Medicare Advantage plans to get less than 1% pay increase
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February 05, 2020 05:30 PM

Medicare Advantage plans to get less than 1% pay increase

Michael Brady
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    The CMS on Wednesday proposed increasing the baseline Medicare Advantage payment rates for 2021 by 0.93%, well below the 2.53% rate increase that plans got this year.

    The agency also proposed new steps to reduce out-of-pocket drug costs for Part D beneficiaries, promote generic drug usage and allow enrollees to know more about their prescription drug costs in advance. The proposed rule also implements changes under the 21st Century Cures Act that allows people with end-stage renal disease to freely enroll in Advantage plans. Comments on the proposed changes are due March 6.

    The CMS estimated that the proposed changes could save the federal government $4.4 billion over a decade. Much of those savings would stem from the Part D star ratings and Medicare Advantage changes, according to a fact sheet.

    Under the proposal, Advantage plans may be able to count telehealth services for specialties like psychiatry or cardiology towards their network adequacy standards. The Trump administration claims the change would increase access to care for seniors in rural areas and lower the costs of Advantage plans. Increasing access to telehealth services had been a key part of the administration's attempts to expand access to care and rein in costs.

    Dual-eligible special needs plan "look-alikes" could soon be an endangered species because the CMS wants to refuse to contract with them if there's a true dual-eligible special needs plan in the state. These look-alikes try to attract patients eligible for both Medicare and Medicaid to Medicare Advantage by promising additional care coordination. But enrollees often may go without important benefits because these plans can't integrate with Medicaid, according to some experts.

    The CMS plans to implement several provisions of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act that mandate Part D plans address the opioid crisis through beneficiary education. The agency also wants to mandate drug management programs and make other changes aimed at preventing and reducing over usage of opioids.

    Medicare Advantage and Part D star ratings could get a minor overhaul under the proposed rule. The CMS wants to weigh patient experience and complaints and access measures more heavily in the ratings. It's another step in the consumerization of healthcare.

    The rate announcement is part two of the 2021 Medicare Advantage Advance Notice. Last month, the CMS said that it wanted to use more encounter data to decide federal payments to Advantage plans. The agency is increasingly using this data to calculate patient risks scores, which it uses to increase or decrease payments to insurers.

    But insurers have complained that encounter data is unreliable and makes their patients look healthier than they are, leading to lower federal payments to Advantage plans.

    Congress repealed the health insurance tax in December. The tax was supposed to help pay for the Affordable Care Act, but it was only in effect for 2018 and 2020 thanks to heavy lobbying from the insurance industry. Analysts say that the repeal will lead to smaller premium increases and more benefits for Advantage plans, and boost payer profits because insurers won't have to pay the tax or pass it onto consumers.

    Flat premiums and enhanced supplemental benefits could boost Advantage plan enrollment, an important policy goal for the Trump administration. Roughly one-third of Medicare enrollees— about 22 million people—participate in Medicare Advantage.

    Continuing the Trump administration's efforts to reduce healthcare spending through increased transparency and lower drug costs, the CMS wants Part D prescription drug plans to give beneficiaries access to patient-specific drug costs in real time by January 1, 2022.

    "If a doctor recommends a specific cholesterol-lowering drug, the patient could easily look up what the copay would be and see if a different, similarly effective option might save the patient money," the CMS said in a statement.

    It proposed giving Part D plans the ability to create a "preferred" specialty tier of high-cost drugs with lower cost-sharing for enrollees. That change could help plans negotiate lower prices for expensive drugs with drugmakers by promising them access to the so-called preferred tier.

    The CMS requested feedback on how it could use measures of generic and biosimilar drug utilization to influence Part D star ratings. The agency thinks that rewarding plans for steering consumers and providers toward generics and biosimilars could reduce healthcare costs.

    End-stage renal disease patients on dialysis will be able to enroll in Advantage plans in 2021 for the first time. In the past they could only participate in an Advantage plan and seek dialysis treatment if they were diagnosed with end-stage renal disease after enrollment.

    End-stage renal disease patients aren't usually profitable for Advantage plans because they pay higher rates for dialysis than original, fee-for-service Medicare. Advantage plans also have caps on out-of-pocket contributions that increase insurers' responsibility for the cost of dialysis and related treatments.

    Tags: Payment, This Week in Healthcare, Centers for Medicare & Medicaid Services (CMS), Medicare Advantage, Medicare Advantage Insurers, Insurance, Insurers, Payment, Seema Verma, Transformation, Transformation Hub
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