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2018 Call Letter Rather Humdrum; But No Signals Away From Value-Based Purchasing

2018 Call Letter Rather Humdrum; But No Signals Away From Value-Based Purchasing

Perhaps due to the new administration taking office just a few days earlier and the uncertainty surrounding health policy, the Centers for Medicare and Medicaid Services (CMS) released a rather humdrum 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 Call Letter on February 1, 2017. At the same time, it is important to note the document does not signal any retreat from the value-based purchasing (VBP) focus of the Medicare Advantage (MA) and Part D programs. We are convinced that the drive for outcomes in health care is key to efficiency and quality in the future. No significant changes on this front is good news … for now.

While last year’s Call Letter had some sweeping changes relative to the Star program and the way Special Needs Plans (SNPs) would be paid as well as rated. This year’s draft notice includes largely cosmetic changes to the MA and Part D landscapes.

Here are some of the highlights of this year’s draft letter.

Expected Rate Hikes and Quality Bonus

The draft Call Letter announced that base rates for Part C likely will be adjusted upward by about 2.7 percent. Notably, there are some negative Part C adjustments to this rate increase. The coding intensity negative rate adjustment (enacted to reduce rates for what is perceived as aggressive coding of disease states in the MA risk adjustment world) moves to 5.91 from 5.66 percent. The normalization factor is anticipated to go up from about 1 to 1.017. This will be formally set in the final call letter. These and other changes will mean relatively flat rates overall, perhaps a slight increase. However, this should largely mean the ability for most plans to maintain benefits into 2018. Despite modest rate increases over the past few years, this rate stability has allowed Medicare Advantage to grow robustly and, now, about one-third of all beneficiaries are in private plans, with many metro markets having a majority of seniors and aged in such plans.

The Part D risk corridors, or risk-sharing, will be maintained. Part D base rates go up 1.22 percent.

On the quality reimbursement side, CMS is making no changes to the quality bonus structure. Only plans with ratings of 4 Stars or greater will receive a 5 percent quality incentive bonus to be passed through to member benefits. Plus, the amount a plan can keep in revenue between the county base bid and the county benchmark (the so-called “quality rebate”), remains as is. Those plans with 4.5 and 5 Stars keep 70 percent of the difference for member benefits, while 3.5 and 4 Star plans keep 65 percent, and those at 3 Stars or less keep just 50 percent. As we have discussed in the past, the combination of these two elements give 4 and 5 Star plans a huge advantage in the marketplace in terms of better benefits to attract members. And remember that 5-Star plans can also enroll throughout the year (not just in the seven-week enrollment period.

Employer Group Waiver Plans (EGWPs) may win a big victory in rating as well. CMS had begun changing how rates are calculated for EGWPs and planned to do so over two years. CMS seems to be pointing to freezing the process and remaining with the 2017 calculation. This saves EGWPs from a further decrease for now.

Encounter Data Phase-In Frozen

In a bit of a surprise move, CMS is freezing the encounter data phase-in for 2018. Currently, plan rates are set by using 75 percent of risk adjustment data sent in via the traditional Risk Adjustment Processing System (RAPS) format, with 25 percent sent in by the Encounter Data Payment System (EDPS or 837) submission process. Originally, 50 percent of submissions were slated to come in by EDPS in 2018, 75 percent in 2019. EDPS was to fully govern rate setting for risk in 2020. CMS bowed to pressure from plans that were struggling with the new and more complex process. The fear was a deep erosion in revenue to these plans. CMS did not set a new phase-in schedule. We see this as only a short hiatus from implementation as CMS is known to be very suspect of the RAPS process, which more easily allows plans to remediate for sloppy year-round encounter documentation processes.

Risk Adjustment Model Changes

The CMS Part C Hierarchical Condition Category (HCC) risk adjustment model will not change in 2018. The Part D model will be updated, including reflecting the 2018 benefit structure and updates to the data years used to calibrate the model.

Star Announcements

In 2016 and 2017, CMS committed to introducing a series of complex measures in future years. This seems to be continuing to prevail, although some slight modifications are occurring:

  • CMS states measures that seem to be “topped out” (those where plans have achieved high performance and additional increase are unlikely) will be moved over time to display. This would up the ante on Star performance in the future.
  • The Medication Reconciliation Post Discharge measure was expanded to all MA plans (as opposed to SNP) and to cover all members age 18 years and older. CMS included this measure on the 2017 display page and proposes to move the revised measure into the 2018 Star program.
  • Improving Bladder Control is being moved back to Star from Display.
  • About six Star measures have changes.
  • The High Risk Medication measure is being moved to Display.
  • About a dozen Display measures are either new or have changes.
  • The Categorical Adjustment Index made to several measures to account for the bias the Star program has on plans with high dual eligibles penetration (including SNPs) will continue in 2018 with minor changes.

Several new initiatives are covered for 2019 and beyond. Some of them are:

  • The anticipated hospitalizations for potentially preventable complications will not be introduced for Star in 2018 as planned, but moved to 2019. NCQA indicated it had to look at some concerns about the measure.
  • Similarly, Statin Therapy for Patients with Cardiovascular Disease measure will remain on display in 2018 and move to Star in 2019.
  • The Medication Management for People with Asthma measure needs to be further analyzed and will be display in 2018 and Star in 2019.
  • Additions to Opioid Overuse, new behavioral health screening and transitions, and substance abuse measures are also contemplated in the future.
  • CMS is proposing to weight care coordination and transition measures as a 3 starting in 2019. This would include the CAHPS Care Coordination measure and Medication Reconciliation measure and additional measures in future years.
  • In addition, CMS plans on expanding Care Coordination measures to include:
    • Ensuring seamless transitions across settings
    • Appropriate follow up after inpatient and emergency department visits
    • Utilizing appropriate health IT tools to share information
    • Communication across providers
    • Comprehensive assessments
    • Strengthening the relationship between the plan and provider in care coordination activities.
  • CMS also wants feedback on a new comprehensive Transitions of Care measure for possible inclusion in the future. This measure includes:
    • Notification of Inpatient Admission
    • Receipt of Discharge Information
    • Patient Engagement After Inpatient Discharge
    • Medication Reconciliation Post-Discharge
  • CMS is considering the use of a new HEDIS measure assessing follow-up care provided after emergency department visit for patients with multiple chronic conditions.

Consider the measures that plans will need to perform well on in the future to achieve or maintain 4 Star or greater and survive in the marketplace:

  • Perform well on the current readmissions measure by monitoring and care coordinating people with certain conditions and stopping them from being readmitted in 30 days.
  • Closely managing the entire population with certain chronic conditions from entering a hospital for exacerbation of those conditions.
  • Ensuring seamless care transitions post hospitalization.
  • Ensuring appropriate follow-up after ER visits or inpatient stays.
  • Adequately assessing members post-acute stay and communicating to providers.
  • Notifying providers timely of IP admission, discharge and follow-up care.
  • Engaging in medication reconciliation and medication therapy management.
  • Managing ever-more-complex suites of measures covering physical and mental health conditions.

In short, the future of exemplary Star performance moves from mobilizing on and remediating discrete measures (although it will still be in play) to plan-wide daily collaboration across health plan departments and with providers on managing chronic conditions of each and every member.

Accounting for poor audit results in Star

In early 2016, CMS suspended the reduction in the overall and summary Star ratings for contracts under sanction. CMS is continuing its analysis of the issue. It will not re-institute the reduction but will make other changes to help reflect poor audit performance in Star. However, it wants to revamp the current Beneficiary Access and Performance Problems (BAPP) measure. BAPP is based on CMS’ sanctions, Civil Monetary Penalties (CMPs), and Compliance Activity Module (CAM) data. CMS wants to move the BAPP assessment period closer to the Star rating period to more closely reflect the compliance status of the plan in a given Star year (it currently lags two years and will move to a period that ends 6 months prior to the start of the Star year). It also is rationalizing and making more equitable how the measure is calculated (taking into account plan size, severity of the beneficiary impact, etc.). These changes will go into effect either in 2018 or 2019.

Data Integrity

CMS is paying special attention to data integrity and how this may impact Star score calculation. One pilot audit program looks at the Medication Therapy Management program data. Early this year most plans were treated to a Timeliness Monitoring audit that will become an annual exercise in the future. CMS plans on using results in both of these to sanction plans and take results into account in Star ratings. And CMS has already noted it is ramping up its oversight of independent review entity submissions for not only timeliness but overturn rates.

CMS, too, is focusing oversight on encounter data submissions. CMS will scrutinize:

  • Submission attestations
  • Submission statuses
  • Frequency of submissions (against a schedule based on plan size that ranges from weekly to monthly submission requirements)
  • Completeness and volume (including both thresholds of encounters overall and in service categories but also how robust each encounter is)
  • Accuracy of encounters (codes, etc.)

Tiering exceptions

While a small percentage of overall authorizations or appeals, CMS is closely scrutinizing tier exceptions in Part D. It believes plans are being more restrictive in their application of these exceptions than the statute and regulations allow. It has come to this conclusion based on audits and evaluation of external review decisions.

CMS believes plans are incorrectly denying tiering exception requests in a variety of ways.

  • Denial based solely upon a tier being labeled “generic” without taking into consideration that the tier also includes brand drugs.
  • Failure to consider tiering exception requests for any drug on a tier that is labeled as “preferred,” solely because that tier is labeled as “preferred,” even when there are alternative drugs in a lower-cost tier on the plan’s formulary.

In the Call Letter, CMS directs plans as follows:

  • Plans should not base tiering exception eligibility on the tier label of the tier on which the alternative drug(s) are placed, but rather whether the tier has lower cost-sharing than the requested drug.
  • Plans should not restrict their consideration of a tiering exception request based on the tier label, and should not limit their consideration to a single lower tier if there are multiple lower tiers containing alternative drugs.
  • If a plan has approved the request for a tiering exception, the plan must apply the cost-sharing for the lowest applicable cost-sharing tier that contains alternatives for the requested drug because the lowest cost-sharing tier is the “applicable lower cost-sharing tier.”

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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