By Sandra Agik, Senior Analyst

CMS released a final ruling on Medicare Advantage (MA) and Part D plan policies for 2019 coverage, boosting payments, revising methodologies, and changing product structure requirements.

With MA enrollment projected to increase to 20.4 million in 2018—roughly 34% of all Medicare enrollees—health plans must carefully consider how each of these changes impacts plan ability to attract and retain new members, and manage medical costs.

Below, we’ve summarized the key implications of the final rule for your MA business, along with resources to help support your strategic response.

1. MA payment rate boost heightens expected plan competition.

From the finalized rule, MA plans can expect to see a 3.4% average payment boost in 2019—well above the initially proposed 1.8%. Further, taking into account the 3.1% underlying coding trend, plans can expect a net rate increase of 6.4%—a rate comparatively higher than 3.0% net increase in 2018.

What it means for you: This is good news for plans overall, as we’ve seen them place huge bets on MA in the past several months. But it also means increased competition, as other organizations (both plan and provider) aggressively seek to expand their MA business. For example, Anthem recently announced plans to acquire America’s 1^st choice and Healthsun, while Centene expanded their Medicare Advantage product into four new states under the Allwell brand. Plans will need to guarantee an innovative service experience to achieve high retention rates.

Your next steps:

• View this on-demand presentation for insights on what services Medicare consumers want from their health plans.

2. Non-medical supplemental benefits present opportunities for targeted marketing and addressing social determinants of health

Plans will now have the flexibility to vary product offerings to meet specific needs of enrollees, as CMS eliminated the meaningful difference requirement that prevents plans from varying supplemental benefits, cost-sharing, and premiums for plans offered in the same county.

In addition, the scope of supplemental benefits is broadening: items or services that compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization will now be coverable.

What it means for you: Historically, MA plans have used the limited set of supplemental benefits (such as dental, vision, and hearing benefits) to market products that appeal to seniors. With flexible benefits, plans can now use non-clinical benefits to appeal to seniors and at the same time lower medical costs by addressing social determinants of health that often bar members from accessing preventive services. Plans can also now structure benefits to keep high-cost enrollees out of expensive hospital settings, without having to face the administrative costs of scaling these programs for their entire membership. For example, a plan could curve in transportation to eye visits as a supplemental benefit for members diagnosed with diabetes.

Your next steps:

• Read this expert insight article to learn how CareMore partnered with Lyft to address member transportation barriers to preventive care visits.

3. Providers will play an increasingly important role in risk adjustment—and plans must help them keep up.

To improve risk prediction for beneficiaries, the hierarchical condition category (HCC) risk adjustment model will now account for three new conditions and calculate enrollee risk scores using a blend of 25% encounter data and 75% claims data from the Risk Adjustment Processing System (RAPS). Plans are responsible for filtering claims data using valid HCC diagnosis codes before submitting data to RAPS, but encounter data has to be submitted directly to CMS.

What it means for you: The stakes are getting higher for plans to ensure that providers are submitting complete and accurate clinical data for their beneficiaries. Compared to claims data, encounter data is not fully validated for accuracy or completeness, and studies have shown that use of encounter data negatively affects plan payments. As CMS raises encounter data weighting on payment calculations, plans will need to incentivize providers and provide ongoing administrative support to enable high-quality encounter data submission.

Your next steps:

• Read this executive research briefing to learn five strategies to prompt provider and member support in your risk adjustment strategy

4. New measures and tightened rules on consolidated plans require plan vigilance to retain high star ratings.

CMS finalized two new measures for Star Ratings in 2019: Statin Use in Persons with Diabetes (Part D) and Statin Therapy for Patients with Cardiovascular Disease (Part C) to close critical gaps in therapy.

CMS also finalized proposed changes to how Star Ratings are assigned when two MA plans consolidate. Currently, insurers can attribute customers to the plan with the higher star rating under the consolidated contract but in the proposed change, the Star Rating for the consolidated contract would be calculated as an enrollment weighted mean of the Star Rating scores of all surviving and consumed contracts.

What it means for you: According to the CBO, the proposed changes to Star Ratings of consolidated contracts will likely reduce payments to plans by up to $520 million—approximately 0.3 percent of annual MA payments to plans—over the next decade. As providers sought to enter MA through partnership with a highly rated plan, there may be fewer new entrants since they will need to rebuild a high star rating themselves. Further, granted that Star Ratings remain an assured opportunity capture.

Your next steps:

• Use this tool to benchmark your plan’s Star Rating performance and find advisory board resources that you can use to improve your quality improvement strategy.
• Download this white paper to learn about the organizational investments plans must make to increase star ratings.

5. Measures targeting opioid abuse could save costs, but increase administrative burden.

Responding to the opioid crisis, CMS' Part D updates include new policies designed to reduce opioid misuse and lower beneficiaries' prescription drug costs.

The agency will require Part D plans to limit initial opioid prescriptions to 7-day supplies and implement drug management programs for patients considered at risk for opioid misuse. Under the program, Part D plans will be able to limit such beneficiaries to select pharmacies or prescribers and implement processes to alert the pharmacist if the patient is taking another opioid.

What it means for you: The additional mandatory drug management programs will bolster health plan efforts to combat the opioid epidemic, and ultimately lower costs from reductions in expensive addiction treatments and costly ED use. However, plans will have to incur upfront costs to implement these initiatives and mitigate administrative burdens on prescribers and pharmacies that may ultimately interfere with care delivery.

Your next steps:

• Read this blog post on how Geisinger is reducing opioid related ED visits by training embedded pharmacists on pain management and addiction treatment.