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Few Changes in Final 2017 Call Letter

Few Changes In Final 2017 Call Letter

The Centers for Medicare and Medicaid Services (CMS) issued the Final 2017 Call Letter this week with few changes from the draft issued in February. Below we cite some of the notable changes made in this final call letter, as well as recap other policy changes that remain as proposed in the draft. For more details, reference our March 7th blog on the draft call letter, but please make sure you note the changes.

Expected Rate Hike Greater Than Draft Letter

Final anticipated Part C and D rate increases remained about the same based on the final calculations from CMS. County base rates for Part C will be adjusted upward by about 3.1%, up from about 2.9% in the draft letter. The normalization factor changed slightly, and CMS confirmed it was sticking with the statutory minimum of 5.66% for coding pattern adjustments. The Part D rate adjustment of 11.75% remains the same. Again, this is overall good news for plans that have been battered by relatively low increases the past few years as well as various financial realignment reductions from the Affordable Care Act (ACA).

Further Phase-In of Encounter Data Tweaked A Bit

As we told you in the blog on the draft call letter, the long awaited migration from Risk Adjustment Processing System (RAPS) data to Encounter Data Payment System (EDPS) for risk adjustment began in 2016. This year, risk score revenue represents a 90% RAPS and 10% EDPS blend. CMS had announced its intention to push the blend to 50%-50% for 2017, but based on transition readiness and revenue concerns raised by some plans, it has backed off this a bit. For 2017, the blend will be 75% RAPS and 25% EDPS. However, in the final call letter CMS stresses that it intends to swiftly implement transition to 100% encounter data. For the first time, it elaborated on its phase-in plans, announcing 50%-50% for 2018, 25% RAPS-75% EDPS in 2019 and 100% EDPS in 2020. The blend for 2017 will apply to PY2017 (2016 dates of service), which will have a submission deadline no earlier than January 2018.

HCC Model Changes Adopted for Duals and Disabled

Responding to known issues with how dual eligibles and the disabled are scored in the risk adjustment system, the draft letter proposed to implement an updated version of the CMS-HCC risk adjustment model that broke out the community segment into six separate model segments (non-dual aged, non-dual disabled, full benefit dual aged, full benefit dual disabled, partial benefit dual aged, partial benefit dual disabled). Each segment will have comparative factors reflecting the specific relative costs for the subgroup. CMS did not change this recommendation in the final call letter.

Star Ratings Changes

CMS confirmed that the quality rebate percentages and quality bonus structure will remain as it is now. It also kept intact its recommended Star changes for 2017 and plans for the outyears. Most significantly, it stuck to its guns on introducing an interim adjustment to some measures to address discrimination in the Star system for Special Needs Plans (SNPs) and those with high concentrations of dual eligibles.

The Categorical Adjustment Index (CAI) will be applied to a contract’s Overall and/or Summary Star Ratings. Medicare Advantage (MA) contracts could get up to three adjustments — Part C Summary Rating, Part D Summary Rating, and Overall Star Rating. PDPs would be adjusted just for the Part D Summary Rating. The CAI seeks to take into consideration the effect that DE/LIS/disability status and penetration have on Star performance for a number of C and D measures. Studies have shown significant variability in outcomes between plans with low penetration of duals and disabled vs. those with high penetrations. Applying the CAI should positively impact the Star results of a number of plans dominated by dual or LIS enrollment.

Prior Authorization Tolling Proposal Abandoned

In the draft letter, CMS proposed an expansion of turnaround times for certain Coverage Determinations and Redeterminations when clinical documentation is not present. It received a great deal of comments and most of them were negative. While almost everyone supports CMS’ idea that a carefully crafted policy could actually speed drug delivery, plans and PBMs felt that this proposal would be difficult to implement, might lead to ambiguities and confusion, and would be administratively cumbersome. Advocacy groups, prescribers, and pharmacies feared abuse and further delays in beneficiaries receiving medication.

Severe Penalties for Inordinate Auto-Forwards

CMS further elaborated on its dismay at the large number of auto-forwards to external review due to failure to meet regulatory timeframes for prior authorizations and appeals. CMS stated it would closely watch outliers in terms of auto-forwards of cases to the independent review entity and take vigorous enforcement actions against plans. In the final call letter, CMS lays out the benchmarks it will use. An outlier threshold will be established each year and will be based on a quarterly auto-forward rate per 10,000 enrollees. The outlier threshold will be in alignment with the Star Ratings auto-forward measure of 2-star cut-point (the 2016 Star Ratings annual cut-point was 38.5 – 66.8). The move is significant as it sets a clear threshold for CMS to monitor auto-forwards, and will likely mean increased Civil Monetary Penalties and possibly other enforcement actions outside of regular audits. Such scrutiny as well can only complicate other aspects of plan compliance.

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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