Release of Final Notice of CY 2010 Medicare Advantage and Part D Payment Rates
On April 6, 2009, the Centers for Medicare and Medicaid Services (CMS) released the Announcement of CY 2010 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies (Announcement). CMS’s final estimate of the National Per Capita MA Growth Percentage, which will be used to update CY 2010 payment rates, is 0.81 percent. This figure reflects a 0.31 percent increase above the initial estimate announced in February’s Advance Notice, “reflecting a different set of economic assumptions,” but remains significantly lower than the average increases of prior years because of the estimated 21 percent physician fee reduction for 2010 contained in current law.
CMS also indicates that it will implement a uniform coding difference reduction of 3.41 percent to all Medicare Advantage (MA) Plans’ risk scores to reflect the effect on CY 2010 rates of different growth rates in MA and traditional Medicare fee-for-service (FFS). CMS provides a detailed review of its approach to implementing this coding adjustment in its response to public comments to the Advance Notice. Notably, CMS considered including 2007-08 data in its calculation of the coding intensity adjustment, but because the difference between MA and FFS growth rates “accelerates” significantly with inclusion of 2008 data, CMS elected to take a “conservative” approach in the inaugural year of this adjustment and only relied upon data from the 2004-05, 2005-06 and 2006-07 data cohorts.
In addition to identifying the Medicare Part D benefit parameters for the defined Part D standard benefit, CMS also addresses other issues in the Announcement, such as collection and use of MA enco
unter data, phase-out of the Indirect Medical Education payment and location of network areas for CY 2011 private fee-for-service plans.
The Announcement can be found on CMS’s website at http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2010.pdf .
CMS Comments to Industry During the National Conference on Medicare Advantage and Part D Programs
On April 2, 2009, CMS hosted its CY 2010 Medicare Advantage and Part D National Conference in Baltimore, Maryland. CMS officials spoke on a range of topics, and as expected, a majority of the substantive commentary addressed policies articulated in the CY 2010 Final Call Letter, which was released on March 30, 2009. Although CMS did not announce any new policies during the conference, officials’ comments provide additional insight into the agency’s priorities.
Potential New Rulemaking
CMS indicated it will propose new regulations to address several of the agency’s “concerns” about the Programs. No specific topics or issues were identified, and, notably, there has not been any new legislation that would require new or modified regulatory proposals. In the CY 2010 Call Letter, however, CMS stated it may “consider rulemaking to limit plans to no more than a specified number of benefit designs in a given service area,” making this one potential topic of future rulemaking.
Focus on Reducing Plan Benefit Packages
CMS reiterated numerous times its short-term goal of ensuring “transparent and meaningful” choices among MA Plans as well as the need for Medicare beneficiaries to understand, and not be overwhelmed by, their Plan options. The agency emphasized its “concern” that Medicare beneficiaries have too many MA plan benefit choices that lack meaningful differences, and so CMS strongly encouraged MA Organizations with duplicative plan benefit packages and/or MA Plans with low enrollment to consider consolidating their offerings in CY 2010.
CMS did not address the competitive bidding process referenced in President Obama’s proposed budget, although Jonathan Blum, the new Acting Director for the Center for Drug and Health Plan Choice, in his remarks identified the agency’s “concern” regarding how to bring about a “level playing field” and introduce a more competitive dynamic into the MA Program that would result in a more responsive program. Blum also indicated that CMS is looking to develop “concepts” that would enable the Programs to use their purchasing power to obtain “fair” pricing.
Marketing and Other Compliance Initiatives
CMS indicated it will continue engaging in marketing “surveillance” activities in upcoming months. In addition to scrutinizing MA Organizations’ and Part D Plan Sponsors’ (Plan Sponsors’) written materials, officials also will be assessing Plan Sponsors’ call centers to ensure, among other points, that customer service representatives understand the benefits they are explaining. Additionally, CMS indicated it will use data, such as per capita complaints as well as a Plan Sponsor’s high number of marketing misrepresentation complaints and high disenrollment rates, to identify industry outliers that should be subject to further review and potential enforcement actions.
Consistent with its comments in the CY 2010 Final Call Letter, CMS indicated it is in the process of shifting its process for selecting Plan Sponsors for audits, from one based on routine reviews (e.g., routine audits of one third of Plan Sponsors) to a selection process that is data driven and focuses on high-risk areas. The agency also emphasized its increasing interest in the outcomes of Plan Sponsors’ compliance activities (e.g., results of internal monitoring and auditing) and decreasing interest in confirming compliance with process requirements (e.g., adoption of policies and procedures for compliance plans). Officials noted, by way of example, that Plan Sponsors should submit attestations only after undertaking appropriate internal activities to substantiate and validate the accuracy and completeness of the data to which the Plan Sponsor is attesting.
More information about the conference, including the list of speakers and copies of their presentations, can be found on CMS’s website at http://www.cms.hhs.gov/apps/events/event.asp?id=557.