CMS proposes Medicare Advantage, Part D updates

Anthony Brino

The Centers for Medicare & Medicaid Services (CMS) has proposed several dozen regulatory updates to Medicare Advantage and Part D prescription drug plans, covering cost sharing, minimum loss ratios, risk adjustment, payment methodologies and other policies.

In an advanced notice of the proposals, CMS said that next year, for the first time since Medicare Part D began in 2006, copays for standard benefit plans will be less than the previous year, decreasing from $325 to $310. For 2014, CMS is proposing a Part D out-of-pocket spending threshold of $6,690 for standard beneficiaries, a decrease from this year’s threshold of $6,938.

In response to reports about Part D beneficiaries receiving and being charged for unnecessary or unwanted prescriptions because of pharmacy “auto-ship” services, CMS is proposing a requirement that pharmacies obtain enrollee consent before each delivery, unless the refill is requested.

For Medicare Advantage, CMS is proposing a negative 2.2 percent growth percentage benchmark that will be used to determine capitation rates for insurance companies selling MA plans in 2014, which would more closely hew to Medicare Parts A and B.

“This negative growth trend is due to historically low growth in Medicare per-capita spending, tied, in part, to successful initiatives undertaken to promote value over volume and help curb fraud, waste, and abuse in the Medicare fee-for-service program in recent years,” CMS said in a media release.

The agency also updated the Medicare Advantage coding adjustment factor for 2014 to 4.9 percent, an increase of 1.5 percent from 2013, and is proposing to address varying coding patterns across MA plans by refining the risk adjustment model to exclude certain conditions.

Medicare Advantage premiums decreased by 10 percent since 2010 and enrollment is estimated to increase 28 percent this year, according to CMS. As Medicare Advantage promises to grow as more Americans retire, CMS is considering several refinements to its average geographic adjustment methodology, which measures per capita Medicare fee-for-service cost by county relative to the national average.

Currently, CMS calculates the geographic adjustment using five years of claims data — a “rolling average approach” to lessen year-to-year fluctuation in the rates and to “enhance the statistical credibility of the historical claims experience.”

Now, CMS is proposing a new step in the geographic adjustment calculation: adjusting the five year claims data to reflect current fee-for-service rules and current economic indices. Geographic adjustments based exclusively on historical claims “do not take into account changes in payment indices from the historical year to the contract year,” CMS says. Under the proposal, CMS would re-price claims from inpatient, hospital outpatient, skilled nursing and home healthcare to reflect current wage indices and would re-price physician claims with the current geographic practice cost index.

The agency is also proposing changes to Medicare Advantage risk assessments, as part of an analysis this year on diagnoses associated with MA enrollee risk assessments. MA insurers are required to flag diagnoses collected in an MA enrollee risk assessment, and, to ensure accuracy in risk adjustment payments, CMS is considering excluding diagnosis data collected from MA enrollee risk assessments that are not confirmed by an approved clinician.

Public comment on the proposals are due by March 1, and then CMS plans to release a final announcement on April 1.

CMS also recently proposed medical loss ratio requirements for Medicare Advantage and Part D, in a draft soon to be published in the Federal Register.

Like the medical loss ratio for commercial insurers selling large group health plans, the proposed rules require MA and Part D plans to spend at least 85 percent of revenue on clinical services, prescription drugs, quality improvement and premium rebates — limiting administration, marketing, overhead and earnings to 15 percent of the total — or otherwise remit payment to CMS.

Under the proposed rules, if a plan sponsor fails to meet the medical loss ratio for more than three consecutive years, they will be subject to enrollment sanctions and, after five years, to contract termination. MA and Part D plans will also have to submit data to CMS, so that consumers and regulators can “take into consideration MLRs as a measure of health insurers’ efficiency.”

See also:

VA formularies could save Medicare $14 billion, study finds

Medicare Advantage costs to near traditional Medicare by 2017


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