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CMS Releases Proposed Medicare Advantage and PACE Regulations and Rate-Setting Updates

On Feb. 5th, the Centers for Medicare and Medicaid Services (CMS) released two important notices signaling its approach to rate-setting for Medicare Advantage (MA) plans and Programs of All-Inclusive Care for the Elderly (PACE) for Contract Years (CY) 2021 and 2022 and codifying in regulations various requirements pertaining to plan finances, benefits, quality measurement, and beneficiary rights. CMS issued both Part II of its Advance Notice proposing updates and changes to the methodologies it will use to pay MA plans, PACE organizations, and Part D sponsors in 2021 and its Proposed Rule governing MA, Part D, and PACE programs for 2021 and 2022. CMS released Part I of the Advance Notice on Jan. 6, 2020. Part I contains proposals regarding the MA and PACE risk adjustment models and the use of encounter data as a diagnosis source for CY 2021 for risk adjustment.

The net payment impact of the changes announced in the Advance Notice is projected to be an increase of 0.93 percent. However, this estimate does not include rate impacts driven by coding trends, which are expected to increase plan premiums by 3.56 percent, according to CMS.

According to the Advance Notice, CMS plans to continue the phase-in of the new risk adjustment model required by the 21st Century Cures Act. For MA plans in CY 2021, CMS will blend encounter data-based risk scores and Risk Adjustment Processing System (RAPS)-based risk scores, as well as the 2017 and 2020 CMS-Hierarchical Condition Category (HCC) risk adjustment models used to calculate those scores. For PACE organizations, as described in Part I of the Advance Notice, CMS intends to continue to use the 2017 CMS-HCC model to calculate risk scores used to pay for Part A and B services in CY 2021.

CMS applies a frailty adjustment to the payment amounts for PACE organizations and Fully Integrated Dual Eligible Special Needs Plans (FIDE SNPs) in order to address additional costs not explained by diagnoses included in the risk adjustment model. For FIDE SNPs in CY 2021, CMS will continue to use the CY 2020 frailty factors for both the 2020 CMS-HCC and 2017 CMS-HCC models. CMS will blend the frailty score applied in the FIDE SNP’s payment, applying 75 percent of the frailty score calculated with the factors in the 2020 CMS-HCC model with 25 percent of the frailty score calculated with the factors in the 2017 CMS-HCC model. FIDE SNPs that wish to receive frailty payments in 2021 must contract with a CMS-approved survey vendor to field the 2020 Health Outcomes Survey (HOS) or the 2020 Modified Health Outcomes Survey (HOS-M). CMS uses the activities of daily living (ADLs) obtained from the survey to calculate frailty scores. PACE organizations will receive a frailty adjustment in CY 2021 calculated using the frailty factors associated with the 2017 CMS-HCC model.

The Advance Notice proposes changes to coverage of organ acquisition costs for kidney transplants to align with new authority under the 21st Century Cures Act that allows all Medicare-eligible individuals with end-stage renal disease (ESRD) to enroll in MA plans beginning Jan. 1, 2021. Thus, MA organizations will not be responsible for organ acquisition costs for kidney transplants for MA beneficiaries, and such costs will be covered under the fee-for-service (FFS) program instead. PACE organizations will continue to cover organ acquisition costs for kidney transplants, and CMS will continue to include the costs for kidney acquisitions in PACE payment rates.

The Advance Notice also provides updates to the 5 Star Ratings Program regulations for the 2021 Star Ratings and solicits feedback on future measures. The future measures include a generic drug utilization measure, ESRD measures, prior authorization measures, an ADL patient reporting measure, and an initial opioid prescribing measure.

CMS will not be publishing a Call Letter for 2021. Much of the guidance typically included in the annual Call Letter is included in the CY 2021 and 2022 MA and Part D Proposed Rule summarized below. CMS will also separately issue the Part C and Part D bidding instructions and information that have been provided through the Call Letter in prior years. The CY 2021 Final Part D Bidding Instructions issued on Feb. 6th by the Medicare Drug Benefit and C & D Data Group are available here.

CMS will accept comments on all proposals in the Advance Notice through Fri., March 6, 2020, before publishing the final Rate Announcement by April 6, 2020. To comment, click here and search for CMS-2020-0003 in the Search field. The Advance Notices are both available here.

In addition to the Advance Notice, CMS issued its 2021 and 2022 Proposed Rule for MA, Part D, and PACE programs. CMS estimates that the provisions of the Proposed Rule, if implemented as proposed, would result in an estimated $4.4 billion savings to the federal government over 10 years, largely as a result of "refinements to the MA and Part D Quality Star Rating system." The Proposed Rule includes the following provisions, among others:

  • authorizing enrollment of all Medicare beneficiaries with ESRD in MA plans and FFS coverage of kidney acquisition costs;
  • modifying the Star Rating system by increasing the weight associated with beneficiary satisfaction, complaints, and access and reducing the weights of outliers;
  • authorizing a second specialty drug tier in Part D and codifying cost sharing limits;
  • requiring plans to implement by 2022 a beneficiary "Real Time Benefit Tool";
  • requiring Part D plans to disclose their pharmacy performance measures;
  • revising Medical Loss Ratio (MLR) regulations to allow MA plans to include in the MLR numerator all amounts paid for covered services, including amounts paid for MA supplemental benefits, and to add a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts;
  • expanding the chronic conditions that plans may target using Special Supplemental Benefits for the Chronically Ill;
  • limiting "Dual Eligible Special Needs Plan (D-SNP) look-alikes" by prohibiting the award and renewal of contracts with MA plans that are not SNPs when the plan projects (or has actual) dual eligible enrollment of 80 percent or more, unless the MA plan has been active for less than one year and has enrollment of 200 or fewer individuals;
  • authorizing more flexibility to count telehealth providers in psychiatry, neurology, or cardiology specialties toward MA network adequacy standards;
  • allowing PACE participant service delivery requests to be approved in full by an interdisciplinary team (IDT) member at the time the request is made and eliminating the requirement of a reassessment;
  • enhancing PACE participant protections in the appeals process and other participant rights, strengthening documentation and delivery requirements, and expanding CMS’s ability to access records; and
  • codifying appeals processes for PACE organizations following selected enforcement actions.

LeadingAge will be analyzing these proposals and providing more detailed summaries in the coming days. Comments on the Proposed Rule must be received by CMS no later than 5 p.m. on April 6, 2020 and may be submitted here by searching for CMS-2020-0010 in the Search field and following the instructions to submit comments.

Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8383 ext. 124