Medicare Advantage Advance Notice and Policy and Technical Changes Proposed Rule

On February 5, 2020, the Centers for Medicare & Medicaid Services (CMS) issued two documents impacting the Medicare Advantage (MA) program: (1) the Medicare and Medicaid Programs: Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly Proposed Rule; and (2) the Advance Notice Part II (Part I was released January 6, 2020).

Comments on the Policy and Technical Changes Proposed Rule are due April 6, 2020. Comments on the Advance Notice Parts I and II are due March 6, 2020.  The final rate announcement is expected by April 6, 2020.

Key Takeaways

  1. The Centers for Medicare & Medicaid Services (CMS) estimates an expected average change in plan revenue of 0.93% (as compared to 2020’s proposed increase of 1.59% and final increase of 2.53%).
  2. CMS is implementing a change flowing the 21st Century Cures Act (Cures Act) that will allow End Stage Renal Disease (ESRD) beneficiaries to enroll in MA plans. This change could have significant financial implications for MA plans and should be closely evaluated.
  3. Building on the President’s Executive Order on Protecting and Strengthening Medicare for Our Nation’s Seniors, CMS is proposing to implement certain flexibilities related to telehealth and network adequacy that could strengthen access to MA in rural areas.

Medicare Advantage Options for End-Stage Renal Disease (ESRD) Beneficiaries

The 21st Century Cures Act included a provision that allows beneficiaries with ESRD to choose to enroll in Medicare Advantage plans. Prior to enactment of Cures, ESRD beneficiaries generally could not enroll in MA, although there were some limited exceptions. CMS is now implementing the provisions of Cures and ESRD beneficiaries can enroll in MA plans for plan years beginning on or after January 1, 2021.

Under the Cures Act, the costs of kidney acquisition for MA beneficiaries are now excluded from the services the MA plan is required to cover and those costs are also excluded from MA benchmarks and capitation rates. These costs will be covered under the fee-for-service program instead. We expect significant engagement from the stakeholder community over the adequacy of payment rates for this population.

Network Adequacy

Plans are required to maintain a network of appropriate providers that is sufficient to provide adequate access to covered services to meet the needs of the covered population. CMS provides guidance to plans on how the agency measures and assesses the adequacy of the plan’s network.  Currently, CMS requires that organizations contract with a sufficient number of specified providers/facilities to ensure that 90 percent of beneficiaries have access to at least one provider/facility of each specialty type within published maximum time and distance standards. In this proposed rule, CMS is codifying a practice it refers to as “customization” which includes the flexibility to expand time and distance standards in cases where, due to provider shortage, it is not possible to meet the base time and distance standards.

In addition, CMS is proposing to modify its network adequacy policy to further account for access needs in counties, including rural counties, and to take into account the impact of telehealth providers in contracted networks. Specifically, in an effort to encourage MA in rural areas, CMS is proposing to the reduce the percentage from 90 to 85 in Micro, Rural and CEAC counties where there is evidence of lower supply of physicians compared to urban areas.

CMS is also proposing to give an MA plan a 10-percentage point credit toward the percentage of beneficiaries residing within published time and distance standards for certain provider specialty types when the plan contracts with telehealth providers. The specialties are dermatology, psychiatry, neurology, otolaryngology and cardiology. CMS also seeks comments relating to measuring and setting standards for access to dialysis services.

CMS further proposes that MAOs may also receive a 10 percentage point credit toward the percentage of beneficiaries residing within the time and distance standards for affected provider and facility types in states with certificate of need laws or other state imposed restrictions that limit providers or facilities in the county or state.

Out of Network Telehealth

In 2019, CMS finalized requirements for MA plans offering additional telehealth benefits.  The Bipartisan Budget Act of 2018 authorized MA plans to offer additional telehealth benefits beginning with the 2020 plan year and to treat these additional benefits as basic rather than supplemental benefits. In the implementing regulations, CMS finalized a requirement that MA plans only furnish these benefits using contracted providers. The regulation provided that benefits furnished by non-contracted providers could only be covered as supplemental benefits. For example, a PPO plan could cover telehealth services that are provided out of network only as a supplemental benefit. CMS is soliciting comments on whether the regulation should be revised to allow all MA plan types, to allow additional telehealth benefits through non-contracted providers and to treat those benefits as basic benefits.