By: Jeremiah McCoy
Yesterday, the holidays have come early for those of us waiting on annual rulemaking related to Medicare Advantage (MA) and Part D. In the nearly 1,000 page rule, CMS proposed substantial policy and technical changes impacting the MA program for Contract Year (CY) 2024. There is much left to review in the proposed rule, but let’s dive into some immediate reactions and considerations.
Star Ratings Program
CMS is moving forward with its efforts to encourage MA plans to address health disparities through the Star Ratings program. In the July 2022 MA request for information, CMS sought feedback on a potential health equity index (HEI) quality measure that would be financially tied to performance on key equity/social risk indicators. CMS isn’t proposing a new HEI measure, which they thought would create too much burden. Instead, CMS proposes a financial methodological enhancement to the Star Ratings program. The HEI “reward” would be based on data from existing measures of how the plan is performing from a health equity perspective across all measures. MA plans are already able to see a Health Equity Summary Score, but this proposal would incorporate a financial incentive.
Additionally, CMS proposes to reduce the weight of patient experience star rating measures by half (from four to two). This is a major reversal from CMS’ previous rulemaking. It was only in the CY 2021 MA Policy and Technical Changes that CMS finalized provisions to double the weight of patient experience measures and implement new guardrails. It’s possible that this reversal was a result of the massive drop many MA plans experienced in star rating performance, which was due in part to the doubling weight of patient experience measures and the new guardrails.
The net impact of the Star Ratings proposed provisions is $24.97 billion in savings over ten years.
Marketing Practices
Marketing practices by MA plans and third parties have been in the press spotlight. For example, the Senate Finance Committee recently released a report and recommendations on how CMS could improve marketing and communication requirements and oversight. In the rule, CMS proposes significant changes to MA and Part D marketing requirements. Much of the public criticism has been directed at Third-Party Marketing Organizations (TPMOs), so it is no surprise that many of the provisions focus on TPMOs. One example is that CMS wants to require TPMOs to list or mention all of the MA organization or Part D sponsors that they sell. Also, CMS proposes to prohibit ads that do not mention a specific plan name, often used by TPMOs. For MA plans and sponsors, CMS proposes to require operation of an oversight strategy that monitors agent and broker activities and reports non-compliance to CMS.
The ongoing time and cost to plans related to this new oversight is unknown by CMS, while the updates to plan policy and documents is estimated only on a one-time cost cycle. Many of these provisions will have a positive impact on beneficiaries, but the unintended consequences have the potential to be significant from a burden and cost perspective. Some might argue that the onus of agent and broker oversight should be on CMS or states, not plans.
Utilization Management/Prior Authorization
Prior authorization has been front and center in the discourse around MA, and CMS itself recently released a proposed rule that would require MA plans to establish an electronic prior authorization system. This proposed rule goes further to reform utilization management and prior authorization requirements. CMS is primarily considering three proposals:
- Require that MA plans to adhere to Fee-for-Service (FFS) Medicare coverage National Coverage Determinations (NCD), Local Coverage Determinations (LCD), and statutes and regulations when making medical necessity determinations.
- If no applicable NCD, LCD, or statute/regulation exists, the plan would be required to provide a public summary of evidence that was used to make the medical necessity determinations.
- Require that a prior authorization approval must remain valid for the entire period of a prescribed source of treatment. The plan would also be required to provide a minimum 90-day transition period when an enrollee switches to a new MA plan, is new to Medicare, or switches from FFS to MA.
- Require MA plans to establish a committee that reviews utilization management policies annually.
CMS was not able to predict the impact of the first proposal, while the others CMS anticipates little to no economic impact. When you look at all the activity related to MA prior authorization – the bill under consideration in Congress sponsored by Rep. DelBene (D-WA), the electronic prior authorization proposed rule, and now this rule – there is a ton of movement and reform. While many of these policy changes are supported by providers and plans, the provisions in this rule may not be welcomed with open arms. With all this activity, unintended consequences are expected. It may be too much all at once.
Overpayment
While not mentioned in the proposed rule’s fact sheet or press release, CMS is proposing changes that it says would align existing regulation with statutory language related to overpayment provisions in the Affordable Care Act. CMS seeks to remove the “reasonable diligence” standard and adopt by reference the “knowledge” standard outlined in the False Claims Act. What this means is if an entity – including MA plans, Part D sponsors, providers, and suppliers – has identified an overpayment so long as it has knowledge of the existence of the overpayment, or “acts in reckless disregard or deliberate ignorance of the overpayment.”
With ongoing legal battles around risk adjustment, audits, and overpayment, many plans and other entities will wait to take cues from their lawyers on the implications here. The impact could be quite an operational and/or financial burden – and not just on plans but on providers too. CMS says they have no basis for estimating the impact of any new overpayment recoveries.
Next Steps for Stakeholders
Like all things in the world of complex health policy, the devil is in the details and we have much to dig into before comments are due on February 13, 2023. Don’t forget, we are also waiting on the CY 2024 Medicare Advantage Advance Notice, expected likely in mid-January or early February. The CY 2024 Rate Notice must be finalized by the first Monday in April.
Jeremiah McCoy jmccoy@sironastrategies.com