Fact Sheets

2017 Medicare Advantage and Part D Advance Notice and Draft Call Letter

¹ Rebasing/re-pricing impact is dependent on finalization of average geographic adjustment index and will be available with the publication of the Rate Announcement

Risk Adjustment Model

Last year, CMS received significant input from stakeholders that the current Risk Adjustment Model does not effectively capture the full cost to Medicare Advantage plans of serving dually eligible beneficiaries. In response, CMS conducted extensive research and released a description of potential revisions to the model for comment last fall (https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/RiskAdj2017ProposedChanges.pdf).

Following this public process, CMS is proposing to implement a new Risk Adjustment Model for 2017. The proposed new model has separate coefficients for partial benefit dually eligible beneficiaries, full benefit dually eligible beneficiaries, and non-dually eligible beneficiaries.  These proposed changes will improve the precision of the payments made to plans, including increases in payments for plans serving full benefit dually eligible beneficiaries.

Coding Pattern Adjustment

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between Medicare Advantage organizations and fee-for-service (FFS) providers. In CY 2017, CMS proposes to make an adjustment reflective of the statutory minimum.   

Using Encounter Data

CMS calculates risk scores using diagnoses submitted by FFS providers and by Medicare Advantage organizations. Historically, CMS has used Medicare Advantage diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS). In recent years, CMS began collecting encounter data from MA organizations to develop more accurate payment models. In 2016, CMS began using diagnoses from encounter data to calculate risk scores, by blending encounter data-based risk scores with RAPS-based risk scores. In 2017, CMS is proposing to continue using a blend, using a higher percentage of encounter data-based risk scores.

Employer Group Waiver Plans

Employer Group Waiver Plans (EGWPs) serve specific employer groups, and are either offered through negotiated arrangements between Medicare Advantage plans and employer groups or by the employer directly. Because of the nature of these unique agreements, EGWPs do not compete against other plans through the bidding process, and therefore have little incentive to submit lower bids. CMS has previously waived bidding requirements for Part D for EGWPs and set payment amounts for Part D plans based on the competitive bids submitted for non-EGWP Part D plans. CMS is proposing a similar waiver and payment policy for EGWP Part C plans for 2017.

2017 Draft Call Letter

Star Ratings – Adjusting for Socioeconomic Status

Medicare Advantage plans that achieve high star ratings are eligible for Quality Bonus Payments. Plans and other stakeholders have raised concerns that the current Part C and D Star Rating system creates a disincentive for plans to serve dually eligible or low income beneficiaries. In response, CMS conducted extensive research on this issue, releasing findings and requesting comment on proposed methodological changes in the fall of 2015. 

Following this public process, CMS is proposing to implement a new analytical adjustment for a subset of Star Rating measures that is meant to adjust for plans serving dually eligible enrollees and/or enrollees receiving the low income subsidy, as well as enrollees with disabilities. Through this interim adjustment, CMS seeks to more accurately capture true plan performance, while work continues by the HHS Assistant Secretary for Planning and Evaluation (ASPE) and measure stewards in this important area.

Service Category Cost-Sharing Requirements

CMS has traditionally afforded plans that adopt a lower, voluntary maximum out-of-pocket (MOOP) limit greater flexibility in establishing Parts A and B cost sharing than is available to plans that adopt a higher, mandatory MOOP limit. The number of Medicare Advantage plans with voluntary MOOPs has decreased significantly over the past several years. To address this, CMS is proposing to reduce the cost sharing limit for skilled nursing facility stays (days 1 through 20) in CY 2017 and CY 2018, to reduce cost sharing flexibilities for other service categories, and to make other adjustments. In addition, CMS is requesting comments about other incentives to encourage Medicare Advantage organizations to offer plans with a lower voluntary MOOP for enrollees. Such incentives could include flexibilities to highlight voluntary MOOP plans in marketing materials or a special indicator or priority sorting on Medicare Plan Finder.

Drug Utilization

CMS is proposing a number of updates intended to address drug utilization within the Part D program.

• Allowing Part D plans to designate specific drugs for which a beneficiary’s initial fill could be limited to a 1 month supply, regardless of whether the drug is otherwise available as an extended days’ supply. This change should eliminate waste when patients’ initial doses may change or if they are removed from therapy due to side effects, adverse reactions, or lack of clinical response. After the first one month supply, the change to extended days’ supply would be seamless for the beneficiary.
• Encouraging sponsors to inform beneficiaries directly of additional formulary drugs that become available mid-year, as such drugs may provide more value or better quality options.
• Adding, by 2017 (or possibly sooner), a link from the Medicare Plan Finder website to the Medicare Drug Spending Dashboard to raise beneficiary awareness.

Opioid Use

The Administration is committed to addressing the growing opioid epidemic. Last fall, CMS released information on the success of the Part D Overutilization Monitoring System in lowering the number of Part D beneficiaries identified as potential opioid overutilizers. CMS also released a new mapping tool showing geographic comparisons of Medicare Part D opioid prescription claims. 

Continuing this record of success, CMS is proposing a number of updates in the 2017 Draft Call Letter.  Specifically, CMS is proposing expectations for Part D plans to implement edits to prevent opioid overutilization at point of sale. CMS is also reminding Part D sponsors that beneficiaries who are in need of medication-assisted treatment (MAT) should not be subject to unnecessary hurdles.  Part D formulary and plan benefit designs that hinder access to MAT, either through overly restrictive utilization management strategies or high cost-sharing, will not be approved.  

Process

Comments on the proposed Advance Notice and Draft Call Letter are invited from the industry, seniors, consumer advocates, and the public, and must be submitted by March 4, 2016. The final 2017 Rate Announcement and Call Letter, including the final Medicare Advantage and FFS growth percentage and final benchmarks will be published by Monday, April 4, 2016.

Comments can be emailed to: AdvanceNotice2017@cms.hhs.gov.

The Advance Notice and Draft Call Letter may be viewed through: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/ and selecting “Announcements and Documents.”

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