Trick or Treat? Expected and Surprising Provisions in the New Medicare Advantage Regulation

On October 26, the Centers for Medicare and Medicaid Services (CMS) released a 362-page proposed regulation that makes changes to three expected areas:

• New telehealth flexibilities for Medicare Advantage (MA) plans.
• New rules for integrating Medicare and Medicaid standards in Dual Eligible Special Needs Plans.
• Updates to the MA and Medicare Part D star measures.

The regulation also proposes process-related changes to the agency’s new Preclusion List, from which MA and Part D plans will deny payment to certain providers. Finally, in a move that surprised many, the agency proposed to revive a 2012 plan to extrapolate Risk Adjustment audit results, which might dramatically increase government collections from MA plans. Below, we discuss these five provisions of the new proposed regulation.

New Telehealth Flexibilities

CMS proposes to implement the Bipartisan Budget Act of 2018 (BBA) provisions that allow MA plans to provide telehealth benefits in 2020 as “basic benefits” (which are treated as Medicare-covered benefits in annual bids). Telehealth benefits are limited to services available under Medicare Part B that are clinically appropriate to be administered through telecommunications and e-technology. Telehealth services may continue to be offered as supplemental benefits as well.

The proposed regulation seeks to ensure that Medicare beneficiaries retain the choice to receive all Medicare-covered services in-person through a traditional provider. When bidding telehealth benefits, the Medicare Advantage plans cannot include infrastructure costs and investments related to building the capacity to offer such benefits. The proposal also seeks to integrate the new telehealth basic benefits with beneficiary education, network adequacy and provider directory requirements. CMS requests comments on several aspects of the telehealth proposal.

Integrating Medicare and Medicaid Standards in Dual Eligible Special Needs Plans (D-SNPs)

CMS proposes to implement provisions in the BBA designed to further integrate Medicare and Medicaid standards in a D-SNPs by 2021; it also establishes unified appeals and grievance processes for D-SNPs (and their parent organizations) that contract with both Medicare and Medicaid. This speaks to long-simmering problems created by D-SNP enrollees having separate processes for grieving and appealing problems related to Medicare and Medicaid benefits.

CMS proposes to fully integrate D-SNP contracts by 2021, while also creating a mechanism to allow for substantially (but not fully) integrated D-SNPs. The agency also proposes to establish authority to impose sanctions, particularly enrollment freezes, for D-SNPs that do not integrate by January 2021. When Medicare and Medicaid appeals standards differ, CMS would allow for the use of the more stringent state requirement. CMS also proposes to allow providers to file appeals on behalf of enrollees.

The draft rule proposes to establish a unified grievance and appeals process for D-SNP members, though the agency notes that it does not believe a fully unified system is feasible for D-SNPs and Medicaid managed care organizations that are not integrated. CMS proposes specific types of assistance that SNPs need to offer members, including assistance to enrollees filing the appeal or grievance for those enrollees who request.

Updates to MA and Medicare Part D Star Measures

The proposed rule builds upon the April 2018 final rule in its efforts to further refine the Medicare Advantage and Part D star ratings programs. CMS is proposing a change to the cut-point methodology for several non-CAHPS measures, and also proposes establishing a process to adjust a plan’s star rating to account for “uncontrollable circumstances,” such as natural disasters. The agency’s overarching goal for the revisions is to ensure ratings accurately reflect true plan performance. To do so, CMS is proposing to use mean sampling based upon the most recent year’s data; this would presumably reduce the influence of outliers on measures and result in longer-term measure stability. To account for the lack of predictability associated with this shift, CMS is also proposing to set maximum allowable movements — both upward and downward. CMS concedes that the proposal would mean changes in excess of the cap would not be reflected — and CMS invites comments on this proposal.

CMS also proposes updates to other measures, including one focused on controlling high blood pressure (to reflect the most recent American College of Cardiology and American Heart Association treatment guidelines) as well as the all-cause readmissions measure (to reflect changes to the measure made by the National Committee for Quality Assurance).

Process-Related Changes to the Preclusion List

Included in its April 2018 regulation, the Preclusion List replaced a controversial policy that required all providers that might prescribe a Part D or furnish a MA-covered service to become a Medicare participating provider. The proposed regulation would make several changes to the originally proscribed Preclusion List approach. Among various approaches contemplated, CMS proposes to streamline the preclusion list appeals and Medicare participation revocation processes. CMS also clarifies that a provider will only be placed on the list after losing a first-level Medicare appeal with CMS. However, an excluded provider would be added immediately to the preclusion list.

CMS also considers potential care disruptions that might result when a provider is placed on the preclusion list. For example, the agency proposes timelines for informing patients under the care of a precluded provider of the provider’s termination from a network. It also would require an impacted plan to deny claims from a precluded provider after 60 days and stipulates that the Medicare beneficiary be held harmless for appropriately denied claims from precluded providers. The hold harmless protection would not apply to claims billed by non-contracted providers. Providers convicted of a felony may be added to the preclusion list for up to 10 years, while reserving the right to lessen that length of preclusion on a case-by-case basis.

Risk Adjustment Audit Extrapolation

CMS is revisiting a controversial proposal first made during the Obama Administration: extrapolating the results of Risk Adjustment Data Validation (RADV) audits. Under an extrapolation methodology, CMS would project the errors discovered during the audit across the entire Medicare Advantage contract. While CMS requests public comment on numerous aspects of the extrapolation methodology, the adoption extrapolation has the potential to exponentially increase the size of overpayment recoveries resulting from a RADV audit. Accordingly, CMS seeks input on when to implement this policy change, how to recoup payment and whether or not to expand the scope of RADV audit appeals. In addition, and in contrast to previous extrapolation proposals, CMS proposes to eliminate a “FFS adjuster” that acknowledges a baseline error rate between traditional Medicare and Medicare Advantage. The elimination of this adjuster would likely further increase the size of government recoveries following an audit.

CMS makes this proposal at a crossroads moment for risk adjustment. In September, a federal court ruled against and vacated a CMS regulation that had expanded the government’s capacity to collect for risk adjustment overpayments. That decision did not address extrapolation. Meanwhile, CMS is gradually phasing out the current risk adjustment approach in favor of an encounter data risk adjustment model that would make RADV audits unnecessary. Medicare Advantage plans continue to express concerns over the encounter data transition, and CMS’s willingness to greatly toughen its stance on the existing risk adjustment could make encounter data somewhat more desirable to MA plans.

Link to the regulation here. The proposed regulation has a 60-day comment period that officially started on November 1, the date of the regulation’s official display in the Federal Register.