This week, our In Focus section highlights the Centers for Medicare & Medicaid Services (CMS) proposed changes to the Medicare Advantage (MA) and Part D programs for contract year 2023 and how these changes may impact plan applications, bid submissions, and market dynamics for future years. The analysis and insight reflect the combined expertise of HMA and its companies including the Wakely Consulting Group and The Moran Company.
The proposals for contract year 2023 reflect CMS’ policy priorities and signal the future direction for the Medicare Advantage and Part D landscape, including strategies the agency will utilize to address health disparities, controlling prescription drug costs for beneficiaries, and encouraging competition focused on access to and quality of services. We expect the final rule to include modified versions of many proposals to address stakeholders’ operational concerns. However, the agency is likely to maintain the overarching policy direction when it finalizes the rule this spring. The emerging trends include:
- CMS is moving to make benefit information more transparent, understandable, and applicable to Medicare beneficiaries diverse health and health-related needs.
- The rule reflects a renewed interest in better integrating care for Medicare and Medicaid dually eligible individuals. This is most evident in the combination of new federal requirements and CMS’ creation of pathways for sharing information and partnering with state Medicaid agencies.
- CMS is reverting to more detailed data collection and oversight policies, particularly in areas of notable cost growth or noncompliance such as Medical Loss Ratio. This data collection could compel behavior changes among plans and/or future policy changes.
- Reporting on supplemental benefit expenditures for dental, vision, and hearing services could inform future legislative and regulatory changes with respect to these services.
HMA summarizes and discusses the potential implications of major proposals in the proposed rule below.
Network adequacy. CMSis proposing to revise the timeline for reviewing network submissions for new applicants and plans or those seeking to expand their service. Beginning with contract year 2023, CMS intends to review plans’ compliance with network standards during the annual application review process, rather than allowing them to attest to meeting the standard at that point in the process. CMS noted that in recent years plans were adjusting their network service areas later in the review process, creating challenges with meeting the compliance deadline and adjusting bids accordingly. This policy is expected to streamline CMS’ review of plan applications by addressing network requirements earlier in plan application and bid review process while providing more certainty around plan specific service areas.
- Takeaway: CMS is proposing to provide applicants a 10-percentage point “credit” for plans that may need more time to build their networks. We expect significant stakeholder input on the feasibility of this requirement as well as the sufficiency of the 10-percentage point credit. While initially onerous to shift the timeline for submission, the earlier review could provide plans more time to address CMS’ feedback and incorporate this in bid submissions.
Medical Loss Ratio. CMS proposes to reinstate detailed MLR reporting requirements using the MLR Reporting Tool that was used from 2014 through 2017. CMS also intends to collect additional data on certain categories of expenditures, including MA supplemental benefit expenditures by benefit category.
- Takeaway: Several stakeholders, notably The Medicare Payment Advisory Commission (MedPAC), have highlighted the lack of information about plans’ spending and utilization associated with MA supplemental benefits. The new data that CMS is requiring will provide both CMS and external parties more insight into this area of plan operations. It may also allow plans to differentiate their offerings for beneficiaries and compete. This is an area to monitor as additional data on plan expenditures could determine the feasibility of future statutory changes to Medicare benefits.
Prescription drugs. CMS proposes to address costs incurred by Medicare Part D enrollees at the pharmacy point of sale. Specifically, CMS proposes to begin requiring in 2023 that the negotiated price reflect the lowest possible pharmacy reimbursement, inclusive of performance-based payment arrangements, for purposes of determining beneficiary cost-sharing. CMS highlights that it is not interfering with the Part D market by requiring modifications to contracts, but instead mandating that pharmacy price concessions be included in the point-of-sale calculation, which is used to determine beneficiary cost-sharing. However, it remains unclear how plans and PBMs would operationalize this change, and whether the actual point-of-sale payment to the pharmacy would shift to this lower amount with potential bonuses based on performance, or whether plans would continue to pay the current amounts at point-of-sale but submit a different price to CMS.
- Takeaway: Based on its analysis, CMS expects this proposal to lower average beneficiary cost-sharing by $57 per person and increase average annual premiums by $20. While this issue is likely one that will primarily impact the contracting relationship and dynamics between Pharmacy Benefit Managers and pharmacies, there are potential impacts on Part D plans and enrollees. CMS expects this proposal to lower cost-sharing for enrollees. However, it is also possible that the policy could drive changes in plan benefit design that negates the benefits for enrollees. Commenters are expected to address unintended consequences of this proposal on beneficiary costs as well as the potential for plan designs that could exacerbate health inequities.
Maximum Out-of-Pocket (MOOP). CMS proposes that the MOOP must be calculated based on accrual of all cost sharing in the plan benefit, whether paid by the beneficiary, Medicaid, or other secondary insurance (or remains unpaid because of limits on amounts). Currently, plans are only required to consider the enrollee’s actual out-of-pocket, which can result in some enrollees never actually reaching the MOOP. CMS is concerned that providers may be reluctant to provide care to high-cost dual-eligible individuals, since in many cases a state uses a ‘lesser-of’ policy for cost share payments. CMS proposes to require plans to track and alert enrollees and contracted providers when the MOOP limit is reached.
- Takeaway: CMS expects this policy to increase bids, lower state payments, and increase total payments to providers. Currently, roughly half of Dual-eligible Special Needs Plans (D-SNP) apply the full 20 percent coinsurance for physician visits. CMS notes that some D-SNPs also do not count any cost-sharing toward the MOOP if the payment came from the State. These D-SNPs will likely need higher bids, which could either reduce rebate dollars or put pressure on plan margins. D-SNPs may also need to revisit their physician cost-sharing benefit given the proposed revision to the MOOP calculation.
D-SNPs and the Medicare and Medicaid Dually Eligible Population. The most extensive area of potential policy change is found in the integrated plan options for the Medicare and Medicaid dually eligible population as well as proposals to support dually eligible individuals with selecting a plan. CMS’ proposals include definitional changes for certain types of D-SNPs, new requirements for D-SNPs such as a requirement to have an enrollee advisory committee, and new contracting authorities for state Medicaid agencies.
Specifically, starting in contract year 2025, CMS plans to require fully integrated dual eligible (FIDE) SNPs to have exclusively aligned enrollment. In other words, a FIDE SNP would refer to a plan that includes dually eligible individuals enrolled in the D-SNP and receiving coverage of Medicaid benefits from the D-SNP or from a Medicaid MCO that is the same organization or the parent organization of the MA organization offering the D-SNP (or another entity that is owned and controlled by the D-SNP’s parent organization). FIDE SNPs would also have to cover Medicaid home health, durable medical equipment, and the vast majority of behavioral health benefits and long-term services and supports through a capitated contract with the state Medicaid agency (with limited exceptions). In addition, FIDE SNPs would be required to cover Medicare cost-sharing for acute and primary care for full-benefit dually eligible enrollees.
CMS’ proposed changes to HIDE SNPs are intended to help differentiate various types of D-SNPs, clarify options for beneficiaries, and improve integration. A highly integrated dual eligible (HIDE) SNP would include a plan having a capitated contract between the Medicare Advantage organization and a state Medicaid agency. The HIDE SNP must cover the vast majority of Medicaid behavioral health or the vast majority of long-term services and supports (with limited exceptions).
Under CMS’ proposals, states would gain new authority to require and encourage integration for dually eligible individuals. For example, states could use contracting authority to require certain D-SNPs with exclusively aligned enrollment to (a) establish contracts that only include one or more D-SNPs within a state, and (b) integrate materials and notices for enrollees. CMS also intends to improve coordination with states around monitoring and oversight of D-SNPs, when a state chooses to pursue higher levels of integration. For the first time, CMS proposes to provide states with D-SNPs access to certain information systems.
- Takeaway: These and several other proposed changes in the rule collectively reflect over two decades of experience with D-SNPs and demonstration initiatives to better integrate care for dually eligible individuals. In addition, the proposals are clearly linked to CMS’ goals for addressing health equity for this population. Plans and providers should begin to assess and develop strategies to respond to the enhanced requirements for D-SNPs, particularly FIDE and HIDE SNPs. Specific attention is needed to understand the alignment opportunities and how these vary within and across states.
States may need to reassess their strategy to ensure ongoing alignment with plans under the proposed policies. States may also gain authority to execute significant policy and contractual decisions for D-SNPs and pursue the new coordination options with CMS. If finalized, the proposed changes could strengthen integration initiatives in more mature states and give new tools for other states to consider. This will require plans to enhance their coordination and engagement with CMS and states.
Star Ratings. CMS proposes a limited number of changes and largely maintains current policy. All contracts will receive the higher of their 2022 or 2023 Star Rating (and corresponding measure score) for the three HEDIS measures collected through the 2021 HOS survey. CMS intends to address other disaster-related changes concerning 2021 and 2022 Star Ratings in future rulemaking.
- Takeaway: While this proposed rule includes few major changes to the Star Rating program, CMS may utilize forthcoming guidance to lay the groundwork for other major changes to the program.
HMA’s Medicare practice has deep experience with the development and implementation of best practices to improve compliance with Medicare Advantage and Part D regulations. Specifically, we have been working with clients to understand the potential impact of these policy changes to improve Star Rating performance and helping plans achieve economies of scale around maximizing their year-round Medicare stars strategy. For information on our Medicare practice, please contact HMA colleagues Julie Faulhaber, Amy Bassano, Eric Hammelman, Aimee Lashbrook, Andrea Maresca, Tim Courtney or Kevin Kirby.
