CMS releases part II of the 2019 Medicare Advantage and Part D Advance Notice and Draft Call Letter

The Centers for Medicare and Medicaid Services (CMS) on February 1, 2018, released the second part of the 2019 Medicare Advantage (MA) and Part D Advance Notice, and the Part D draft Call Letter, proposing average increases to MA payment rates for 2019 of 1.84% plus a potential further increase of 3.1% as a result of expected changes to risk scores for MA Plans.

The first part of the Call Letter was released on December 27, 2017, in compliance with provisions of the 21st Century Cures Act that require CMS to fully implement changes to the Medicare risk adjustment model by 2022.

Comments for both parts of the proposed Advance Notice and the Part D Call Letter are due to CMS by March 5, 2018. CMS expects to publish the final 2019 Rate Announcement and final Call Letter by April 2, 2018.

Highlights of key provisions of the advance notice and draft call letter are provided below.

2019 MA Risk Adjustment Proposals

Reflecting changes required by the 21st Century Cures Act, CMS has proposed incorporating mental health, substance use disorder, and chronic kidney conditions, as well as other technical changes into the risk adjustment model for 2019. For 2019, the proposed risk adjustment model for 2019 would account for 25% of the overall risk adjustment model, and the risk adjustment model used for 2017 and 2018 would account for 75% of the risk adjustment model.

In addition, CMS proposes to continue using a blend of encounter data and inpatient data submitted to the Risk-Adjustment Processing System (RAPS). For 2019, CMS proposes adding 25% of the risk score calculated using diagnoses from encounter data and fee-for-service (FFS) diagnoses to 75% of the risk score calculated with RAPS and FFS diagnoses.

MA supplemental benefits

MA plans are permitted to use rebates they receive for submitting bids under the risk-adjusted benchmark amount either to lower enrollee premiums or to offer supplemental benefits. Although supplemental benefits must be directly related to health care, current guidance does not allow an item to be eligible if it is for daily maintenance.

In the draft call letter, CMS proposes reinterpreting statutory language to allow supplemental benefits that compensate for physical impairments, reduce the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization. CMS cites fall prevention devices as an example of a newly eligible supplemental item under this proposed policy.

MA and the Quality Payment Program

The Medicare Access and CHIP Reauthorization Act (MACRA) instituted a Quality Payment Program (QPP), under which clinicians participating in Medicare generally will be paid under the Merit-based Incentive System (MIPS) or as a qualifying participant (QP) in Advanced Alternative Payment Models (AAPMs).

Beginning in the 2019 QPP performance year, the All-Payer Combination Option will provide opportunities for clinicians to achieve QP status by participating in payment arrangements through Medicare Advantage, Medicaid and other commercial payers that meet the criteria under MACRA to be considered Other Payer APMs: required use of certified electronic health record technology, payment linked to MIPS-like quality measures, and more than nominal financial risk.

In the MACRA QPP final rule for 2018, CMS stated that MA plans will be able to submit payment arrangements for consideration as Other Payer APMs for 2019 as part of the MA bid process for 2019. In the Advance Notice, CMS states, “Guidance and submission forms will be part of a Quality Payment Program module of the bid submission package released in April 2018.”

Star measures

For 2019, CMS proposed adding statin therapy for patients with cardiovascular disease to the star measures for MA and adding statin use in people with diabetes to the star measures for Part D.

In addition, CMS proposed removing Beneficiary Access and Performance Problems (BAPP) from the star measures for MA and Part D. CMS proposed temporarily removing the Reducing the Risk of Falling from the MA measures.

CMS also proposed changes to star measures that will be used to assess performance improvement and to the 2019 CMS display measures, which are not factored into star ratings but are nonetheless publicly available.

Quality Bonus Payment percentages

CMS proposes providing Quality Bonus Payments (QBPs) of 5% for plans with 4 or more stars, while plans with fewer than 4 stars would not receive a QBP percentage increase to county rates. A QBP percentage increase of 3.5% would apply to county rates for new MA plans.

In cases where two existing plans are consolidated, the star rating is proposed to be calculated by a weighted average, as opposed to prior years where one higher-rated plan could subsume another lower-rated plan under the higher rating.

MA Employer Group Waiver Plans

Employer Group Waiver Plans (EGWPs) are MA plans sponsored by employers that wish to offer an enhanced benefits package to retirees. Currently, EGWPs make a bid independent of other MA bids in a particular county, and often receive higher payments in comparison to other MA plans. After prior delays in implementing changes to how EGWPs are paid, CMS proposes for 2019 to calculate the bid-to-benchmark ratios that set EGWP payments to use the overall county-level individual bids, instead of the EGWP’s. This change would result in an estimated -0.3% payment adjustment to these plans.

MA special needs plans

CMS plans to continue to accept applications for special needs plans (SNPs), models of care (MOCs), and other SNP-related material for new and renewing SNPs “based on a belief that Congress will likely act in 2018 to extend the SNP program, and to be prepared in that event for SNPs to be offered without interruption.” CMS states that any contracts for 2019 will be void if Congress does not reauthorize SNPs.

Authorization of the SNP Program expires December 31, 2018.

MA plan uniformity

CMS proposes allowing greater flexibility on cost-sharing and supplemental benefits based on specific medical needs of enrollees, subject to non-discrimination rules. Under this change, an MA plan could identify enrollees diagnosed with specific diseases like diabetes, chronic heart failure, and COPD, as medically vulnerable and in need of additional services.

MA Value-based Insurance Design

The MA Value-based Insurance Design Model (V-BID) offers supplemental benefits or reduced cost sharing to enrollees with certain chronic conditions. CMS proposes expanding the model in 2019 to begin allowing plans to submit V-BID proposals for the following states:

  • California
  • Colorado
  • Florida
  • Georgia
  • Hawaii
  • Maine
  • Minnesota
  • Montana
  • New Jersey
  • New Mexico
  • North Carolina
  • North Dakota
  • South Dakota
  • Virginia
  • West Virginia

In 2018, CMS tested the model in Alabama, Arizona, Indiana, Iowa, Massachusetts, Michigan, Oregon, Pennsylvania, Tennessee, and Texas.  CMS had previously approved MA VBID plans in Indiana, Massachusetts, Michigan and Pennsylvania.

Part D

CMS proposed a general recalibration of Part D risk adjustment models to account for updates to plan benefit structures, as well as adding encounter data as a diagnosis source for 2019 Part D plan risk scoring.

CMS proposed no changes to the risk corridor thresholds for 2019, citing a continued high variation in part D risk sharing amounts. Part D plans’ standard deductibles are projected to increase from $405 to $415 for 2019, and the maximum out of pocket limit is projected to increase from $7,508.75 to $7,653.75 for 2019.

CMS retains a focus on reducing Part D opioid overutilization. The Call Letter cites its Overutilization Monitoring System (OMS) as having resulted in a reduction of very high risk overutilization of certain opioids, and CMS proposed further steps intended to curb opioid abuse for Part D beneficiaries. For example, OMS would add “potentiator” drugs such as gabapentinoids and benzodiazepines that are sometimes used in combination with opioids, and consider adding new measures to the Pharmacy Quality Alliance evaluation strategy.

Notably, under the proposal all Part D plans would be required to cap their coverage of opioids at 90 morphine milligram equivalents (MMEs) over a 7-day supply of opioid drugs, with the plans retaining the right to waive this cap. Initial fills of opioids for acute pain would be capped at 50 MMEs over 7 days.

Part D plans must submit formularies for approval between May 14 and June 4, 2018.


Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

Ethan Joselow
Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

This article contains general information only and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this article.

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