SummaryAs the Centers for Medicare & Medicaid Services (CMS) consider what, if any, changes to propose to Medicare Advantage (MA) through fall rulemaking, stakeholders should consider where the Biden administration’s priorities may differ from the previous administration’s. Topics that may be addressed—either in regulation or via legislation—include health equity, supplemental benefit flexibility, star ratings, payment and risk adjustment, and end-stage renal disease (ESRD).
Following the reduction in the number of cases of COVID-19, additional healthcare priorities will likely gain increasing attention from federal regulators and lawmakers as the fall approaches, including potential changes to MA. On June 7, MA plans submitted their 2022 bids to the CMS, and the agency is now in the process of determining what changes, if any, it will propose for the 2023 plan year. Proposed rules released this fall and early in 2022 will be the first developed entirely under the Biden administration on MA. In addition, the administration has signaled its intention to work closely with Congress across a range of health policy issues, which could include reforms to the MA program.
Ahead of the fall, MA plans and other stakeholders should prepare to engage on key MA policy issues that are likely to be addressed either by the CMS or Congress.
Promoting Health Equity
The Biden administration has indicated that addressing racial and ethnic, income-based, and other disparities in healthcare is a top priority. MA plans are in a unique position to help address inequities. A recent study shows that enrollment of Black, Hispanic, and dually eligible beneficiaries in MA is growing faster than enrollment of white, non-dual beneficiaries. In particular, the CMS may consider increasing evaluation and data collection around how the MA program is addressing disparities. In the Fiscal Year 2022 Inpatient Prospective Payment Systems proposed rule released in April, the CMS included a request for information on making reporting of health disparities based on social risk factors, race, and ethnicity more comprehensive and actionable for hospitals, providers, and patients. The CMS may seek similar input specific to MA as a part of the rulemaking process. In addition, policymakers may seek input from stakeholders on what other flexibilities and tools they need to better address healthcare disparities, as well as on current systems (e.g., star ratings, risk adjustment) that could be modified to further incentivize stakeholders to take action to reduce disparities. In anticipation, stakeholders should consider how to respond to questions or proactively engage with policymakers.
Reexamining Supplemental Benefit Flexibility
Under the Trump administration, the CMS provided MA plans with new regulatory flexibility to offer a wider array of “primarily health-related” supplemental benefits, and Congressional action allowed plans to provide non-medical special “supplemental benefits for the chronically ill” (SSBCI), such as pest control or caregiver support. The Biden administration may reexamine supplemental benefit flexibility as permitted under the statute to understand the role that supplemental benefits play in improving healthcare outcomes and lowering costs. For example, the CMS might consider collecting additional data from plans on the utilization and impact of these benefits, or the agency could revise its interpretation of “primarily health-related” supplemental benefits to make these benefits more narrowly focused on medical services. Additionally, as policymakers continue to focus on advancing health equity, Congress could extend the SSBCI policy to allow plans to target beneficiaries based on other criteria that may impact beneficiary health, such as social and environmental risk factors.
Accounting for New Drug Therapies
The approval of new medications and the development of gene therapies pose coverage and reimbursement questions for MA plans and other stakeholders. While these products could potentially reduce the burden of chronic diseases and reduce medical spending in the long term, MA plans will incur large upfront costs. Due to the potential cost burden, stakeholders are likely to request a National Coverage Determination (NCD) for specific products, which would result in Medicare FFS covering costs until these costs are included in payment rates for MA plans. While MA plans are currently allowed to use step therapy in Part B and have other utilization management tools, CMS may revisit some of these flexibilities and could consider broader reforms to address the costs associated with new, innovative therapies.
Modifying the Quality Measurement Program
Under the Trump administration, the CMS finalized several changes to the MA Star Ratings program, including increasing the weight of patient experience and access measures and increasing the stability of measure cut points. As the Biden administration or Congress contemplate broader changes to the MA program, either could consider additional, more sweeping reforms. For example, the Medicare Payment Advisory Commission (MedPAC) continues to recommend overhauling the current system and phasing in a new value incentive program. In addition, driven by concerns with the ability of star ratings to capture the experience of racial/ethnic minorities and enrollees with variable socioeconomic status—as discussed in a recent study—policymakers could consider adjusting performance based on social or demographic factors.
Increasing Scrutiny of Risk-Adjustment Coding
Risk adjustment is a key part of how the CMS determines payment for MA plans by increasing payment for enrollees with multiple health conditions. As such, plans pay close attention to changes that impact risk adjustment, as these changes can have notable impacts on MA benefits. Recent activity by policymakers has focused on the accuracy of diagnoses submitted by plans to the CMS for the calculation of risk scores. For example, the Office of the Inspector General recently published several studies that found varying levels of errors in plan risk-adjustment diagnoses. In 2018, the CMS published a proposed rule under which it would extrapolate results from payment audits. Under this proposed rule, which could be finalized this fall, CMS’s extrapolation—without adjusting for coding errors in the risk model—would require plans to return millions of dollars of payments to the CMS.
In addition, MedPAC and others have expressed concern that CMS’s current coding intensity adjustment factor—which adjusts risk scores based on differences in coding between MA and fee-for-service (FFS)—does not adequately account for the higher level of diagnosis coding in MA compared to FFS. As a result, MedPAC and other groups have advocated increasing (and potentially better targeting) the coding intensity factor used by the CMS. Congress is likely to pursue legislation through budget reconciliation later this year and may need to include policies that reduce spending, making coding intensity a potential target.
Using Encounter Data for Risk Adjustment
Since 2012, the CMS has collected encounter data from MA plans, and it now uses these data to calculate risk scores. Now that risk scores are calculated using only encounter data, the CMS has signaled it may overhaul the current risk-adjustment model to directly reflect treatment patterns in the MA population. This overhaul could include estimating the model based on encounter data, which would eliminate the need for a coding intensity adjustment because the model would no longer be based on FFS data. However, a number of payment and policy issues would need to be addressed as part of this process, and stakeholder engagement with the CMS could be critical to ensuring that the agency assesses these issues in a way that appropriately ensures the risk model achieves the objective of avoiding adverse selection.
Preparing to Engage on Experience with Beneficiaries with ESRD
This is the first year in which all ESRD patients can enroll in MA, and many plans continue to adjust to this new patient population. Questions remain regarding how many ESRD patients choose to shift from FFS to MA, in which ESRD patients have been most likely to enroll (e.g., dual eligibles, those with multiple chronic conditions,), and whether the current MA payment methodology that was in place prior to this change fully accounts for the costs associated with the new increase in ESRD enrollment in MA. In conjunction with the enrollment change, the CMS also modified the requirements around network adequacy for outpatient dialysis facilities. Specifically, starting in 2021, the CMS relaxed this requirement by removing outpatient dialysis facilities from the types of providers that must meet time and distance standards, and instead required plans to attest that the network is adequate in providing access to services. This change gives plans more flexibility in forming dialysis networks and potentially modifies their reimbursement strategies with respect to dialysis payments. MedPAC has been very critical of this change, citing potential access concerns. Given the recent reforms related to ESRD, policymakers could choose to make further changes—including payment adjustments—in the upcoming rulemaking cycle. Stakeholders should be prepared to engage with the CMS and Congress on this topic.
Adjusting to the Post Public-Health Emergency (PHE) Environment
With COVID-19 vaccination rates increasing throughout the US and new infection rates declining, MA plans will soon need to contemplate how to operate in a post-PHE environment. While Congress and the administration moved quickly to implement policy changes to help mitigate the impact of the pandemic, uncertainty now exists around which of these changes will remain after the PHE expires. Key issues will likely include:
- Telehealth flexibilities granted during the PHE: Plans and providers began utilizing telehealth at an unprecedented rate due to expanded flexibilities provided during the pandemic. Plans will need to consider the role that telehealth can play in future service delivery, what impact on MA payment would result from Congress making current temporary telehealth flexibilities in FFS permanent, and what longer-term policy changes could facilitate patient access in the future (e.g., changes to reimbursement policy, using telehealth to collect risk-adjustment information,).
- Coverage of COVID-19 related services: While the federal government was the primary payer for most COVID-19 related services (e.g., vaccines and therapeutics) during the PHE, it is likely that liability for those services will shift to the plans after the PHE. While plans may be required to cover some of these services—such as vaccines—with zero-dollar cost-sharing, there may be flexibility for plans to impose cost-sharing or otherwise manage patient utilization in the future. As a result, plans will need to develop coverage and contracting strategies to facilitate patient access.
- Increase in patient care: Overall, the pandemic will likely have a long-term impact on the healthcare system, as beneficiaries may reinitiate healthcare services that were postponed during the pandemic, creating unusually high demand. Among these patients, a higher-than-average percentage may have a condition that has gone undiagnosed or unmanaged, increasing the need for more serious intervention and, in certain circumstances, costly procedures to treat an unmanaged/undiagnosed condition.
The combination of the transition to the Biden administration and the focus on addressing the gaps in the healthcare system exposed by the COVID-19 pandemic present a unique opportunity for stakeholders to shape post-PHE policy priorities. In particular, MA plans should prepare to engage with the CMS and Congress around their experiences during the pandemic and on the policies necessary to support them in providing holistic, equitable care to beneficiaries going forward. In addition, MA plans should be prepared to engage policymakers who may look to MA payment reductions as a way to offset spending or avoid payment cuts to providers who are experiencing funding and staff shortages as a result of the pandemic.
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