Medicare Advantage rates to increase by less than 1%

The Centers for Medicare and Medicaid Services is giving Medicare Advantage plans a rate increase of less than 1%, which is less than half of what they received last year.

The .93% rate is the expected change in revenue for plans under the 2021 Medicare Advantage and Part D Advance Notice.

Last year the rate increased by 2.53% after CMS originally proposed 1.59%. CMS Administrator Seema Verma said at the time that the reason for the change was that CMS is continually updating information.

In a call Wednesday afternoon, Verma gave no reason for this year's rate.

But for 2021, CMS expects the underlying coding trend to increase risk scores, on average, by 3.56%. MA plans receive payment based on risk scores, with a higher score resulting in increased reimbursement.

Organizations representing Medicare Advantage plans registered their disappointment over the rate, especially in light of a new proposal to allow MA plans to offer benefits to patients with end-stage renal disease.

Currently, patients with end stage renal disease are covered under traditional Medicare. This is now being extended to MA plans, starting on January 1, 2021.

" … We are concerned that some proposals could undermine the critical funding that protects millions of Americans' access to the benefits and care they need, including individuals with kidney disease who are newly eligible to enroll in Medicare Advantage," said Matt Eyles, CEO and president of America's Health Insurance Plans.

"An independent study commissioned by BMA (Better Medicare Alliance) found that payment to Medicare Advantage remains inadequate to cover the cost of care for ESRD patients in many highly-populated regions,"  said Allyson Y. Schwartz, president and CEO of the Better Medicare Alliance.

WHY THIS MATTERS

Medicare Advantage plans are becoming an increasingly popular alternative to traditional Medicare due to the price and additional benefits they offer.

Verma said there has been a 29% increase in number of beneficiaries, as average premiums have declined 28% since 2017 and are at their lowest level in 13 years.

Plan satisfaction will now have a greater effect on Medicare Advantage star ratings. Yesterday's Advance Notice proposes changes to star ratings to double the value of how members feel about their plans.

If finalized, proposed policy changes outlined in the Advance Notice would result in an estimated $4.4 billion savings to the federal government over 10 years, largely arising from proposed refinements to the MA and Part D Quality Star Rating system, Verma said.

"We expect some savings will also be passed onto beneficiaries in the form of increased benefit offerings and reduced premiums or cost sharing," Verma said. 

ADVANCE NOTICE PROPOSALS

Insurers find the plans lucrative and CMS keeps adding benefits MA can offer, such as telehealth and also transportation and cleaning services for members who have chronic disease.

CMS will now count telehealth providers in specialty areas such as psychiatry, neurology or cardiology towards network adequacy standards.

CMS is proposing new policies to improve access in rural areas and encourage the use of telehealth in all areas. In rural areas, CMS is proposing to reduce the required percentage of beneficiaries that must reside within the maximum time and distance standards from 90% to 85% and is inviting comment regarding additional changes to improve MA access in rural areas.

To encourage and account for telehealth providers in contracted networks, CMS is proposing that MA plans receive a 10% credit toward the percentage of beneficiaries that must reside within required time and distance standards when the plan contracts with telehealth providers for dermatology, psychiatry, cardiology, otolaryngology and neurology. The agency is also soliciting comments regarding whether to expand this credit to other specialty provider types.  

The Advance Notice also proposes policies to advance price transparency, lower drug prices, promote the use of generic drugs and ensure pharmacy satisfaction.

Online Pricing Tool

CMS is proposing a requirement for plans to provide an online pricing tool in 2022 to compare plans for cost and prescription drug alternatives.

Each Part D plan would implement a beneficiary real time benefit tool by January 1, 2022, that would allow enrollees to view plan-provided, patient-specific, formulary and benefit information. Plans would be able to use existing secure patient portals, develop a new portal, or use a computer application to fulfill this requirement.

Drug Tiers

Average Part D premiums have declined, Verma said. CMS is giving MA plans more negotiating power to lower prices further.

Many put drugs in tiers in formularies to reflect the same level of cost sharing.

CMS proposes, with a proposed effective date of January 1, 2021, to allow Part D sponsors to establish a second, preferred specialty tier with lower cost sharing than the current specialty tier.

Generic Drug Initiative

CMS is seeking comment to develop measures for generic and biosimilars for possible use for star rating to reward plans for adoption of competitor products.

Pharmacy Quality

Plans currently do not have to disclose to CMS the measures they use to evaluate pharmacy performance in their network agreements. The measures used by plans potentially impact pharmacy reimbursements. Therefore, CMS proposes to require Part D plans to disclose such information to enable CMS to track how plans are measuring and applying pharmacy performance measures. CMS will also be able to report this information publicly to increase transparency.

Opioid Epidemic

The proposed rule also addresses the opioid epidemic by implementing several provisions of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act that require Part D plans to educate beneficiaries on opioid risks, alternative pain treatments, and safe disposal of opioids.

THE LARGER TREND

The proposed rule implements several changes stemming from federal laws related to the Part C and D programs -- including the Bipartisan Budget Act of 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, and the 21st Century Cures Act.

The proposed rule continues CMS's Patients Over Paperwork initiative. 

CMS released Part I of the Advance Notice on January 6. CMS will accept comments on all  proposals in 2021 Advance Notices forPart I and Part II  through Friday, March 6,  before publishing the final rate announcement by April 6.

ON THE RECORD

Matt Eyles, president and CEO of America's Health Insurance Plans said AHIP would continue to review the advance rate notice and proposed rule and share feedback with CMS during the comment period.

"More than 23 million Americans -- over one-third of those eligible for Medicare -- choose a Medicare Advantage plan because it delivers better services, better access to care, and better value. For 2020, Medicare Advantage plan premiums declined to their lowest in over a decade, and 93% of Medicare Advantage enrollees are satisfied with their plan," Eyles said. "This year, we saw a bipartisan group of 399 members of Congress sign letters to CMS showing their strong support for Medicare Advantage, and urging the Administration to continue to protect this vital program for America's seniors."

Better Medicare Alliance also said it would submit comments. President and CEO Allyson Schwarz said, "With Medicare Advantage serving a record 24 million enrollees, delivering 94% consumer satisfaction, and saving beneficiaries over $1,200 a year versus traditional Medicare, a stable rate environment is critical to ensuring the program continues to deliver the low-cost, high-quality, coordinated care that is the hallmark of MA today."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com