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CMS Expands Benefit Flexibilities in Medicare Advantage

Summary

Earlier this year, the administration granted Medicare Advantage plans greater flexibility to target benefit designs for individuals with certain high-risk health conditions. These changes are expected to position the program for continued growth.

Through recent legislative and regulatory action, Medicare Advantage (MA) plans now have greater flexibility to tailor benefit designs to individuals with select high-need health conditions. Key changes include the agency’s reinterpretation of the benefit uniformity requirement and of the “primarily health-related” definition for supplemental benefits that previously restricted MA plans’ ability to target benefits at specific beneficiary populations. Beginning in 2019, MA plans can leverage the new flexibilities to partner with community-based organizations to create services aimed at addressing barriers to access to care or avoiding costly care. The major new flexibilities for 2019 and beyond include:

  1. Benefit Uniformity Flexibility: In 2019, MA plans can design disease-specific benefits for individuals with certain chronic conditions or other high-risk health conditions if 1) they are available to all enrollees, 2) MA plans use objective and measurable medical criteria, and 3) beneficiaries’ diagnoses have been certified by a provider. MA plans can also now differentiate supplemental benefits and out-of-pocket costs between geographical segments. For example, MA plans may offer reduced cost sharing for podiatrist visits in an area with high diabetes prevalence.
  2. Supplemental Benefits: The previous “primarily health-related” definition has been expanded for supplemental benefits to permit coverage of services to diagnose, prevent, or improve the effects of injuries or health conditions, or reduce avoidable emergency healthcare utilization. Previously, certain services designed for daily maintenance were not considered “primarily health related” and therefore could not be covered as supplemental benefits under Medicare. In 2019, MA plans may offer 3 different types of supplemental benefits, including “standard” supplemental benefits for all enrollees and “targeted” supplemental benefits to qualifying enrollees by health status or disease state. In 2020, MA plans may also offer “chronic” supplemental benefits for enrollees with certain chronic conditions.

On April 27, the Centers for Medicare and Medicaid Services (CMS) released administrative guidance regarding these changes that may limit the breadth of flexibility expected by stakeholders. In particular, CMS indicates that MA plans may not target benefits at social determinants of health (e.g., food insecurity, homelessness). Nevertheless, changes to the MA program present opportunities for plans to address some social needs, including offering supplemental benefits that support Activities of Daily Living and Instrumental Activities of Daily Living (e.g., transportation to healthcare appointments, home safety modifications).

To date, there has been limited opportunities in MA to test the effectiveness of targeted benefits. In 2017, CMS’ Center for Innovation (CMMI) implemented a value-based insurance design demonstration in MA (MA-VBID) to do this in Part C and D. The demonstration is in the early phases and has yet to be evaluated. It is also notable that these new flexibilities only apply to the medical benefit (Parts A and B) and do not extend to the drug benefit (Part D). Uniform benefit rules continue to apply in Part D, although plans may use rebate dollars to reduce Part D cost sharing, which could be considered a partially targeted benefit. In the absence of evidence and with the constrained flexibilities to Part C supplemental benefits, it is unclear how far plans will go in the early years of implementation.

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