Improving health is our policy
Repealed and replaced by section 1102 of HCERA, summarized here. Sets MA payments in 2011 at 2010 levels. Phases in plan reimbursement reductions over three, five or seven years, depending on the depth of the cuts to the plan region, with final benchmarks set at 95% in high-cost areas up to 115% in low-cost areas. Areas with high-quality plans receive a 5% increase.
This provision was formally codified in the final MA/Part D rule issued on April 15, 2011 (see pp. 21480-91). On April 5, 2010, CMS released the CY11 Rate Notice for MA plans that began implementation of these cuts. On April 4, 2011, the Agency released the CY12 Rate Notice and on April 2, 2012, it issued the CY13 Rate Notice. For a summary of implementation of the quality bonus program, including some of the concerns raised about it, see GAO’s March 21, 2012 Report to Congress on the topic.
CMS’s February 15, 2013 Calendar Year (CY) 2014 Medicare Advantage (MA) Advanced Notice and Draft Call Letter reflects several ACA-driven changes to MA payment methodology, including the application of a 4.91 percent coding intensity adjustment – which also reflects an increase by the ATRA of 2012 – as well as CMS’s use of its authority to deny MA plan bids based on changes in cost-sharing or benefits, among other proposed changes, such as to the MA Star measure scoring approach. Comments were due March 1.
On April 1, 2013, CMS released the Announcement of Calendar Year 2014 Medicare Advantage (MA) and Medicare Part D Final Call Letter reflecting several ACA-driven changes to MA payment, including the application of a 4.91 percent coding intensity adjustment – which also reflects an increase by the ATRA of 2012 – as well as CMS’s use of its authority to deny MA plan bids based on changes in cost-sharing or benefits. Implementation continues of the new ACA blended benchmark and related policies, as well as of the Star rating system and Quality Bonus Demonstration. The agency indicated it may issue future guidance on shared decision-making. CMS also notes that in 2014, “plan liability in the coverage gap for non-applicable (generic) drugs increases by 7 percent.” Please see the CMS press release for more details.
On September 19, 2013, HHS announced that the average CY14 MA premium will be $32.60, an increase of $1.64 over last year. HHS in its press released indicated that, “since the passage of the [ACA], average MA premiums are down by 9.8%.” HHS also reiterated the impact of the ACA provision that closes the “donut hole” and the general savings that have been achieved under Part D.
On Nov. 22, 2013, in an unpublicized communication to Medicare Advantage plans, CMS outlines new measures and changes to existing measures for the star rating program. It also outlines potential methodological changes for 2016. Comments are due by December 19.
On May 12, House Energy & Commerce Republican leaders wrote to CMS to reiterate their ongoing concerns regarding the implications of cumulative ACA-driven and agency-led MA payment policies on the underlying viability of the MA program, and ultimately, seniors’ access to these plans – particularly for those seniors of minority and low-income backgrounds. On the latter, in conjunction with the letter submitted to CMS, Committee Republicans released data prepared by the Congressional Research Service (CRS), available here, that suggests that “[MA] enrollees are disproportionately minority or lower income seniors.”
Key updates for September 2014 include:
On Apr. 6, 2015 CMS released the CY 2016 MA Rate Announcement (press release; fact sheet) delineating the agency’s changes in the MA capitation rate methodology and risk adjustment methodology, as well as some policy changes under Part D. Citing a non-discretionary change to expected growth rates, CMS estimates that, on average, MA plans will see a +1.25% revenue increase relative to CY15 and +3.25% when coupled with an additional 2.0% expectation for coding trend. This compares to -0.95% from policy-driven changes the Advance Notice (+1.05% with the same coding expectation).
On Sep. 9, CMS announced (fact sheet) that 2016 MA premiums will remain stable, with the majority (59 percent) of seniors expected to face no premium increase.
2016
On Feb. 19, 2016, CMS released its estimates of the CY 2017 Medicare Advantage (MA) Advanced Notice and Draft Call Letter delineating the agency’s planned changes in the MA capitation rate and risk adjustment methodologies, as well as key policy changes under Part D. An agency press release is available here. CMS estimates that, on average, MA plans will see a +1.35 percent revenue increase relative to CY 2016 due to Advance Notice policies.
On May 11, GAO released a report finding that CMS action was needed to ensure appropriate Medicare Advantage payments for Veterans and nonveterans.
On Sept. 22, CMS announced that Part D premiums will remain stable for CY 2017, partially in part due to payment reforms established under the ACA. See here.
On Nov. 4, MedPAC held a discussion on coding intensity and calculating benchmarks in Medicare Advantage (MA). The Commission has long-sought to keep MA spending on par with fee-for-service (FFS) levels.
2017
On Feb. 1, CMS posted the CY2018 Advance Notice delineating proposed methodological and payment changes for MA plans, as well as key policies under Part D.
2019
On April 1, CMS released its Announcement of Calendar Year (CY) 2020 of Medicare Advantage (MA) Capitation Rates and MA and Part D Policies and Final Call Letter. Through its finalized changes, Net payment to MA plans is expected to increase by 2.53 percent on average in CY 2020. For MA risk adjustment, CMS finalized the use of the Alternative Payment Condition Count (APCC) model beginning in 2020. The agency will calculate risk scores using a blend of 50 percent calculated from the APCC model using diagnoses from encounter data (supplemented from RAPS inpatient data) and FFS data and 50 percent from the 2017 CMS-HCC model using RAPS and FFS diagnoses. CMS provides guidance on implementing the Bipartisan Budget Act’s (BBA) flexibility for MA plans to provide special supplemental benefits for the chronically ill, including non-medical transportation, home-delivered meals, food, and produce. The agency encourages MA plans to increase access to non-opioid pain management and naloxone. In the Part D standard benefit, the out-of-pocket threshold at which the catastrophic phase begins is $6,350 in CY 2020, up $1,250 from CY 2019 because of the expiration of an Affordable Care Act (ACA) provision which had slowed its growth.
SEC. 3201. øMEDICARE ADVANTAGE PAYMENT¿øREPEALED & REPLACED¿. øSection 3201 (and the amendments made by such section, as previously amended by section 10318) was repealed by section 1102(a) of HCERA. Section 1102(b) of HCERA amended section 1853 of SSA to provide for a phase-in of modified MA benchmarks under a blended benchmark amount under a new subsection (n); section 1102(c) of HCERA further amended section 1853 of SSA to apply a percentage quality increase under a new subsection (o). Sections 1102(b)-(c) of HCERA shown below¿ (b) øSec. 1102(b) of HCERA:¿ Phase-in of Modified Benchmarks.—Section 1853 of the Social Security Act (42 U.S.C. 1395w– 23) is amended— (1) in subsection (j)(1)(A), by striking ‘‘(or, beginning with 2007, 1⁄12 of the applicable amount determined under subsection (k)(1)) for the area for the year’’ and inserting ‘‘for the area for the year (or, for 2007, 2008, 2009, and 2010, 1⁄12 of the applicable amount determined under subsection (k)(1) for the area for the year; for 2011, 1⁄12 of the applicable amount determined under subsection (k)(1) for the area for 2010; and, beginning with 2012, 1⁄12 of the blended benchmark amount determined under subsection (n)(1) for the area for the year)’’; and (2) by adding at the end the following new subsection: ‘‘(n) DETERMINATION OF BLENDED BENCHMARK AMOUNT.— ‘‘(1) IN GENERAL.—For purposes of subsection (j), subject to paragraphs (3), (4), and (5), the term ‘blended benchmark amount’ means for an area— ‘‘(A) for 2012 the sum of— ‘‘(i) 1⁄2 of the applicable amount for the area and year; and ‘‘(ii) 1⁄2 of the amount specified in paragraph (2)(A) for the area and year; and ‘‘(B) for a subsequent year the amount specified in paragraph (2)(A) for the area and year. ‘‘(2) SPECIFIED AMOUNT.— ‘‘(A) IN GENERAL.—The amount specified in this subparagraph for an area and year is the product of— ‘‘(i) the base payment amount specified in subparagraph (E) for the area and year adjusted to take into account the phase-out in the indirect costs of medical education from capitation rates described in subsection (k)(4); and ‘‘(ii) the applicable percentage for the area for the year specified under subparagraph (B). ‘‘(B) APPLICABLE PERCENTAGE.—Subject to subparagraph (D), the applicable percentage specified in this subparagraph for an area for a year in the case of an area that is ranked— ‘‘(i) in the highest quartile under subparagraph (C) for the previous year is 95 percent; ‘‘(ii) in the second highest quartile under such subparagraph for the previous year is 100 percent; ‘‘(iii) in the third highest quartile under such subparagraph for the previous year is 107.5 percent; or ‘‘(iv) in the lowest quartile under such subparagraph for the previous year is 115 percent. ‘‘(C) PERIODIC RANKING.—For purposes of this paragraph in the case of an area located— ‘‘(i) in 1 of the 50 States or the District of Columbia, the Secretary shall rank such area in each year specified under subsection (c)(1)(D)(ii) based upon the level of the amount specified in subparagraph (A)(i) for such areas; or ‘‘(ii) in a territory, the Secretary shall rank such areas in each such year based upon the level of the amount specified in subparagraph (A)(i) for such area relative to quartile rankings computed under clause (i). ‘‘(D) 1-YEAR TRANSITION FOR CHANGES IN APPLICABLE PERCENTAGE.—If, for a year after 2012, there is a change in the quartile in which an area is ranked compared to the previous year, the applicable percentage for the area in the year shall be the average of— ‘‘(i) the applicable percentage for the area for the previous year; and ‘‘(ii) the applicable percentage that would otherwise apply for the area for the year. ‘‘(E) BASE PAYMENT AMOUNT.—Subject to subparagraph (F), the base payment amount specified in this subparagraph— ‘‘(i) for 2012 is the amount specified in subsection (c)(1)(D) for the area for the year; or ‘‘(ii) for a subsequent year that— ‘‘(I) is not specified under subsection (c)(1)(D)(ii), is the base amount specified in this subparagraph for the area for the previous year, increased by the national per capita MA growth percentage, described in subsection (c)(6) for that succeeding year, but not taking into account any adjustment under subparagraph (C) of such subsection for a year before 2004; and ‘‘(II) is specified under subsection (c)(1)(D)(ii), is the amount specified in subsection (c)(1)(D) for the area for the year. ‘‘(F) APPLICATION OF INDIRECT MEDICAL EDUCATION PHASE-OUT.—The base payment amount specified in sub-paragraph (E) for a year shall be adjusted in the same manner under paragraph (4) of subsection (k) as the applicable amount is adjusted under such subsection. ‘‘(3) ALTERNATIVE PHASE-INS.— ‘‘(A) 4-YEAR PHASE-IN FOR CERTAIN AREAS.—If the difference between the applicable amount (as defined in subsection (k)) for an area for 2010 and the projected 2010 benchmark amount (as defined in subparagraph (C)) for the area is at least $30 but less than $50, the blended benchmark amount for the area is— ‘‘(i) for 2012 the sum of— ‘‘(I) 3⁄4 of the applicable amount for the area and year; and ‘‘(II) 1⁄4 of the amount specified in paragraph (2)(A) for the area and year; ‘‘(ii) for 2013 the sum of— ‘‘(I) 1⁄2 of the applicable amount for the area and year; and ‘‘(II) 1⁄2 of the amount specified in paragraph (2)(A) for the area and year; ‘‘(iii) for 2014 the sum of— ‘‘(I) 1⁄4 of the applicable amount for the area and year; and ‘‘(II) 3⁄4 of the amount specified in paragraph (2)(A) for the area and year; and ‘‘(iv) for a subsequent year the amount specified in paragraph (2)(A) for the area and year. ‘‘(B) 6-YEAR PHASE-IN FOR CERTAIN AREAS.—If the difference between the applicable amount (as defined in subsection (k)) for an area for 2010 and the projected 2010 benchmark amount (as defined in subparagraph (C)) for the area is at least $50, the blended benchmark amount for the area is— ‘‘(i) for 2012 the sum of— ‘‘(I) 5⁄6 of the applicable amount for the area and year; and ‘‘(II) 1⁄6 of the amount specified in paragraph (2)(A) for the area and year; ‘‘(ii) for 2013 the sum of— ‘‘(I) 2⁄3 of the applicable amount for the area and year; and ‘‘(II) 1⁄3 of the amount specified in paragraph (2)(A) for the area and year; ‘‘(iii) for 2014 the sum of— ‘‘(I) 1⁄2 of the applicable amount for the area and year; and ‘‘(II) 1⁄2 of the amount specified in paragraph (2)(A) for the area and year; ‘‘(iv) for 2015 the sum of— ‘‘(I) 1⁄3 of the applicable amount for the area and year; and ‘‘(II) 2⁄3 of the amount specified in paragraph (2)(A) for the area and year; and ‘‘(v) for 2016 the sum of—‘‘(I) 1⁄6 of the applicable amount for the area and year; and ‘‘(II) 5⁄6 of the amount specified in paragraph (2)(A) for the area and year; and ‘‘(vi) for a subsequent year the amount specified in paragraph (2)(A) for the area and year. ‘‘(C) PROJECTED 2010 BENCHMARK AMOUNT.—The projected 2010 benchmark amount described in this subparagraph for an area is equal to the sum of— ‘‘(i) 1⁄2 of the applicable amount (as defined in subsection (k)) for the area for 2010; and ‘‘(ii) 1⁄2 of the amount specified in paragraph (2)(A) for the area for 2010 but determined as if there were substituted for the applicable percentage specified in clause (ii) of such paragraph the sum of— ‘‘(I) the applicable percent that would be specified under subparagraph (B) of paragraph (2) (determined without regard to subparagraph (D) of such paragraph) for the area for 2010 if any reference in such paragraph to ‘the previous year’ were deemed a reference to 2010; and ‘‘(II) the applicable percentage increase that would apply to a qualifying plan in the area under subsection (o) as if any reference in such subsection to 2012 were deemed a reference to 2010 and as if the determination of a qualifying county under paragraph (3)(B) of such subsection were made for 2010. ‘‘(4) CAP ON BENCHMARK AMOUNT.—In no case shall the blended benchmark amount for an area for a year (determined taking into account subsection (o)) be greater than the applicable amount that would (but for the application of this subsection) be determined under subsection (k)(1) for the area for the year. ‘‘(5) NON-APPLICATION TO PACE PLANS.—This subsection shall not apply to payments to a PACE program under section 1894.’’. (c) øSec. 1102(c) of HCERA:¿ Applicable Percentage Quality Increases.—Section 1853 of such Act (42 U.S.C. 1395w–23), as amended by subsection (b), is amended— (1) in subsection (j), by inserting ‘‘subject to subsection (o),’’ after ‘‘For purposes of this part,’’; (2) in subsection (n)(2)(B), as added by subsection (b), by inserting ‘‘, subject to subsection (o)’’ after ‘‘as follows’’; and (3) by adding at the end the following new subsection: ‘‘(o) APPLICABLE PERCENTAGE QUALITY INCREASES.— ‘‘(1) IN GENERAL.—Subject to the succeeding paragraphs, in the case of a qualifying plan with respect to a year beginning with 2012, the applicable percentage under subsection (n)(2)(B) shall be increased on a plan or contract level, as determined by the Secretary— ‘‘(A) for 2012, by 1.5 percentage points; ‘‘(B) for 2013, by 3.0 percentage points; and ‘‘(C) for 2014 or a subsequent year, by 5.0 percentage points. ‘‘(2) INCREASE FOR QUALIFYING PLANS IN QUALIFYING COUNTIES.—The increase applied under paragraph (1) for a qualifying plan located in a qualifying county for a year shall be doubled. ‘‘(3) QUALIFYING PLANS AND QUALIFYING COUNTY DEFINED; APPLICATION OF INCREASES TO LOW ENROLLMENT AND NEW PLANS.—For purposes of this subsection: ‘‘(A) QUALIFYING PLAN.— ‘‘(i) IN GENERAL.—The term ‘qualifying plan’ means, for a year and subject to paragraph (4), a plan that had a quality rating under paragraph (4) of 4 stars or higher based on the most recent data available for such year. ‘‘(ii) APPLICATION OF INCREASES TO LOW ENROLLMENT PLANS.— ‘‘(I) 2012.—For 2012, the term ‘qualifying plan’ includes an MA plan that the Secretary determines is not able to have a quality rating under paragraph (4) because of low enrollment. ‘‘(II) 2013 AND SUBSEQUENT YEARS.—For 2013 and subsequent years, for purposes of determining whether an MA plan with low enrollment (as defined by the Secretary) is included as a qualifying plan, the Secretary shall establish a method to apply to MA plans with low enrollment (as defined by the Secretary) the computation of quality rating and the rating system under paragraph (4). ‘‘(iii) APPLICATION OF INCREASES TO NEW PLANS.— ‘‘(I) IN GENERAL.—A new MA plan that meets criteria specified by the Secretary shall be treated as a qualifying plan, except that in applying paragraph (1), the applicable percentage under subsection (n)(2)(B) shall be increased— ‘‘(aa) for 2012, by 1.5 percentage points; ‘‘(bb) for 2013, by 2.5 percentage points; and ‘‘(cc) for 2014 or a subsequent year, by 3.5 percentage points. ‘‘(II) NEW MA PLAN DEFINED.—The term ‘new MA plan’ means, with respect to a year, a plan offered by an organization or sponsor that has not had a contract as a Medicare Advantage organization in the preceding 3-year period. ‘‘(B) QUALIFYING COUNTY.—The term ‘qualifying county’ means, for a year, a county— ‘‘(i) that has an MA capitation rate that, in 2004, was based on the amount specified in subsection (c)(1)(B) for a Metropolitan Statistical Area with a population of more than 250,000; ‘‘(ii) for which, as of December 2009, of the Medicare Advantage eligible individuals residing in the county at least 25 percent of such individuals were enrolled in Medicare Advantage plans; and ‘‘(iii) that has per capita fee-for-service spending that is lower than the national monthly per capita cost for expenditures for individuals enrolled under the original medicare fee-for-service program for the year. ‘‘(4) QUALITY DETERMINATIONS FOR APPLICATION OF INCREASE.— ‘‘(A) QUALITY DETERMINATION.—The quality rating for a plan shall be determined according to a 5-star rating system (based on the data collected under section 1852(e)). ‘‘(B) PLANS THAT FAILED TO REPORT.—An MA plan which does not report data that enables the Secretary to rate the plan for purposes of this paragraph shall be counted as having a rating of fewer than 3.5 stars. ‘‘(5) EXCEPTION FOR PACE PLANS.—This subsection shall not apply to payments to a PACE program under section 1894.’’. (4) DETERMINATION OF MEDICARE PART D LOW-INCOME BENCHMARK PREMIUM.—[Amended section 1860D– 14(b)(2)(B)(iii) of SSA, as amended by section 3302]
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