Parts C and D 2011 Final Rates, Policies Released

The Centers for Medicare & Medicaid Services (CMS) issued on April 6 its final rule implementing policy and technical changes to the Medicare Advantage (Part C) and Medicare prescription drug benefit programs (Part D). That same day, CMS announced that capitation rates for Medicare Advantage (MA) plans in 2011 will be unchanged from this year. The 2011 Rate Announcement was accompanied by the final 2011 Call Letter for Part C and Part D plans.

The recently enacted health reform bills (the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act) had an affect on 2011 policy for these Medicare programs.

2011 Rates

According to the CMS final 2011 Part C and Part D payment policies, The Rate Announcement contains the following key changes in response to this new legislation:

  • CMS will not implement the new CMS-HCC and CMS-HCC ESRD dialysis and risk adjustment models or the recalibrated frailty factors in 2011.
  • CMS will maintain the 2011 state ESRD rates at the 2010 amounts.
  • CMS will calculate the government Part D premium subsidy amounts for low-income beneficiaries using plans’ basic part D premiums before the premiums are reduced by Part C rebates. This will help ensure that the premium subsidy in each Part D region provides low-income beneficiaries with a sufficient choice of plans for which they would incur no premium liability.

In addition to changes resulting from new legislation, the following key changes or updates have been made to the Advance Notice and draft Call Letter in response to public comments received from beneficiary advocacy groups, associations, Congressional agencies, members of the public, and health plans:

  • CMS describes the methodology that will be used to adjust the ‘default’ risk scores for new enrollees to reflect the predicted costs of full risk enrollees in chronic care SNPs.
  • CMS notes that for beneficiaries to receive reimbursement for clinical trial services, beneficiaries (or providers acting on their behalf) must notify their plan that they have received clinical trial services and provide documentation of the cost sharing incurred, such as a Medicare Summary Notice (MSN). CMS will explore ways that this information can be provided to plans in the future to alleviate the potential burden on beneficiaries.
  • CMS states that, at this time, low-income beneficiaries who originally chose to enroll in their current plan will not be reassigned, but several methods to make beneficiaries more aware of their options are being considered. CMS will also continue to evaluate the merits of reassigning beneficiaries based on beneficiary drug utilization.
  • CMS announces that we intend to issue a regulation proposing to authorize the release of Part C and Part D payment data.

Annual parameter updates to Medicare Part D benefits are unchanged (with the exception of a $10 increase in the Initial Coverage Limit).

Medicare Advantage Final Rule

According to AHA News Now, the final rule exempts hospitals and other health care entities that participate in the traditional Medicare program from separate compliance training requirements under the MA program.

Also in the final rule are changes intended to strengthen beneficiary protections and CMS’ ability to distinguish for approval stronger applicants for Part C and D participation and to remove consistently poor performers. The agency is finalizing changes and clarifications to its regulations to ensure all current and potential Medicare Advantage operations (MAOs) and prescription drug plan (PDP) sponsors clearly understand and can reasonably anticipate how the agency measures sponsor performance, determine when there is noncompliance, and when enforcement actions are warranted.

The final rule also provides plans offerings with meaningful differences. CMS will only approve a bid submitted by an MA organization or Part D sponsor if the plan benefit package or plan cost structures are substantially different from those of other plans offered by the organization or sponsor with respect to key plan characteristics such as premiums, cost-sharing, formulary structure, or benefits offered.

In the final rule, CMS provides MA organizations and Part D sponsors involved in mergers or acquisitions a two-year transition period from the merger or acquisition to ensure that plans offered by the MA organization or Part D sponsor are significantly different from each other. The final rule also clarifies that if a Part C or Part D plan has failed to attract a significant number of enrollees over a sustained period of time, its contract may not be renewed.

The final rule also provides payment rules and procedures changes. CMS will initially establish cost-sharing thresholds for those Parts A and B services that have, through a number of years of experience with plan benefit reviews, been identified as likely to have a discriminatory impact on sicker beneficiaries. Some of these service categories are: inpatient catastrophic days; inpatient short stay days; inpatient mental health days; and skilled nursing facility (SNF) days.

In addition to establishing a mandatory maximum out-of-pocket (MOOP) limit on overall cost-sharing for Parts A and B services, CMS also plans to continue offering MA organizations the option of adopting a lower voluntary MOOP limit with greater flexibility in Parts A and B cost sharing than what is available for MA plans that elect to design their benefit packages consistent with the higher, mandatory MOOP limit. Under this approach, the voluntary MOOP limit would be set at an amount lower than the mandatory MOOP limit and would therefore not disadvantage those MA plans that have adopted the voluntary MOOP limit in previous contract years.

The final regulation includes medical record review appeal rights; new policy; clarification regarding various program participation requirements; implementation corrections and other technical changes.

CMS estimates the cost of implementing this final rule to be $260.3 million in 2010 — $61.4 million less than what was estimated in the proposed rule. CMS estimates the changes outlined in the final rule will generate a net savings of $341.7 million to the Medicare program between 2010 – 2015.

This final rule was published at the Federal Register on April 15. The rule is effective June 7; the provisions, however, will not have an effect prior to contract year Jan. 1, 2011 unless otherwise noted in the rule.


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