In Depth

The Centers for Medicare & Medicaid Services (CMS) released a Notice of Proposed Rulemaking on Friday, October 26, 2018 (the Proposed Rule) addressing expanded telehealth coverage in Medicare Advantage (MA), extrapolation of Risk Adjustment Data Validation (RADV) audit results, and updates to the MA and Part D Quality Star Ratings program, among othertopics. Some of these changes implement provisions of the Bipartisan Budget Act of 2018, which was passed by Congress earlier this year, and other changes reflect CMS’s new use of notice and comment rulemaking in areas that were previously governed primarily by subregulatory guidance.

If finalized, the regulations set forth in the Proposed Rule would impact notonly MA and Part D plan sponsors (Plan Sponsors) but also a broad range of providers and health care companies, particularly those involved in the provision or delivery of telehealth services.

Extrapolation of RADV Audit Results without Fee-for-Service Adjuster

CMS proposes significant changes to its RADV audit methodology. Notably, CMS proposes to extrapolate the findings of RADV audits without applying a Fee-for-Service Adjuster to the audit findings to reflect the error rate inherent in diagnosis coding in the Medicare Fee-for-Service program. This proposal is a significant change from CMS’s previously announced RADV audit methodology, issued in 2012, in which CMS announced it would apply a Fee-for-Service Adjuster. CMS proposes to implement its proposal retroactively, beginning with payment year 2011. CMS estimates that, if finalized, the RADV proposal could result in the recovery of $4.5 billion from MAOs over the next ten years, including $1 billion in 2020 alone.

Expansion of MA Telehealth Benefits

The Proposed Rule includes provisions implementing the additional MA telehealth benefit added by the Bipartisan Budget Act of 2018. MAOs were previously limited in the telehealth services they could include in their basic benefit package because they could only cover the telehealth services available under the Fee-for-Service Medicare program. MAOs were permitted to offer more expansive benefits as supplemental benefits, but there are financial limitations on the ability of many MAOs to offer a wide range of additional benefits. Under the Bipartisan Budget Act of 2018 and the Proposed Rule, MAOs would be able to include in their basic benefit packages any Part B benefit that the plan identifies as “clinically appropriate” to be furnished electronically by a remote physician or practitioner. These additional telehealth benefits and any applicable limitations would need to be described in the plan’s Evidence of Coverage document.

There are a few notable limitations applicable to the expanded telehealth coverage under the Proposed Rule. First, MAOs will only be permitted to provide additional telehealth benefits through contracted providers that meet plan selection and credentialing standards. Contracts with telehealth providers must require compliance with applicable licensure laws imposed by the state in which the member is located and receiving the service. Pursuant to a statutory requirement, MAOs will also be prohibited from including any capital or infrastructure costs related to the additional telehealth benefits in their bids.

Updates to Quality Star Ratings

In the first rulemaking since the Quality Star Ratings (Star Ratings) were codified into regulation earlier this year, CMS proposes a number of updates to the Star Ratings program for MA and Part D contracts. Among other changes, CMS proposes to revise the methodology for determining cut points, codify its adjustments for contracts facing extreme and uncontrollable circumstances, and update the specifications of several individual Star Ratings measures.

  • Cut point methodology. CMS proposes two significant revisions to the way in which cut points for non-CAHPS measures are calculated. In CMS’s words, these changes would balance how to accurately measure true performance with providing more predictable and stable cut points. First, CMS proposes to perform mean resampling, under which CMS would calculate the cut point 10 times (each time leaving out a different random sample of scores) and then take the average of each of the 10 cut points. CMS suggests in the preamble to the Proposed Rule that this would reduce the impact of outliers and increase the stability of the cut points over time. Second, CMS proposes to impose a 5 percent bi-directional cap on the change in a cut point from the prior year, noting that this would increase the predictability of cut points. CMS notes that there are various ways such a cap could be implemented and indicates that the agency is considering alternatives, including whether the cap should be 3 percent. Plan Sponsors should consider whether a 5 percent cap would provide the increased predictability CMS apparently seeks, as scores on many measures may not move significantly from year to year.
  • Adjustment for extreme and uncontrollable circumstances. CMS also proposes to codify its policy (originally implemented for the 2019 Star Ratings though the CY 2019 Final Call Letter) of adjusting the Star Ratings for contracts that are affected by “extreme and uncontrollable conditions” such as natural disasters. The proposed methodology would compare the Star Ratings of a qualifying contract from the current year and the previous year and apply the higher of the two. Although this policy will likely affect only a handful of contracts in any given year, the impact of this adjustment on some Plan Sponsors may be significant.
  • Changes to individual measures. In the past, CMS has proposed and finalized changes to individual Star Ratings measures through subregulatory guidance. As these updates are now implemented through formal notice and comment rulemaking, the Proposed Rule reflects individual measure-level changes that CMS proposes for performance periods beginning on or after January 1, 2020 and/or January 1, 2021 (depending on the measure). In particular, CMS proposes changes to the following measures: Controlling High Blood Pressure (Part C), Medicare Price Finder (MPF) Price Accuracy (Part D), Plan All-Cause Readmissions (Part C), and the Improvement Measures (Parts C and D). Perhaps most notably, as forecast in the CY 2019 Final Call Letter, CMS proposes revising the MPF Price Accuracy measure to take into account both the frequency of differences in prices listed on MPF and those paid at the point-of-sale and the magnitude of those differences. This change may help alleviate concerns that Plan Sponsors are penalized for very minimal differences in the display price and the paid price.

Preclusion List Clarifications

Finally, CMS proposes several changes and clarifications to its recently adopted preclusion list standards. Under the existing preclusion list framework, Plan Sponsors will be prohibited from paying for Part D drugs and MA services prescribed or furnished by a provider on the preclusion list. There have been ongoing questions about the implementation of this new screening mechanism, which becomes effective in 2019. The Proposed Rule includes new requirements and clarifications regarding:

  • The process for a provider to appeal preclusion list status;
  • How long a provider will remain on the preclusion list;
  • The obligation to notify members whose providers are added to the preclusion list; and
  • Hold harmless protections for members that receive services from in-network precluded providers.

CMS is accepting comments on the Proposed Rule through December 31, 2018.

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