CMS touts falling premiums in announcing Medicare Advantage and Part D rates

The impact of the updated methodologies on Medicare Advantage and Part D plan payments for 2022 relative to 2021 is expected to result in a 4.08% change in health plan revenue. The expanded change in the advance notice was 2.82%.

Medicare Advantage and Part D rates aren't typically announced until later in the year, but the Centers for Medicare and Medicaid Services has released the rates three months ahead of schedule, ostensibly to provide Medicare health and prescription drug plans more time to consider the information as they prepare and finalize their bids for 2022 Those bids are due June 7.

For the past four years, CMS has emphasized flexibility and competition in Medicare Advantage and Part D, and the agency is touting the results. Since 2017, Medicare Advantage premiums have gone down 34%, CMS said, and Part D premiums are down 12%. These premium reductions have come with new benefits, such as more plan options for beneficiaries.

The announcement follows the release of the Contract Year 2022 MA and Part D final rule on January 15 that included additional policies applicable to coverage for the 2022 plan year, and which could potentially lower beneficiary cost sharing on some of the most expensive prescription drugs.

This earlier release of the rate announcement, along with the policies announced in the 2022 MA and Part D Final Rule, will help Medicare Advantage and Part D plans better plan for 2022 plan costs in light of the uncertainty associated with the COVID-19 pandemic, according to CMS.

WHAT'S THE IMPACT?

Each year, CMS adopts certain payment policies for Medicare Advantage and Part D after considering comments submitted on the Advance Notice. The final policies in the rate announcement are expected to increase per-capita plan payments by 4.08% on average.

Also, the ongoing public health emergency has led to policy changes, including for the 2022 Star Ratings calculations described in COVID-19 interim final rules that appeared in the Federal Register on April 6, 2020 and September 2, 2020.

The Rate Announcement also includes the date by which plans must submit requests for changes to the appeals and complaints measures data for Star Ratings; lists the measures included in the Part C and D Improvement measures and the Categorical Adjustment Index for the 2022 Star Ratings; and lists the states and territories with Individual Assistance designations from the FEMA major disaster declarations used in the definition of an affected contract for the 2022 Star Ratings extreme and uncontrollable circumstances policy.

CMS continues to review different measurement concepts provided in response to the Advance Notice, including those for Provider Directory Accuracy (Part C) and COVID-19 Vaccination (Part C), and will still consider any feedback that is received.

The rate announcement also includes final policies on risk adjustment for 2022. Due to requirements in the 21st Century Cures Act, CMS is finalizing the full phase-in of the Part C CMS-Hierarchical Condition Categories (HCC) risk adjustment model that was first implemented in 2020. This risk adjustment model includes variables that count the number of conditions a beneficiary has among those in the risk adjustment model and additional conditions for mental health, substance use disorder and chronic kidney disease. 

With the full phase-in of this 21st Century Cures CMS-HCC risk adjustment model, which is designed to calculate risk scores using diagnoses from encounter data submissions, the Part C risk score used for payment in 2022 will rely entirely on diagnoses from MA encounter data and FFS claims as the sources of diagnoses.

THE LARGER TREND

In September 2020, CMS released Part II of the 2022 Medicare Advantage and Part D Advance Notice three months early to provide Medicare health and prescription drug plans more time to prepare in light of the COVID-19 pandemic. The proposed changes were expected to increase plan revenue by 2.82%.

A final rule issued Friday will require Part D plans to offer a real-time benefit-comparison tool starting January 1, 2023. CMS said the rule is meant to strengthen and modernize the Medicare Advantage and Part D prescription drug programs so enrollees can obtain information about lower-cost alternative therapies under their prescription drug benefit plan. The agency said it expects the changes will result in an estimated $75.4 million in savings to the federal government over 10 years.

The changes are generally effective for the 2022 plan year and will potentially lower enrollee cost sharing on some of the most expensive prescription drugs, CMS said. The final rule will allow enrollees to know in advance and compare their out-of-pocket payments for different prescription drugs.

ON THE RECORD

"The vindication of our fresh approach to healthcare policy, one that discards the consensus of the last several decades – prescriptiveness, overregulation, and micromanagement from Washington D.C. at every turn – is complete and undeniable," said CMS Administrator Seema Verma. "CMS's efforts to lower prices and improve benefits has delivered historic results."

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com