In a recent letter to the CMS Administrator, Republican Senators highlighted specific policy recommendations they would like to see incorporated into Medicare Advantage (MA) plans. This includes measures relating to the fee-for-service normalization factor, plan performance rating methods and employer group waiver plans. The Senators also noted the importance of CMS’s willingness to work with stakeholders and Congress on these issues.
The letter was signed by: Senate Finance Committee Chairman Orrin Hatch (Utah), Majority Leader Mitch McConnell (R-Ky.) and Finance Committee Senators Chuck Grassley (Iowa), Mike Crapo (Idaho), Pat Roberts (Kans.), John Cornyn (Tex.), John Thune (S.D.), Richard Burr (N.C.), Johnny Isakson (Ga.), Rob Portman (Ohio), Pat Toomey (Pa.), Dean Heller (Nev.), Tim Scott (S.C.) and Bill Cassidy (R-La.).
Some specifics of letter
“Specifically, we appreciate that the 2018 Advance Notice proposes to pause the phase-in of the use of encounter data to determine patient risk scores. It is important that CMS continue to work with stakeholders and the Congress to ensure that use of encounter data is viable prior to further implementation.”
“Fee-for-Service Normalization Factor: We urge CMS to make additional information available regarding the methodology for calculating the normalization factor and to work with stakeholders to fully understand the data sources and implications. We recognize the challenges that the agency faces in establishing the normalization factor but believe that increased transparency will help establish the most appropriate adjustment. We are also concerned with the proposed 2018 normalization factor specific to the ESRD Dialysis Model. This proposed factor, which is calculated based on a risk score that includes at least one outlier year, would result in an 8 percent decrease in payments to plans for serving this vulnerable, high-need population.”
“Star Ratings: We urge CMS to ensure that any reflection of data integrity issues into the MA Star Ratings methodology is fair to plans and helpful to beneficiaries in distinguishing plan performance. We appreciate the CMS willingness to reconsider its approach in recent years and ask that the agency continue to work with stakeholders and the Congress.”
“Employer Group Waiver Plans (EGWPs): We urge CMS to reconsider the 2017 Final Notice policy that waives the bidding requirements for MA EGWPs. The decision to set payments to EGWPs administratively, which was made by the previous Administration, is likely to adversely impact the roughly 3.2 million beneficiaries with retiree coverage. Further, CMS took this action despite a lack of Congressional interest in the policy when it was included in then-President Obama’s budget request. At a minimum, CMS should use the same blend between the old and new methodology for 2018 to provide more time to broadly consider the issue and its impact.”
Final Rate Notice
On April 3, after the release of the GOP letter, CMS announced the Medicare Advantage Final Rate Notice, laying out the policies governing plan payment for 2018. CMS estimated that MA funding will increase by 0.45 percent on average in 2018. However, plan costs are expected to increase on average by 4 percent to 5 percent due to projected health care cost increases and the expiration of the one-year moratorium on collecting the health insurance tax.
According to analysis from AHIP, CMS responded to the GOP requests on three particular topics with the following policies:
Fee-for-Service Normalization Factor
CMS finalized the normalization factor as proposed for 2018. CMS made a technical correction to the ESRD normalization factor. As a result, the ESRD normalization factor was 1.015, resulting in a lower impact on payments than proposed.
Star Ratings
CMS retained the current Beneficiary Access and Performance Problems (BAPP) Star Rating measure for 2018. In addition, CMS will incorporate results of Appeals Timeliness Monitoring activity audits, if accurate and valid, into data integrity reviews for the four Star Ratings appeals measures. For 2019, the agency intends to retire the current BAPP measure and introduce a revised BAPP measure on the display page that will no longer include enforcement actions or reductions for plans under sanction due to an audit, and may consider scaling reductions of Star Ratings due to data integrity reviews (rather than continue the policy of automatic downgrades to one star).
Employer Group Waiver Plans (EGWPs)
CMS will use the same methodology for payment of EGWPs in 2018 as in 2017. That is, EGWPs will not submit bids for 2018 and CMS will base payments on a 50/50 blend of individual MA plan and EGWP bids submitted in 2016.