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Medicare Advantage Advance Notice and Policy and Technical Changes Proposed Rule

On February 5, 2020, the Centers for Medicare & Medicaid Services (CMS) issued two documents impacting the Medicare Advantage (MA) program: (1) the Medicare and Medicaid Programs: Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly Proposed Rule; and (2) the Advance Notice Part II (Part I was released January 6, 2020).

Comments on the Policy and Technical Changes Proposed Rule are due April 6, 2020. Comments on the Advance Notice Parts I and II are due March 6, 2020.  The final rate announcement is expected by April 6, 2020.

Key Takeaways

  1. The Centers for Medicare & Medicaid Services (CMS) estimates an expected average change in plan revenue of 0.93% (as compared to 2020’s proposed increase of 1.59% and final increase of 2.53%).

  2. CMS is implementing a change flowing the 21st Century Cures Act (Cures Act) that will allow End Stage Renal Disease (ESRD) beneficiaries to enroll in MA plans. This change could have significant financial implications for MA plans and should be closely evaluated.

  3. Building on the President’s Executive Order on Protecting and Strengthening Medicare for Our Nation’s Seniors, CMS is proposing to implement certain flexibilities related to telehealth and network adequacy that could strengthen access to MA in rural areas.

Medicare Advantage Options for End-Stage Renal Disease (ESRD) Beneficiaries

The 21st Century Cures Act included a provision that allows beneficiaries with ESRD to choose to enroll in Medicare Advantage plans. Prior to enactment of Cures, ESRD beneficiaries generally could not enroll in MA, although there were some limited exceptions. CMS is now implementing the provisions of Cures and ESRD beneficiaries can enroll in MA plans for plan years beginning on or after January 1, 2021.

Under the Cures Act, the costs of kidney acquisition for MA beneficiaries are now excluded from the services the MA plan is required to cover and those costs are also excluded from MA benchmarks and capitation rates. These costs will be covered under the fee-for-service program instead. We expect significant engagement from the stakeholder community over the adequacy of payment rates for this population.

Network Adequacy

Plans are required to maintain a network of appropriate providers that is sufficient to provide adequate access to covered services to meet the needs of the covered population. CMS provides guidance to plans on how the agency measures and assesses the adequacy of the plan’s network.  Currently, CMS requires that organizations contract with a sufficient number of specified providers/facilities to ensure that 90 percent of beneficiaries have access to at least one provider/facility of each specialty type within published maximum time and distance standards. In this proposed rule, CMS is codifying a practice it refers to as “customization” which includes the flexibility to expand time and distance standards in cases where, due to provider shortage, it is not possible to meet the base time and distance standards.

In addition, CMS is proposing to modify its network adequacy policy to further account for access needs in counties, including rural counties, and to take into account the impact of telehealth providers in contracted networks. Specifically, in an effort to encourage MA in rural areas, CMS is proposing to the reduce the percentage from 90 to 85 in Micro, Rural and CEAC counties where there is evidence of lower supply of physicians compared to urban areas.

CMS is also proposing to give an MA plan a 10-percentage point credit toward the percentage of beneficiaries residing within published time and distance standards for certain provider specialty types when the plan contracts with telehealth providers. The specialties are dermatology, psychiatry, neurology, otolaryngology and cardiology. CMS also seeks comments relating to measuring and setting standards for access to dialysis services.

CMS further proposes that MAOs may also receive a 10 percentage point credit toward the percentage of beneficiaries residing within the time and distance standards for affected provider and facility types in states with certificate of need laws or other state imposed restrictions that limit providers or facilities in the county or state.

Out of Network Telehealth

In 2019, CMS finalized requirements for MA plans offering additional telehealth benefits.  The Bipartisan Budget Act of 2018 authorized MA plans to offer additional telehealth benefits beginning with the 2020 plan year and to treat these additional benefits as basic rather than supplemental benefits. In the implementing regulations, CMS finalized a requirement that MA plans only furnish these benefits using contracted providers. The regulation provided that benefits furnished by non-contracted providers could only be covered as supplemental benefits. For example, a PPO plan could cover telehealth services that are provided out of network only as a supplemental benefit. CMS is soliciting comments on whether the regulation should be revised to allow all MA plan types, to allow additional telehealth benefits through non-contracted providers and to treat those benefits as basic benefits.

Implementing Opioid Provisions in the SUPPORT Act

In 2018, President Trump signed into law the Substance-Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, comprehensive, bipartisan legislation to address the opioid epidemic. CMS is now proposing implementation of certain provisions of that law.

CMS proposes implementation of a SUPPORT Act provision that requires Part D plans to establish Drug Management Programs to identify and manage beneficiaries who are at risk for prescription drug misuse or abuse for plan years beginning on or after January 1, 2022. Currently, plans have the option of establishing DMPs, and according to CMS, 99% of enrollees are covered under Part D contracts that offer a DMP.

The SUPPORT Act also modified requirements for Medication Therapy Management program requirements for Part D plans beginning in January 1, 2021 to better assist enrollees who are at risk for prescription drug abuse.

For plan years 2021 and beyond, Part D sponsors also must provide information to certain enrollees about pain treatment, including coverage of non-pharmacological therapies, devices, and non-opioid medications.

Second, Preferred Specialty Tier in Part D

CMS allows Part D sponsors to offer plans that are either a defined standard benefit or an alternative benefit design equal in value to the defined standard benefit (“actuarially equivalent”), and to offer provide enhanced benefits. Plans with alternative benefit designs often use tiered formularies.  The top tier—the “specialty tier”—is reserved for the most expensive drugs that are brand name, specialty, and not-preferred.  Cost-sharing on this tier is typically based on a coinsurance rather than a copayment amount.  Part D sponsors are currently permitted to include only one specialty tier in their plan design, which is intended to allow them to manage high-cost drugs separately from tiers with less expensive drugs.

CMS proposes allowing Part D sponsors to establish two specialty tiers provided that one is a preferred tier offering lower cost sharing than the proposed maximum allowable specialty tier cost sharing. Stakeholders have argued that creating an additional specialty tier could improve the ability of Part D sponsors to negotiate with pharmaceutical manufacturers to help lower the prices of high-cost Part D drugs, as well as potentially encourage the use of lower-cost biosimilar products and encourage competition among existing specialty Part D drugs.

Beneficiary Real Time Benefit Tool (RTBT)

In line with the Administration’s goals around improving transparency for consumers and reducing the costs of prescription drugs, CMS is proposing a requirement that Part D sponsors implement an RTBT that would allow enrollees to view accurate, timely, and clinically appropriate patient-specific, real-time formulary and benefit information, effective January 1 2022. The goal of the tool would be for prescribers and patients to be able to consider and compare the potential cost differences of medications. The systems would be required to provide real-time values for cost-sharing information and formulary alternatives, where appropriate. The requirement would include the formulary status of clinically appropriate alternatives and utilization management requirements. Plans would be encouraged, but not required, to include the negotiated price. CMS also proposes to allow plans to offer certain rewards and incentives to enrollees who use the tool.

Establishing Pharmacy Performance Measure Reporting Requirements

CMS proposes establishing a requirement for Part D sponsors to disclose to CMS the pharmacy performance measures plan sponsors use to evaluate pharmacy performance. CMS seeks to better understand the use of pharmacy performance measures in network pharmacy agreements and to determine financial rewards and penalties incurred at the point of the sale. Once collected, CMS would publish the measures. CMS states that the measures information could include:

Data elements may include:

  • Name of performance measure

  • Performance calculation methodology

  • Success/failure thresholds

  • Financial implications of success/failure to achieve threshold(s)

  • Pharmacy appeal requirements

  • Method of payment of collection.

CMS notes that if this proposal is finalized, the actual reporting requirements, data elements, timelines, and method of submission would be proposed through the Office of Management and Budget Paperwork Reduction Act process after publication of this final rule. In this proposed rule, CMS is encouraging industry to come together to develop pharmacy performance measures through a consensus process and to adopt measures to ensure standardization, transparency and fairness.

CMS seeks comments on the principles that pharmacy performance measures should adhere to, the data elements, timeline, and method of submission for reporting measures.

Proposed Rule Does not Include Risk Adjustment Data Validation (RADV) Provision

CMS uses RADV audits to determine and recoup improper payments to MA plans. In a 2018 proposed rule, CMS proposed dramatic changes to the RADV audit process, representing a nearly $4.5 billion cut to Medicare Advantage. The 2018 proposed rule was never finalized and RADV is not addressed in the technical and policy rule.

“Look-Alike” Dual Eligible Special Needs Plans

Special Needs Plans (SNPs) are specifically designed to provide targeted care to individuals with special needs. SNPs may restrict enrollment to certain categories of enrollees, including individuals who are dually eligible for Medicare and Medicaid (duals). D-SNPs are intended to integrate or coordinate care for this population and are subject to specific requirements that promote care coordination and protect beneficiaries.

The Medicare Payment Advisory Commission (MedPAC) recently reported to Congress the emergence of D-SNP look-alike plans that have similar levels of dual eligible enrollment as D-SNPs but are not subject to the same requirements as D-SNPs. In the proposed rule, CMS outlines its concerns with the proliferation of D-SNP look-alike plans that are not subject to the same regulatory scrutiny as D-SNPs and summarizes stakeholder feedback on the issue. CMS then proposes that the agency will not enter into or renew a contract with a D-SNP look alike in any state where there is a D-SNP or other plan CMS has authorized to exclusively enroll duals. CMS proposes to establish procedures to transition enrollees from D-SNP look alike plans to other MA plans.

© 2020 McDermott Will & Emery


About this Author

Mara McDermott, McDermott Law Firm, Washington DC, HealthCare Law Executive

Mara is an accomplished health care executive with a deep understanding of federal health care law and policy, including delivery system reform, physician payment and Medicare payment models.

Most recently Mara served as the senior vice president of federal affairs at America’s Physician Groups (formerly the California Association of Physician Groups, CAPG), a professional association representing medical groups and independent practice associations practicing in capitated, coordinated care models. As head of the Washington, DC, office, Mara...