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February 8, 2024:
Obviously, I don’t have the power to do that, but the health policy community did see a lot of activity in this space last month. The specific actions around Medicare Advantage (MA) align with three general priority areas for policymakers: prior authorization and utilization management, data and transparency, and payments to MA plans. While policymakers have also raised other issues regarding MA, it was interesting to see how these three came to the forefront in the first month of the year.
On January 17, 2024, the Centers for Medicare & Medicaid Services (CMS) released a long-awaited final reg that requires MA plans and other payers to automate their prior authorization processes by 2027. The reg outlines new timeframes for prior authorization decisions and imposes requirements on both plans and providers to help make prior authorization more efficient and transparent.
While the reg includes many new requirements, stakeholders have pointed out what it does not include. The reg explicitly does not apply to prescription drugs, employer-sponsored insurance plans or Medicare fee-for-service (FFS) (i.e., traditional Medicare). CMS also did not address payers’ use of algorithms or artificial intelligence to make prior authorization decisions. These are significant issues that could be addressed in future rulemaking.
The reg also notably does not impose limitations on the use of prior authorization – a major concern for many providers. CMS has weighed in on prior authorization in previous regs. As noted in this Regs & Eggs post, in the contract year (CY) 2024 MA and Part D reg issued in April 2023, CMS prohibited MA plans from denying coverage for services covered by Medicare FFS. CMS also required that prior authorization approvals remain valid for a patient’s entire episode of care as long as the care is medically necessary. Starting this year, CMS also requires all MA plans to establish a utilization management committee, which will review prior authorization policies annually to ensure they are consistent with coverage requirements, including traditional Medicare’s national and local coverage decisions and guidelines.
Interestingly, in the CY 2025 MA and Part D proposed reg released in November 2023, CMS proposed to require the utilization management committee to conduct an annual health equity analysis of prior authorization use and to include an expert in health equity policies and principles as a committee member. CMS believes that utilization management protocols disproportionately affect certain populations and can lead to overall worse medical outcomes for these individuals due to delayed or denied care.
While CMS sets payment rates for providers and facilities in traditional Medicare, CMS cannot interfere in contract negotiations between MA plans and providers and facilities (and therefore cannot dictate what MA plans pay providers and facilities). Thus, it is much easier for CMS to make data and prices transparent in traditional Medicare than in MA. On January 25, 2024, CMS released a request for information (RFI) on how to increase MA data transparency, with the stated goal of making publicly available MA data “commensurate with data available for Traditional Medicare to advance transparency across the Medicare program, and to allow for analysis in the context of other health programs like accountable care organizations, the Marketplace, Medicaid managed care, integrated delivery systems, among others.”
The RFI seeks comments on all aspects of data related to the MA program. CMS requests detailed information from beneficiary advocates, healthcare providers and other stakeholders on common challenges and experiences in the MA program for which limited data are currently available. Comments on the RFI are due May 29, 2024.
The debate about whether MA plans are “overpaid” began long before “Medicare Advantage Month” and will continue for a long time afterward, but the debate definitely heated up in January. The Medicare Payment Advisory Commission’s (MedPAC’s) public meeting on January 11 and 12, 2024, included a dedicated session on the status of the MA program. MedPAC staff presented commissioners with information on MA enrollment and beneficiary access to plans, plan quality, plan rebates, market consolidation, plan coding practices and Medicare payments to plans. MedPAC staff estimated that coding and favorable selection of beneficiaries in the MA program will cause MA payments to be 23% above Medicare FFS spending in 2024. That difference translates to an additional $88 billion in MA payments. These estimated “overpayments” led to a robust discussion. After the meeting concluded, other health policy reporters and analysts, including KFF, released articles and issue briefs discussing the estimate’s implications.
While the $88 billion estimate captured headlines, last month Congress also urged CMS to continue to provide stable payment updates to MA plans. Understanding that CMS planned to propose payment updates for 2025 at the end of the month, 61 Senators sent a letter to CMS on January 26, 2024, requesting that CMS ensure payment and policy stability for the MA program to protect what they referred to as a “critical choice” for Medicare beneficiaries. CMS released the 2025 MA and Medicare Part D Advance Notice as expected on January 31, 2024. In the advance notice, CMS proposed payment rates and other technical changes to the MA and Part D programs. CMS estimated that the proposed policy changes would result in a 3.7% increase in MA payments in 2025 – a more than $16 billion increase. CMS also proposed to proceed with the Part C Risk Adjustment Model phase-in by blending 67% of the risk score calculated using the updated 2024 MA risk adjustment model with 33% of the risk score calculated using the 2020 MA risk adjustment model. This blended MA risk score trend for CY 2025 is, on average, 3.86%.
CMS stated in a fact sheet and frequently asked questions document that the estimated 3.7% increase in 2025 MA payments is just an average payment increase. Actual payments to plans depend on a range of factors, including “growth rates of underlying costs, 2024 Star Ratings for 2025 quality bonus payments, continued phase-in of risk adjustment model updates that were implemented in CY 2024, and increases to risk scores because of MA risk score trend, which can be driven by a number of factors including MA demographics and coding patterns.” Therefore, CMS stated, “there will be variation among plans in terms of their plan-specific payment impacts, including plans that would see a larger or smaller impact year over year.” Some media outlets have reported that MA plans’ base payments will actually slightly decrease in 2024.
Comments on the advance notice are due March 1, 2024. CMS will release the final notice by April 1, 2024, and MA plans will submit their 2025 bids by June 3, 2024.
Well, that was a month full of Medicare Advantage news and policies!
Since more than half of Medicare beneficiaries are now enrolled in MA plans, policymakers will likely continue to focus on these and other issues (such as quality, value-based care and benefit standardization) in the months and years to come.
When evaluating these issues, policymakers should consider their implications on Medicare FFS. As the percentage of beneficiaries in Medicare FFS declines, participation in all of CMS’s FFS initiatives could also shrink – from the Merit-based Incentive Payment System (MIPS) to the Medicare Shared Savings Program (the national accountable care organization program), to many of the CMS Innovation Center’s payment models. And as CMS continues to use available FFS data to set rates in future physician fee schedules and prospective payment systems for facilities, that data may eventually become a non-representative sample of the Medicare population as a whole.
Just some food (eggs?) for thought as we move beyond Medicare Advantage Month.
Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.
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