of contract’s measure rating to 1 star if they determine that a contract’s measure data are incomplete, biased or erroneous, while potentially increasing the scope of its data integrity reviews. CMS highlights two programs in particular that may inform data integrity reviews: 1) the new Medication Therapy Management (MTM) program audits and 2) the expanded, industry-wide monitoring of appeals timeliness data. CMS will examine the appeals timeliness monitoring results with the aim of finding a method for scaled reductions instead of the standard reduction to 1 star.
Categorical Adjustment Index
CMS will retain the Categorical Adjustment Index (CAI) to adjust within-contract disparities due to high enrollment of low-income subsidy and dual eligible and/or disabled beneficiaries. The measures for adjustment for the 2018 Star Ratings include the following three Part C measures for MA (MA-only and MA-PD) and 1876 contracts: 1) Breast Cancer Screening; 2) Osteoporosis Management in Women Who had a Fracture; and 3) Diabetes Care – Blood Sugar Controlled. Similar to last year, in order to apply consistent adjustments across MA-PDs and PDPs, the Part D measures were selected by applying the selection criteria to MA-PDs and PDPs independently and, then, selecting measures that met the criteria for either delivery system. For the 2018 Star Ratings program, the two Part D measures: Medication Adherence for Hypertension (RAS antagonists) and Medication Therapy Management (MTM) Program Completion Rate for CMR are included for adjustment for MA-PDs and PDPs.
Potential Star Ratings changes for 2019
CMS has proposed a number of potential new measures for 2019 and beyond.
Among these changes is the potential addition of nine new measures: 1) Care Coordination (Part C); 2) Transitions of Care (Part C); 3) Follow-up after Emergency Department Visit for Patients with Multiple Chronic Conditions (Part C); 4) Opioid Overuse (Part C); 5) Depression Screening and Follow-Up for Adolescents and Adults (Part C); 6) Alcohol Screening and Follow-Up (Part C); 7) Appropriate Pain Management (Part C); 8) Plan Makes Timely Decisions about Appeals (Part C); and 9) New PQA-endorsed measures in development for future testing/consideration (Part D). Of note for the proposed new measures, the Use of Opioids measure is actually composed of three different opioid measures and NCQA is considering two additional measures of opioid overuse including multiple prescribers and multiple pharmacies.
Several modifications to existing measures for 2018 are also being proposed, including changes to: 1) Colorectal Cancer Screening (Part C Star Rating); 2) Initiation and Engagement in AOD Treatment (IET, Part C measure); and 3) Telehealth and Remote Access Technologies, Cross-Cutting Exclusions for Advanced Illness, and Center for Medicare and Medicaid Innovation Model Tests.
Medicare Advantage Value-Based Insurance Design (MA-VBID) model test
CMS is testing the MA-VBID in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. Beginning in CY 2018, CMS will also test the MA-VBID model in Alabama, Michigan, and Texas. CMS has authorized 11 MAOs from 9 parent organizations in Indiana, Massachusetts, and Pennsylvania to participate in the model test in CY 2017, and released a Request for Applications for CY 2018 participation. The model tests will not be implemented until 2017, so they will not affect ratings until 2019 Star Ratings.
Part D Enhanced MTM model
Six Part D Sponsors encompassing 22 PBPs are participating in the CMS Innovation Center’s Part D Enhanced MTM model for 2017. These plans will offer MTM programs subject to the terms and conditions of the model test in the selected regions. Other Part D plans, including any ineligible plans offered by the PDP sponsors of participating plans, will remain subject to the current regulatory requirements for MTM programs.
Attachment VI: 2018 Draft Call Letter Section II – Part C
Total Beneficiary Cost (TBC)
The TBC for each CY 2017 plan will be compared independently to the CY 2018 plan. To avoid TBC issues, MAOs are strongly encouraged to make sure Part C and Part D benefit and formulary changes are considered as part of their TBC evaluation prior to submitting their final bids and formularies to CMS. Detailed TBC information and examples will be provided in mid-April 2017 via the HPMS Memorandum titled “CY 2018 MA Bid Review and Operations Guidance.”
Maximum Out-of-Pocket (MOOP) limits
CMS is conducting research and evaluating potential future changes to the MOOP limits, based on Medicare FFS, MA encounter, and general benefit data analyses. CMS will communicate any future changes through the Call Letter or HPMS guidance documents so that plans will have adequate time to comment and prepare. CMS will continue to conduct research and evaluate potential future changes to the MOOP limits, based on Medicare FFS, MA encounter data, and general benefit analyses.
CMS monitoring and compliance activities regarding encounter data
CMS is focusing monitoring and compliance activity in these areas: Operational Performance, Completeness Performance, and Accuracy Performance. Further, CMS has identified the following seven measures (four operational and three completeness) to use to guide its evaluation and oversight of MAO data submission –
CMS will communicate a contract’s performance on these measures to the appropriate plan contacts. In future years, CMS expects to revise existing performance measures or include additional measures as they are developed as part of CMS’ on-going evaluation and oversight of MAO compliance. CMS will continue monitoring and assessment of contractor performance, using these measures. CMS will identify contracts failing to meet the performance thresholds for follow up communication and tracking, and will conduct compliance activity, including but not limited to, notices of non-compliance, warning letters, and corrective actions plans as needed to improve performance.
Decreasing health disparities in the quality of care that vulnerable populations receive
In 2016 CMS launched Part C and D Performance Data Stratified by Race and Ethnicity for HEDIS and CAHPS measures at the contract and national level to assist in the identification and prioritization of disparities in the quality of care. CMS sought comments from the industry regarding their experiences related to identifying and engaging enrollees in order to provide appropriate services, especially to vulnerable enrollees. CMS was particularly interested in learning about MAOs’ collection of information about enrollees’ race, gender, ethnicity, and languages and how that information is used to eliminate disparities through quality improvement and outreach activities. All comments received on this topic were supportive of efforts to identify and reduce health disparities, especially among vulnerable and underserved populations. Many of the commenters applauded CMS for discussing this topic and felt that addressing health disparities would help to improve overall health outcomes and functionality, especially in SNPs.
Attachment VI: 2018 Draft Call Letter Section III – Part D
Tiering exceptions: Policy clarifications, additional operational guidance, and solicitation for stakeholder feedback
Changes in the prescription drug landscape, including the considerable impact of high-cost drugs on the Part D program, have resulted in increasingly complex plan benefit packages and more variation in the type and level of cost-sharing. In response, CMS has made a number of changes to Part D formulary tier models for non-defined standard plans, including changes to tier labeling, which has resulted in brand and generic drugs being placed on the same tiers more frequently. However, some of these changes, along with the prevalence of multiple brand and generic drug tiers on formularies, have resulted in confusion about CMS policies related to tiering exceptions.
Through the CY 2018 Call Letter, CMS is asked for information, on a voluntary basis, related to tiering exceptions from plan sponsors, PBMs, and other interested stakeholders. While tiering exception requests constitute a small percentage of overall case volume at all levels of the coverage and appeals process, they are consistently associated with significantly lower approval rates than other types of coverage and exception requests.
Changes to Overutilization Monitoring System (OMS) opioid overutilization methodology
Based on the feedback received which considered the caseload (over 33,000), CMS will implement the following
Modifications to the OMS criteria beginning in 2018:
Modification 1: Shorten the measurement period from 12 months to 6 months
Rationale: A shortened measurement period better identifies current potential overutilization, reduces the number of repeat cases reported by the OMS, and reduces the number of false positives.
Modification 2: Use average MED rather than a count of 90 consecutive days of high MED
Rationale: By allowing gaps between prescription fills and days’ supply in the calculation, the average MED methodology improves identification of beneficiaries who are chronic users of high opioid doses compared to evaluating consecutive days, and reduces false positives.
Modification 3: Lower the MED mg threshold (90 mg)
Rationale: A lower MED threshold aligns the CDC guideline (amount generally suggested to avoid increasing above) and may capture additional beneficiaries with egregious patterns of potential overutilization who may need additional monitoring or case management.
Modification 4: Group providers, such as physicians, within the same practice
Rationale: Grouping providers reduces false positives by eliminating beneficiaries managed in the group practice setting.
A revised analysis summary is available at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.html
CMS’ expectation for hard formulary-level cumulative opiod MED POS safety edits in CY 2018
For CY 2018, CMS is not finalizing the proposal for all sponsors to implement a hard edit. As in 2017, CMS will continue to expect sponsors to implement formulary-level soft and/or hard cumulative MED opioid safety edits for 2018, but hard edits are not required, and they reiterate past guidance. CMS recommends that if a soft opioid safety edit is implemented, the threshold be set at levels greater than 90 mg MED. They also recommend that if a hard opioid safety edit is implemented, the threshold be set at 200 mg MED or more. The edits should include additional criteria to minimize false positives by accounting for known exceptions, such as hospice care, certain cancer diagnoses, reasonable overlapping dispensing dates for prescription refills or new prescription orders for continuing fills, and high-dose opioid usage previously determined to be medically necessary such as through case management or the coverage determination and appeals process. CMS also provided additional background and guidance on formulary-level soft and hard safety edits for opioids based on a cumulative MED. CMS expects Part D sponsors to implement a soft and/or hard edit but only as a safety edit.
Addressing chronic use of Benzodiazepine Sedative-Hypnotics (BSH) in the Medicare Part D population
CMS strongly encourages Part D sponsors to evaluate their claims data and use drug utilization management tools to monitor beneficiaries’ BSH use before it becomes chronic. CMS also recommends that sponsors assess prescriber rates to identify outliers for educational or administrative interventions. CMS does not plan to add the measure to the Star Ratings or display measures at this time since the overall use of BSH medications in the elderly is not an absolute contraindication per the Beers Criteria and the BSH rates were low for most Part D contracts.
As in previous years, CMS proposed a number of significant payment changes in the Advance Notice and Call Letter. The final announcement is largely unchanged from what was proposed in February. This was expected given that the new administration has yet to appoint many key officials within the agency.
Medicare Advantage plans will receive a 0.45 percent increase in funding for 2018. That is slightly more than the 0.25 percent increase which was proposed in February.
Insurers also received news on how CMS will evaluate “encounter data.” The administration will base 15 percent of the Medicare Advantage funding formula on encounter data, down from 25 percent as it initially proposed. Insurers have complained that the data, essentially their paid claims, is not reliable and should be scrapped entirely.
MA covers around one third of all Medicare beneficiaries and is a roughly $200 billion per year business.
Insurers had been expecting that the administration would fix what they see as a problem in the funding formula that prevents some plans from getting their full quality bonus payments. However the administration did not alter the policy.
CMS also decided not to move forward with changes to the funding model for employer-based plans that the Obama administration had proposed. Insurers believe the change would have resulted in lower payments. Instead the administration will continue with the same formula as 2017.
CMS also issued a request for information about ways to improve the private Medicare program. The agency asks for ideas on regulatory, sub-regulatory, policy, practice and procedural changes to improve the programs, and suggests that ideas could include recommendations on benefit design, operational or network flexibility, “supporting the doctor-patient relationship in care delivery” and ways to promote individual preferences.
For example, CMS suggests stakeholders could provide recommendations on changes to the way plans are paid, monitored and measured as well as changes to the star rating quality program. The agency also suggests that stakeholders could provide feedback on “when and how CMS issues regulations and policies and how CMS can simplify rules and policies for beneficiaries, providers and plans.”
Comments are due April 24.
1, 2 CMS Press Release
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