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2019 CMS Call Letter Is Treasure Trove of New Policies

2019 CMS Call Letter Is Treasure Trove Of New Policies

Due to recent mandate by Congress, the Centers for Medicare and Medicaid Services (CMS) is releasing the Advance Notice of Methodological Changes for Calendar Year (CY) 2019 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2019 Call Letter in two draft notices. The first came in late December and the second in early February. Click Here to review the official release for both Call Letters. We wrote about the first draft notice in a blog in early January (Risk Adjustment Changes Outlined In Additional 2019 Advanced Call Letter); however, we pulled a summary of the first notice into this blog as well.

Key Takeaways

  • Huge fee-for-service trends will once again drive MA rates higher. Plans are benefiting from the inefficiency of the traditional system. This is driving plan profits and enrollment.
  • Major changes in the Part C risk adjustment system, with a blend of payment methodologies as well as a blend of 837 encounter data and traditional risk adjustment payment encounter submissions. This will challenge plan reconciliation and analyzing how well their encounter data programs are truly performing.
  • Special Needs Plans (SNPs) will sunset unless reauthorized by Congress sometime in 2018. We expect them to be reauthorized.
  • In addition to the Value Based Insurance Design (VBID) expanding to half the states in 2019, CMS is also allowing non-VBID MA plans to vary services and cost-sharing as long as it is tied to health status and does not discriminate. It is also expanding the definition of supplemental benefits that can be offered to plans. This is part of CMS’ effort to drive benefit variability to improve outcomes.
  • CMS is encouraging plans to participate both in the enhanced Medication Therapy Management (MTM) and VBID pilots. For the enhanced MTM pilot, a $2.00 PMPM payment will be made in 2019 if certain cost-reduction and reporting benchmarks are achieved. It is small, but valuable, revenue.
  • Major changes in Star are coming, including the continued migration to a comprehensive management approach for clinical measures. See our detailed table below. Take note of the measures with an asterisk, as these show how complex the measures will get and how important it will be to forge real-time communication and information sharing within plan departments.
  • The Categorical Adjustment Index (CAI) used to adjust certain Star measure scores for special needs plans and others with high dual eligible populations is continued. In addition, CMS is working with the Pharmacy Quality Alliance (PQA) to risk adjust certain scores and with the National Committee for Quality Assurance (NCQA) to break out achievement based in part on socio-demographic characteristics. Overall, this will mean a major refinement of Star over time.
  • Hurricane impacted plans get major relief on the Star front, including major concessions on submissions for Consumer Assessment of Healthcare Providers and Systems (CAHPS), Health Outcome Survey (HOS), and Healthcare Effectiveness Data and Information Set (HEDIS).
  • CMS continues its focus on data integrity to ensure the Star assessment process is fair and accurate. Major new initiatives will tackle inaccuracy and bias in several measures.
  • Plans will have the ability in 2019 to offer a reward, or incentive, for those who complete a Health Risk Assessment (HRA).
  • CMS outlines new initiatives to control Opioid addiction through plan drug utilization review.

Here are some of the technical details of this year’s draft letter:
Expected Rate Hikes and Membership

  • Based on fee-for-service (FFS) data, MA plans’ average base Part C trend is about 4.1%. MA plans have benefited from generous positive trends over the last several years, but this is the highest seen lately and represents a huge win for both MA plans and members. This will likely drive the profits of plans but also add to the already generous member benefits seen in the marketplace.
  • We expect more lives now to enter plans in the coming years. 2018 enrollment is already up over 4% from the close of last year and we should see continued growth into February. Already, about 20 million of the roughly 59 million Medicare beneficiaries are in MA plans. This may grow to 35% in 2018 and it is expected to exceed 50% by 2025.
  • There are a number of positives and negatives that hit the base Part C trend, including among others, the Part C normalization factor adjustment (this will go up dramatically and cost plans money) and the coding intensity factor (this stays at a 5.9% reduction). The result is that plans should see an average increase in the mid 2% range. Still, the largest we have seen in a long-time. Of course, this is an average and actual rates will depend on your county benchmarks, risk scores, coding changes, and other factors. Some states see very high base-rate trends.
  • Due to a relatively low Part D inflationary factor and a negative change in the Part D normalization factor, drug rates will be relatively flat, although this is a much smaller revenue component for MA-PDs.
  • The Part D risk corridor break points and revenue- or cost-sharing percentages remain the same in 2019.

Quality Incentive Structure Remains the Same

  • The 5% quality bonus will remain for 4 Star plans and above. New plans remain treated as 3.5 Stars.
  • The county benchmark rebate structure remains the same, with 4.5 and 5 Star plans retaining 70% for increased member benefits, 3.5 and 4 Star plans getting 65% and those below getting 50%.
  • As we have noted, the combination of the rebate and Star bonus incentives can give plans an up to 11% revenue advantage in the marketplace.

Risk Model Changes

  • Additions to enhance recognition of mental health, substance abuse and kidney disease are being made to the main risk adjustment model:
    • Drug Abuse, Uncomplicated, Except Cannabis (HCC 56)
    • Reactive and Unspecified Psychosis (HCC 58 — the current HCC 58 will be renumbered as HCC 59)
    • Personality Disorders (HCC 60)
    • Chronic Kidney Disease, Moderate (Stage 3) (HCC 138)
    • Selected drug and alcohol “poisoning” (overdose) codes to existing “Drug/Alcohol Dependence,” to create “Drug/Alcohol Dependence, or Abuse/Use with Complications” (HCC 55)
  • CMS’ HCC model already recognizes co-morbidities because it is an additive model, giving a risk factor for each counted HCC in the model. However, CMS calls for calculating the impact of the number of conditions present for each individual into the payment. Changes will be phased in. In 2019, 25% of the risk score will be calculated with the proposed Payment Condition Count CMS-HCC model and 75% of the risk score calculated with the 2017 CMS-HCC model. The condition count changes will be phased in 25% at a time through 2022. CMS looks for comments related to whether or not the Payment Condition Count vs. All Conditions Count methodology should be used. CMS recommends the Payment Condition Counts model and would factor it only in the Encounter Data Payment System (EDPS) portion of the risk adjustment calculation. Plans should do better with the Payment Condition Count option vs. All Conditions Count model.
  • There will be an update to the Part D HCC model as well for numerous factors.
  • The ESRD model is being recalibrated.
  • Frailty indexes for SNPs and Programs of All-Inclusive Care for the Elderly (PACE) programs are being updated.
  • All of this is a signal that CMS will continue to refine the risk adjustment system to ensure accurate payment and to encourage quality of care.

Risk Adjustment Submission Methodology Changes

  • A few years ago, CMS laid out a migration that would use the EDPS or 837 encounters process exclusively by 2020. In the 2018 call letter, recognizing the revenue impact on plans ill-prepared to continue phasing in 837 encounters, CMS took a step back. While 2017 payments had 25% tied to 837 encounters, in 2018 just 15% will be calculated using this process. The 2019 first notice lays out that 25% will be EDPS and 75% will be the traditional Risk Adjustment Payment Systems (RAPS). It does not lay out the rest of the schedule at this time.
  • EDPS encounters will be supplemented with RAPS inpatient diagnoses. CMS determined that 837 submissions are low compared to corresponding RAPS inpatient submissions. CMS believes that this change will improve the completeness of the data for payment in 2019.

Special Needs Plans Need to be Reauthorized

  • We think CMS and Congress love SNPs, but given the partisan wrangling and general dysfunction in Washington the last year, SNPs were not reauthorized. However, plans should not take reauthorization for granted and should lobby Congress.
  • CMS will assume reauthorization sometime in 2018 and accept new and continuing applications for SNPs.

Compliance Actions

  • In addition to posting audits and Civil Monetary Penalty (CMP) notices, it will also display a CMP icon on Medicare Plan Finder for plans that have been assessed CMPs.
  • CMS warns of major enforcement actions on inaccurate provider directories.
  • While follow-up validation audits will need to occur after a CMS audit, some softening of the requirements are being put in place and extending the timeframe for completion.

Star Announcements
Star Changes

  • The table below shows the major proposed Star changes for 2019. As you can see, two measures are being added for scoring. Five are being changed and two are being removed.
  • To us, the more compelling proposals are for 2020 and beyond. As we have outlined in past blogs (e.g. Plans Must Get Ready For Comprehensive Management Measures), CMS is moving the clinical measures to what we are naming Comprehensive Management Measures. These complex clinical measures will need a collaborative approach across plan departments to succeed. Plans already score very low on these types of measures (e.g., readmissions) and plans will need to revamp their clinical strategies as these measures come out or risk losing 4 Star or greater status. In the chart below, we highlight the measures that we see as emerging comprehensive management measures.
Star Program Changes for 2019
* One of a number of emerging Comprehensive Management Measures
  Name Part C or D or Both New Removal Change
Star Scored
Statin Use in Persons with Diabetes Part D X
Statin Therapy for Patients with Cardiovascular Disease Part C X
Improvement Measures Both X
Medication Adherence (ADH) for Hypertension (RAS Antagonists), Medication Adherence for Diabetes Medications Part D X
Medication Adherence (ADH) for Hypertension (RAS Antagonists), Medication Adherence for Diabetes Medications, and Medication Adherence for Cholesterol (Statins) Part D X
MPF Price Accuracy Part D X
Members Choosing to Leave the Plan Both X
Beneficiary Access and Performance Problems (BAPP) Both X (To Display With Changes)
Reducing the Risk of Falling Part C X (Temporary)
Star Display
Plan Makes Timely Decisions about Appeals Part C X
Hospitalizations for Potentially Preventable Complications* Part C X
High Risk Medication Part D X
Drug-Drug Interactions (DDI) Part D X
Antipsychotic Use in Persons with Dementia (APD) Part D X
Use of Opioids from Multiple Providers and/or at High Dosage in Persons without Cancer Part D X
Transition Monitoring* Part D X
Formulary Administration Analysis Measure Part D X
Timely Effectuation of Appeals Part D X
Enrollment Timeliness Both X
Appropriate Monitoring of Patients Taking Long-term Medications and Asthma Medication Ratio Part C X
Possible 2020 and Beyond 
Controlling High Blood Pressure Part C X
Plan All-Cause Readmissions* Part C X
Initiation and Engagement in Alcohol or Drug Dependence (AOD) Treatment* Part C X
Telehealth and Remote Access Technologies Part C X
Cross-Cutting Exclusions for Advanced Illness Part C X
Medication Adherence (ADH) for Cholesterol (Statins) Part D X
· Medication Therapy Management (MTM) Program Completion Rate for Comprehensive Medication Reviews (CMR) Measure Part D X
Transitions of Care* Part C X
Follow-up after Emergency Department Visit for Patients with Multiple Chronic Conditions* Part C X
Care Coordination Measures* Part C X
Opioid Overuse Part C X
Assessment of Care for People with Multiple High-Risk Chronic Conditions* Part C X
Depression Screening and Follow-Up for Adolescents and Adults* Part C X
Unhealthy Alcohol Use Screening and Follow-Up* Part C X
Readmissions from Post-Acute Care* Part C X
Adult Immunization Measure Part C X
Anxiety Part C X
Polypharmacy Measures Part D X
Additional PQA Medication Adherence Measures Part D X

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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