April 1, 2019

2020 Medicare Advantage and Part D Rate Announcement and Final Call Letter
Fact Sheet

On April 1, 2019, the Centers for Medicare & Medicaid Services (CMS) released final policy and payment updates to the Medicare Advantage (MA) and Part D programs through the 2020 Rate Announcement and Call Letter. The Advance Notice was posted in two parts: Part I on December 20, 2018 and Part II on January 30, 2019 with the Draft Call Letter. CMS accepted comments on all proposals through March 1, 2019. The final updates will continue to maximize competition among Medicare Advantage and Part D plans, as well as include important actions to address the nation’s opioid crisis. 

2020 Rate Announcement

Through the 2020 Rate Announcement, CMS is finalizing updates to the methodologies used to pay Medicare Advantage plans and Part D sponsors.

Net Medicare Advantage Plan Payment Impact

The chart below indicates the expected impact of the policy changes on Medicare Advantage plan payments relative to last year.  

Year-to-Year Percentage Change in Payment¹

¹The Expected Average Change in Revenue reported above does not include an adjustment for underlying coding trend. For 2020, CMS expects the underlying coding trend to increase risk scores, on average, by 3.3 percent. ²Rebasing/re-pricing impact is dependent on finalization of average geographic adjustment index and will be available with the publication of the 2020 Rate Announcement

2020 Part C Risk Adjustment Model

The 21st Century Cures Act requires CMS to make adjustments to the risk adjustment model to take into account the number of conditions an individual beneficiary may have, and to make an additional adjustment as the number of conditions increases. For 2020, CMS is finalizing implementation of the alternative payment condition count model that includes additional condition categories for pressure ulcers and dementia, as well as additional variables that count the number of conditions a beneficiary may have (among those that are in the risk adjustment model, or “payment conditions”), and makes an adjustment as the number increases.

CMS began implementing the risk adjustment requirements in the 21st Century Cures Act in Payment Year (PY) 2019, by utilizing a risk adjustment model with additional factors for substance use disorder, mental health, and Chronic Kidney Disease (CKD) diagnoses. Further, the 21st Century Cures Act requires that CMS fully phase in the required changes to the risk adjustment model by 2022. We are therefore beginning the phase in of this new model in 2020, starting with a blend of 50 percent of the risk adjustment model first used for payment in 2017 and 50 percent of the new risk adjustment model.

Using Encounter Data

CMS calculates risk scores using diagnoses submitted by Medicare Fee-For Service (FFS) providers and by Medicare Advantage organizations. Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by Medicare Advantage organizations. In recent years, CMS began collecting encounter data from Medicare Advantage organizations, which also includes diagnostic information. In 2016, CMS began blending 10 percent of risk scores calculated using diagnoses from encounter data with 90 percent of risk scores calculated with diagnoses from RAPS. CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25 percent encounter data and 75 percent RAPS in 2017, 15 percent encounter data and 85 percent RAPS in 2018, and 25 percent encounter data (with RAPS inpatient diagnoses included as a supplement) and 75 percent RAPS in 2019. For 2020, CMS is finalizing the proposal to calculate risk scores by blending 50 percent of the risk score calculated using diagnoses from encounter data, RAPS inpatient diagnoses, and FFS diagnoses with 50 percent of the risk score calculated with diagnoses from RAPS and FFS.

In addition, the risk adjustment model we are finalizing builds upon the model implemented for 2019 risk adjustment payments that includes technical updates such as calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and including additional condition categories for mental health, substance use disorder, and chronic kidney disease. Consistent with the phase-in of the model in 2019, for 2020 CMS is also finalizing the proposal to implement the phase-in of the new risk adjustment model by calculating the encounter data-based risk scores exclusively with the new risk adjustment model, while continuing use of the risk adjustment model first implemented for 2017 payment for calculating the RAPS-based risk scores.

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 FFS providers. For 2020, CMS is finalizing the proposal to apply a coding pattern adjustment of 5.9 percent, which is also the minimum adjustment for coding pattern differences required by the statute.

Medicare Employer Retiree Plans

Medicare Employer Retiree Plans (Employer Group Waiver Plans or EGWPs) serve specific employer groups, and are either offered through negotiated arrangements between Medicare Advantage plans and employer groups or by the employer directly. For 2019, CMS completed the transition to administratively-set rates for Retiree Plans that was originally scheduled to be completed in 2018. For 2020, CMS is continuing the payment policy that was finalized for 2019.

Puerto Rico
In Puerto Rico, a far greater proportion of Medicare beneficiaries receive benefits through Medicare Advantage than in any state or territory. The policies finalized for 2020 will continue to provide stability for the Medicare Advantage program in the Commonwealth and to Puerto Ricans enrolled in MA plans. These policies include continuing to base the Medicare Advantage county rates in Puerto Rico on the relatively higher costs of beneficiaries in fee-for-service Medicare who have both Medicare Parts A and B, continuing the statutory interpretation that permits certain counties in Puerto Rico to qualify for an increased quality bonus adjusted benchmark, and continuing to applying an adjustment in the calculation of the per capita cost estimate used in the benchmark to reflect the nationwide propensity of beneficiaries with zero claims.

2020 Final Call Letter

Improving Drug Utilization Review Controls (Opioids)

Opioid pain medications are effective at treating pain in certain circumstances, but have serious risks such as addiction, abuse, misuse, overdose, and death. CMS is deeply concerned about the magnitude of the opioid epidemic and its impact on our communities, and is committed to a comprehensive and multi-pronged strategy to combat this public health emergency. It is a top priority of this Administration to address the opioid epidemic.

CMS’s oversight through the overutilization monitoring system (OMS) has reduced very high risk overutilization of prescription opioids in the Part D program, but is just one of several key tools CMS uses to combat opioid overuse. Many new policies are being implemented in 2019 – including Part D drug management programs for high risk opioid users, and improved safety alerts, such as the 7-day supply limit for opioid naïve patients. CMS will continue to evaluate the success and impact of these policies throughout 2019, and will continue them into 2020.

Given the urgency and scope of the continuing national opioid epidemic, CMS is finalizing a number of additional policies for 2020 to help Medicare plan sponsors prevent and combat prescription opioid overuse. Those include:

• Pain Management and Complementary and Integrative Treatments in Medicare Advantage: CMS is encouraging plans to take advantage of the new flexibilities to offer targeted benefits and cost sharing reductions for patients with chronic pain or undergoing addiction treatment.
• Access to Opioid Reversal Agents: CMS is strongly encouraging Part D sponsors to provide lower cost sharing for opioid-reversal agents, such as naloxone.
• Star Ratings: CMS is taking steps to advance Medicare Part D opioid-related measures through the Star Ratings development process. We are updating the specifications for the Use of Opioids at High Dosage and/or from Multiple Providers, and Concurrent Use of Opioids and Benzodiazepines measures, and adding them to the display page. Reporting measures on the display page is a necessary step before the measure can be formally adopted as part of the Star Ratings through rulemaking. 

Star Ratings Enhancements

As part of the Administration’s effort to increase transparency and advance notice regarding enhancements to the Part C and D Star Ratings program, CMS codified the methodology for the Part C and D Star Ratings program in the CY 2019 Medicare Part C and D Final Rule, published in April 2018, which will apply beginning with the 2021 Star Ratings. Historically, the Part C and D Star Ratings methodology was adopted and updated through the Part C and D Call Letter, with additional guidance issued in annual technical notes. As codified in the CY 2019 Final Rule, the removal of measures from the Star Ratings program based on standards in the new regulations will be announced through the Call Letter process prior to the measurement period. The 2020 Star Ratings is the final year when all changes to the methodology for calculating the ratings and any changes in the measurement set will be addressed using the Call Letter. 

CMS is finalizing a policy to adjust the 2020 Star Ratings in the event of extreme and uncontrollable circumstances, such as major hurricane weather events. The policy to adjust Star Ratings in the event of extreme and uncontrollable circumstances is similar to the policy that CMS implemented for the 2019 Star Ratings and the policy that CMS proposed in the CY 2020 Parts C and D Policy and Technical Changes Notice of Proposed Rulemaking in November 2018. 

We are expanding the number of measures used in the determination of the Categorical Adjustment Index to include all Star Ratings measures that remain after applying the exclusion criteria for a candidate measure for adjustment. This will implement a more comprehensive adjustment for socio-economic status and disability by including all measures that may be sensitive to the composition of enrollees in a contract and it will align with the methodology finalized in the CY 2019 Final Rule for the 2021 Star Ratings.

In the final Call Letter, CMS is also finalizing several measure updates and announcing the removal of three measures from the 2022 Star Ratings. We are removing the following measures from the 2022 Star Ratings program due to the measures showing low statistical reliability:

• Adult BMI Assessment (Part C)
• Appeals Auto-Forward (Part D)
• Appeals Upheld (Part D)

CMS is temporarily removing the Controlling High Blood Pressure (Part C) measure from the 2020 and 2021 Star Ratings due to a substantive measure specification change to align with the release of new hypertension treatment guidelines from the American College of Cardiology and American Heart Association.

Special Supplemental Benefits for the Chronically Ill   

Traditionally, MA plans have only been allowed to offer “primarily health related” supplemental benefits and must offer these benefits uniformly to all enrollees. Beginning with the 2019 plan year, CMS determined that plans can provide certain enrollees with access to different supplemental benefits. Specifically, Medicare Advantage plans can offer targeted supplemental benefits, including reductions from FFS Medicare-equivalent cost sharing, for specific enrollee populations based on health status or disease state in a manner that ensures that similarly situated individuals are treated the same way. This flexibility helps Medicare Advantage plans better manage health care services for particularly vulnerable enrollees.

The Bipartisan Budget Act of 2018 (Public Law No. 115-123) amended the statute to allow MA plans, beginning CY2020, to offer non-primarily health related supplemental benefits to chronically ill enrollees. The law also permits the Secretary, only with respect to supplemental benefits provided to a chronically ill enrollee under the new provision, to waive uniformity requirements, allowing MA plans to vary these supplemental benefits based on the individual enrollee’s specific medical condition and needs. In the final Call Letter, we provide guidance about these new special supplemental benefits for the chronically ill. MA plans will have greater flexibility to offer chronically ill patients a broader range of supplemental benefits that are tailored to their specific needs, such as providing meals beyond a limited basis, transportation for non-medical needs, and home environment services if these benefits have a reasonable expectation of improving or maintaining the health or overall function of the patient as it relates to their chronic condition or illness. For example, for a patient with asthma, an MA plan could cover home air cleaners and carpet shampooing to reduce irritants that may trigger asthma attacks.

The 2020 Rate Announcement and Call Letter may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and selecting “2020 Announcement.”

Ratebooks and supporting calculation data may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Ratebooks-and-Supporting-Data.html and selecting “2020.”

The 2013-2017 FFS data used in the ratebook calculations may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/FFS-Data.html.