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CMS 2020 Advance Notice of Changes: ESRD Coverage, Part D Costs and More

Published Feb. 11, 2020

The Centers for Medicare and Medicaid Services (CMS) released its Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part D Payment Policies for 2021.

The Advance Notice is an annual release of any upcoming changes in payments and procedures regarding Medicare Advantage (Medicare Part C) plans and Medicare Part D prescription drug plans.

Part I of the notice was released on January 6, 2020.1 Part II was issued February 5.2

Below is a summary of some of the highlights from the release.

Anticipated payment increase to Medicare Advantage plans

The U.S. government proposed a 0.93 percent payment increase to Medicare Advantage insurance plan carriers for 2021.

A finalized rate will be announced in April, following a public comment period that ends on Friday, March 6, 2020.

Increase to Medicare Advantage risk adjustment

In 2021, 75 percent of the CMS risk adjustment methodology will be based on its most recent model, which is up from 50 percent for 2020.

The new model relies on actual patient data to calculate risk. This could contribute to higher payments to Medicare Advantage plan carriers, which could then result in lower premiums and other costs to the plan beneficiaries.

Cost changes to Medicare Part D

Some of the proposed changes could lower prescription drug costs to Part D plan beneficiaries by encouraging the use of generic drugs and allowing beneficiaries advance notice to compare their prescription drug costs.

Standardized Medicare Part D (prescription drug) plan deductibles may increase from $435 for the year in 2020 to $445 annually in 2021.

The initial coverage limit will likely increase from $4,020 in 2020 to $4,130 in 2021. 

New criteria for Star Ratings

New criteria were proposed for use in the annual Medicare Star Ratings that are given to Medicare Advantage and Medicare Part D plans.3

Some of the proposed criteria for Medicare Advantage plans include measurements related to prior authorization for drugs, health outcomes of beneficiaries, home health services utilization and more.

Proposed criteria for rating Part D plans include measurements for generic drug utilization, initial opioid prescribing and customer satisfaction.

Adjustment to the Medicare Advantage coding pattern

As required by law, the CMS adjusts plan payments every year to reflect the differences in diagnosis coding between Medicare Advantage and Original Medicare providers.

For 2021, the coding pattern adjustment will be 5.9 percent, which is the minimum adjustment required for coding intensity. This means that the CMS is looking to ease some of the administrative burden placed on Medicare Advantage plans.

Exclusion of kidney acquisition costs from Medicare Advantage benchmarks

Beginning January 1, 2021, Medicare Advantage organizations will no longer be responsible for the acquisition costs of a new kidney for beneficiaries with End-Stage Renal Disease (ESRD).

These costs will also be excluded from Medicare Advantage benchmarks and covered under Original Medicare instead. 

This means that Medicare beneficiaries who have End-Stage Renal Disease (ESRD) will have the option of enrolling in a Medicare Advantage plan starting in 2021. These beneficiaries are currently limited to Original Medicare coverage in most cases.

If a beneficiary with ESRD joins a Medicare Advantage plan in 2021, the costs for a kidney transplant will still be covered by Original Medicare.

Financial strength of Medicare Advantage in Puerto Rico

An increasing proportion of Medicare beneficiaries in Puerto Rico belong to a Medicare Advantage plan. New proposals have been made to provide greater financial stability to Medicare Advantage plans in Puerto Rico.

These include basing the Medicare Advantage county rates in Puerto Rico on the higher costs of Original Medicare beneficiaries.

Next Steps

The public comment period for the Advance Notice lasts until March 6, 2020.

Comments and questions may be submitted electronically by visiting www.regulations.gov, entering the docket number “CMS-2020-0003” in the search field and following the instructions for submitting a comment. 

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