Insights

This week’s In Focus section previews key public policy issues affecting Medicare Advantage (MA) and Medicare Part D that could potentially be addressed under regulations issued by the Centers for Medicare & Medicaid Services (CMS) later this fall. CMS’s highly anticipated regulations—which include annual programmatic, policy, and technical updates to the MA and Part D programs for the coming plan year—are under review at the Office of Management and Budget and are expected to be released in the coming weeks ahead.

In addition to the proposed rule, healthcare organizations are closely tracking CMS regulations that are expected to be released later this year, which would impact MA plan payment rates as well as proposed regulations intended to streamline the prior authorization process for prescription drug coverage under Medicare. This annual regulatory policymaking process is getting under way as the Medicare Open Enrollment period begins October 15, 2024, during which Medicare beneficiaries will compare Medicare health plan and drug coverage options and select the coverage that best meets their health care needs. (See Table 1 for key 2024 MA dates.)

As the last major Medicare policy regulations from the Biden Administration, healthcare entities can expect a continued focus on regulatory policies and requirements that strengthen program oversight and enhance beneficiary protections, while also seeking to maintain stability in Medicare benefits offerings and plan choices.

Following are some of the key issues to watch for as CMS’s annual regulatory process begins this fall.

Health Equity

Ensuring health equity is a foundational element of CMS’s strategic plan and the agency seeks to advance health equity goals and improvements across all of its programs, including Medicare Advantage. Beginning next year, MA plans will be required to conduct an annual review and analysis of utilization management (UM) policies and procedures from a health equity perspective. By requiring public reporting and identifying any impacts on underserved populations, this requirement is designed to ensure MA plans’ UM policies and procedures ensure access to medically necessary care, especially for vulnerable, low-income populations, such as beneficiaries who receive the Part D low-income subsidy and those who are dually eligible for Medicare and Medicaid.

In addition, CMS has finalized rules to collect health equity data, including race and ethnicity data, and adopted changes to the MA quality measurement program that will provide incentives for MA plans to improve care for underserved and vulnerable populations, including beneficiaries with high social risk factors.

Stakeholders should expect CMS to continue building and strengthening policies to advance health equity goals while exploring new initiatives to reduce disparities and close gaps in care for vulnerable populations.

Consumer Protection and Oversight

Earlier this year, CMS launched a high-profile effort to increase transparency in Medicare Advantage, including the release of a request for information (RFI) to solicit public input on ways to improve data collection and enhance oversight over all aspects of the MA program. More details are available in the press release. In addition to seeking comments on improving overall MA data collection and public reporting, the CMS RFI on MA data collection solicited specific recommendations to improve data collection and accountability for MA plans’ provider networks and prior authorization process.

While the formal comment period closed in May 2024, responses to the CMS RFI on MA data collection can inform and shape future regulatory policy direction, as CMS continues to examine ways to improve transparency and oversight over MA plans.

Quality and Star Ratings

CMS will soon release the Medicare Advantage Star Ratings, which measure the quality of MA plans based on a range of quality and performance metrics. The Star Rating system provides beneficiaries with crucial information to compare plans and select the coverage option that best meets their needs. High-performing plans receive bonuses—which provides incentives for plans to continue to improve quality of care for beneficiaries and patient outcomes. Last year, MA plans received $11.8 billion in bonus payments, and 74 percent of MA beneficiaries were enrolled in plans that achieved a rating of four or more stars. For more information, read the issue brief.

On the regulatory front, CMS recently adopted significant changes to Star Ratings that continue to have far-reaching impacts on MA plans’ quality performance, which, in turn, will continue to shape and inform their quality improvement strategies. Among the notable regulatory changes CMS has adopted is the new Health Equity Index, which rewards MA plans that provide high quality care to beneficiaries with social risk factors, including low-income beneficiaries and those dually eligible for Medicare and Medicaid. Though this policy change takes effect in 2027, MA plans can take steps now to prepare and enhance their capabilities to improve quality of care for beneficiaries with social risk factors, including using targeted care coordination programs.

As policymakers and stakeholders continue to monitor the impact of recently finalized changes to MA Star Ratings, CMS will continue exploring improvements to the MA Star Ratings system that further raise the bar on quality and ensure the program aligns with CMS’s broader goals and objectives.

Prior Authorization

As MA plans have increased the use of prior authorization and drawn scrutiny among patient advocates and providers, CMS has taken important steps to streamline and improve the prior authorization process to ensure timely access to care for Medicare beneficiaries. These regulatory policy changes—which include continuity of care requirements beneficiaries, increased oversight over UM practices, and ensuing evidence-based clinical decisions within MA are consistent with traditional fee-for-service (FFS) Medicare—are intended to ensure prior authorization and other UM tools do not create barriers to medically necessary care for Medicare beneficiaries.

Policymakers continue to look for ways to further improve the prior authorization process, and CMS has signaled additional interest in further regulatory standards to strengthen oversight and improve beneficiary protections. Potential policy options CMS could pursue include requiring more detailed reporting by MA plans (including number of prior authorization requests, denials, and appeals by type of service), extending prior authorization standards and consumer protections to prescription drugs covered by Medicare, and improving the timeliness of prior authorization decisions to avoid delays in necessary care.

Risk Adjustment Payment Policy and Coding

CMS has adopted significant changes to the MA risk-adjustment model, which continue to be phased in over a three-year period (2024−2026). These changes include important technical changes to improve the model’s payment accuracy, including a focus on conditions that are subject to more coding variation. Because CMS risk-adjustment changes will be fully implemented by calendar year 2026, policymakers and stakeholders are closely monitoring whether CMS will pursue additional regulatory policies to improve the accuracy of the risk adjustment program and address coding issues.

Since 2018, CMS—as required by statute—has applied a coding intensity adjustment that reduces MA risk scores by 5.9 percent annually to ensure consistency with Medicare FFS coding. However, MedPAC and others have continued to raise concerns that MA risk scores are higher than those for similar Medicare FFS beneficiaries, even after accounting for the 5.9 reduction in MA risk scores, which results in increased payments to MA plans. As policymakers continue to evaluate changes to ensure the long-term sustainability of the Medicare program, CMS could consider further changes in this area to equalize payments between MA and FFS Medicare through risk adjustment or coding changes.

Table 1. Key 2024 Medicare Advantage Dates

Next Steps

The imminent release of CMS regulations come at a critical time for the Medicare Advantage program, which continues to experience enrollment growth amid a challenging and ever-changing regulatory environment. MA plans and other stakeholders need to be prepared to engage in the formal notice and comment process as well as offer policy solutions and best practices to strengthen and enhance the program for the 33 million beneficiaries it serves.

The Health Management Associates, Inc. (HMA), team will continue to closely monitor the timing of the release of CMS regulations and will analyze the impact of the key provisions once these rules are released. We have the depth, experience, and subject matter expertise to assist organizations engaging in the rulemaking process and assessing their impact. HMA can also assist with tailored analysis and modeling capabilities to assess the policy impacts across the multiple rules and guidance.

If you have any questions about the forthcoming CMS regulations and potential impact on MA plans, providers, and beneficiaries, contact our featured experts below.