MA and Part D rate increases, quality improvement highlight 2016 updates

Rate announcements for Medicare Advantage (MA) and Part D Prescription Drug programs highlight CMS’ program final updates for 2016. As in previous years, due to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), CMS noted that the final updates would continue the process of moving and aligning MA program payments with payments made for beneficiaries in fee-for-service Medicare, helping to ensure fairness in the program. In the 2016 Rate Announcement release, CMS finalized updates to the methodologies used to pay MA plans and Part D sponsors that are intended to improve payment accuracy and encourage quality.

Payment projections

CMS noted that it took particular care to ensure plan sponsors had incentives to care for dual eligible populations over the long term. As such, the 2016 Rate Announcement made final changes in payments that will affect plans differently, dependent upon the characteristics of the affected plans. According to a CMS Fact Sheet accompanying the 2016 Rate Announcement, on average, plan sponsors should expect a revenue change of 1.25 percent. Accounting for the expected 2.0 percent growth in coding acuity, the expected average revenue change would be 3.25 percent.

The final revenue increase is larger than the February advance notice because Medicare actuaries recently updated Medicare per capita spending estimates for 2014 and 2015 (see Proposed Medicare Advantage, Part D policy and payment updates focus on quality, access, Health Law Daily, February 23, 2015). Medicare per capita spending in 2014, 2015 and 2016 is still expected to be below historical standards.

Quality improvements and transparency

The 2016 program updates noted important improvements to the star rating system, additional accuracy and transparency of provider networks, and improvements in quality of care for beneficiaries. CMS will continue to update the Star Ratings measures to drive improved quality for MA and Part D enrollees. To enhance program integrity and payment accuracy, MA plans will continue to have stringent oversight for improper payments, similar to other Medicare providers.

CMS anticipates it will begin working with plans participating in MA to better understand, through a voluntary effort, the extent to which value-based payment models are used to compensate providers offering services to their enrollees.

Enrollees will also have access to information in order to make decisions about care and coverage. MA plans will be required to maintain accurate provider directories and make those directories widely available. Part D sponsors will be required to provide clear and accurate access to information on preferred cost sharing pharmacies within their networks.

Star Ratings for dual-eligible or low-income subsidy (LIS) effects will not be changed based on concerns from commentary solicited by CMS. CMS noted that given the uncertainty about any appropriate payment response to changes to Star Ratings, further examination of the issue by CMS, HHS, and external measure developers would be necessary to determine the factors for the observed differences found in the preliminary research. Interim adjustments will still be considered.

Part D risk adjustments

For 2016, CMS finalized the proposed updates to the Part D risk adjustment model to improve predictive accuracy and reflect the following changes to the: (1) benefit structure; (2) data years used for calibration; (3) diagnoses included in some prescription drug hierarchical condition categories (RxHCC); (4) Part D data used in MA-Part D sponsors calibration; and (5) actuarial adjustment to the chronic viral Hepatitis C RxHCC.

Record enrollments

According to a CMS fact sheet, both MA and Part D programs’ enrollments continue to grow since the enactment of the ACA. MA enrollments have increased by 42 percent since 2010 to an all-time high of 16 million beneficiaries; nearly 30 percent of Medicare beneficiaries are enrolled in an MA plan. In addition to the record enrollments, CMS touted the improvement in plan quality. In 2015, 60 percent of MA enrollees will be enrolled in a 4- or 5-star plan, compared to an estimated 17 percent in 2009. As the enrollments increase, the premiums for the MA plans have decreased, dropping 6 percent since the enactment of the ACA. More than 90 percent of Medicare beneficiaries have access to $0 premium MA plans.