February 11, 2020

New CMS Regulation Proposes Another Set of Plan-Friendly Tweaks to Medicare Advantage

On February 5, the Centers for Medicare and Medicaid Services (CMS) proposed several interesting tweaks to the Medicare Advantage (MA) and Medicare Part D programs through an 895-page proposed regulation, Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly.

Below, we summarize some of the most important new policies and program changes proposed in the new regulation, focusing particularly on benefits (social determinants of health, medical loss ratio and prescription drug benefits) and the use of telehealth to meet network adequacy. We also outline additional proposed changes and provide overall analysis of the rule.

Benefits: Social Determinants of Health

Beyond codifying the numerous benefit flexibilities that CMS has previously rolled out via subregulatory guidance, the regulation would allow for more social determinants of health-triggered benefits under the Special Supplemental Benefits for Chronic Illness (SSBCI). These benefits, first implemented for the 2020 plan year, are different from other supplemental benefits because they are not required to be “primarily health related,” and plans can limit eligibility on a social determinant of health, so long as the social determinant is not the sole basis for determining eligibility. This permits plans to offer, for example, free exterminator services for low-income members with chronic obstructive pulmonary disease (COPD) without needing to pay for this service for all plan members. By law, SSBCI are only for assisting the treatment of chronic diseases, so CMS chose initially to limit these benefits to a list of 15 common chronic diseases. For 2021 and beyond, CMS is proposing to let plans choose their own chronic conditions as long as the plan determines that the selected condition(s) meet the statutory definition of a chronically ill enrollee. Under this proposal, it is easy to see how MA plans might further tailor strategies to address social determinants of health for enrollees with specific chronic diseases, including those with two or more diseases.

Benefits: Medical Loss Ratio

CMS proposes to clarify which supplemental benefit expenses can be treated as claims in the Medical Loss Ratio (MLR) numerator. The agency notes that, under existing MLR guidance, only the claims submitted by health care providers can be applied to the numerator and that many supplemental benefit vendors do not meet the historical definition of health care providers. The agency proposes to clarify that any entity administering a supplemental benefit that is primarily health-related can be considered a health care provider for purposes of MLR. MA plans seek to put expenses in the MLR numerator in order to avoid remitting money to CMS, which occurs when 85% of health plan revenue cannot be applied to the numerator.

Benefits: Prescription Drug Benefits

CMS proposes important changes to the Part D benefit. This includes establishing a second, optional Specialty Tier on drug formularies for preferred specialty drugs and establishing a new requirement for Part D plans (including MA plans offering Part D benefits) to offer members a Real Time Benefits Tool (RTBT) starting in 2022. This tool builds on a prior finalized proposal requiring a prescriber-facing RTBT (starting in 2021) in allowing members to also compare drug coverage and prices in order to select lower-priced drug options. Interestingly, CMS “encourages” plans to design RTBTs that would also show the negotiated price of the drugs – aligning these tools with the administration’s broader push for negotiated price transparency. CMS also proposes to let Part D plans encourage use of RTBTs through rewards and incentives programs.

Using Telehealth to Meet Network Adequacy

For more than a decade, CMS has measured health plan provider network adequacy via automated tests that measure provider counts against potential enrollees and providers. Building on flexibilities first introduced in a demonstration last year, CMS proposes to lower the provider counts for MA plans that employ in-network telehealth providers. Specifically, MA plans would receive a “10% credit” on meeting network adequacy requirements by employing telehealth providers. CMS further proposes to loosen the requirement that 90% of beneficiaries in a given county are covered by a network that passes geographic network adequacy tests, lowering the threshold to 85% in three of the five most rural categories of counties. CMS also opens the door to creating additional network flexibilities in states with Certificate of Need laws and areas impacted by provider consolidation. Finally, CMS proposes to formalize the process by which an MA plan can seek an exception from network adequacy requirements.

CMS revisits the use of telehealth providers to cover Medicare Part A and Part B services as a basic benefit in MA plans, which it calls Advanced Telehealth Benefits (ATBs). Currently, in-network telehealth providers can provide ATBs and out-of-network telehealth providers can provide services as supplemental benefits. The agency seeks comment on whether MA plans should be allowed to use out-of-network telehealth providers as ATBs, which would make the use of those providers more desirable to MA plans.

Additional Proposed Changes and Analysis of the Rule

The proposed regulation, which arrives three months later than originally forecasted, also codifies numerous policies that have existed only via guidance memos and CMS’s annual Call Letter to MA and Part D plans. The regulation includes other important provisions that we do not cover above, including provisions related to:

  • Giving MA and Part D plans additional tools and requirements for combatting the opioid crisis.
  • Adding transparency to pharmacy network performance requirements.
  • Bringing Medicare beneficiaries with end-stage renal disease (ESRD) into the MA program.
  • Amending the Quality Rating System (star measures).
  • Sunsetting so-called “D-SNP Look-alike” plans in order to facilitate greater care integration for Medicare-Medicaid dual eligibles.

Small but significant tweaks are also made to rules regarding Medical Savings Accounts, insurance agent referral fees, rewards and incentives programs and other topics.

For the first time in many years, CMS did not issue an annual Call Letter – the narrative document in which CMS states its expectations and concerns for the coming plan year. The agency signaled that this regulation, and future annual regulations, may replace the Call Letter.

The proposed regulation implements only a few of the provisions of President Trump’s October 3, 2019 Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors, which generally calls for guidance and rulemaking within one year to effectuate the order. In addition, the regulation does not address long-simmering questions on MA risk adjustment data validation. So, there is a high likelihood that CMS will regulate again on Medicare Advantage in the next handful of months.

While not every tweak in the regulation is favorable to MA plans and their members, most are. This regulation, therefore, is one more in a string of moves by the Trump Administration to further enhance Medicare Advantage in its implicit competition with original Medicare for the affections of Medicare beneficiaries who generally must opt into MA. Public comments on the proposed regulation will be accepted until April 6, 2020.

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