by Yvonne Tso, PharmD, MBA
On February 1, 2023, the Centers for Medicare & Medicaid Services (CMS) published the draft Advance Notice of Methodological Changes for CY 2024 (“Call Letter”) beginning a 30-day comment period which will end on March 3, 2023. The final Advance Notice will be published on April 3, 2023. CMS convened a call on February 1, 2023 with stakeholders to highlight the changes.
As part of the methodological changes, CMS is implementing some of the features in the Inflation Reduction Act (IRA) of 2022 that impact cost sharing/copayments for Part B and Part D drugs. In this blog, we are outlining the highlights of the changes and IRA rollouts in 2023 and 2024 and suggestions for how to prepare for the changes and new benefits.
Impact on MA Plan Payments
CMS is rebasing payment rates for CY 2024 by updating its estimate of each county’s fee-for-service (FFS) costs using FFS claims data from 2017 through 2021. The re-basing/repricing rate is yet to be determined; the expected average revenue increase is 1.03% taking into account factors such as growth rate, STAR rating changes, coding pattern adjustments and risk score trend, to name a few. Of note, CMS is proposing a revised Part C risk adjustment model which includes restructured condition categories using the International Classification of Diseases (ICD)-10 classification system (instead of the ICD-9 classification system), and updated underlying FFS data years (from 2014 diagnoses and 2015 expenditures to 2018 diagnoses and 2019 expenditures), as well as revisions focused on conditions that are subject to more coding variation, e.g., evaluation and management (E/M) visits in hospitals and nursing homes vs. office-based, levels of medical decision making (MDM). The proposed new risk adjustment model should reflect more current costs associated with various diseases, conditions, and demographic characteristics. CMS believes that ICD-10 is sufficiently stable for this purpose as it has been in use since 2015.
Star Rating Changes to Part C and D
CMS will update Star Ratings for CY 2024 by providing the list of eligible disasters for adjustment, updates to several measure specifications, and the list of measures included in the Part C and D Improvement measures and Categorical Adjustment Index (CAI) for the 2024[1] Star Ratings.
On December 14, 2022, in proposed rule 4201-P, CMS announced a health equity index (HEI) reward, beginning with the 2027 Star Ratings using measure data from the 2024 and 2025 measurement years, to further encourage MA and Part D plans to improve care for enrollees with certain social risk factors (dual eligibility, low-income subsidies, and disability). CMS also proposed to reduce the weight of patient experience/complaints and access measures from four to two to further align with other CMS quality programs and the current CMS Quality Strategy that promotes quality and outcomes. In addition, CMS proposed to remove caps restricting upward and downward movement of a measure’s cut points compared to the prior year when determining measure-specific-thresholds for non-Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures, among others.
Changes to Risk Adjustment Data Validation (RADV) Audits
On January 30, 2023, CMS announced the final rule (CMS 4185-F) to identify and recoup overpayments to MAO by using a statistical extrapolation methodology in RADV audits beginning with payment year (PY) 2018 but will not use a FFS adjuster. Integritas Medicare has posted a blog on this topic. Please visit https://www.integritasmedicare.com/blog for more details.
Changes related to IRA 2022[2]
Beginning January 1, 2023, IRA requires monthly copayments for covered insulin products not to exceed $35.00 with no deductibles and zero deductible and copayments for ACIP (Advisory Committee on Immunization Practices)-recommended vaccines[3]. CMS is making allowances for covered insulin overpayments if plan sponsors cannot configure the adjudication system to charge the correct copayments.[4]
Beginning January 1, 2023, drug manufacturers are required to pay rebates to Medicare if prices for certain Part B drugs increase faster than the rate of inflation. The Part B inflation rebates for quarters in 2023 and 2024 must be invoiced by September 30, 2025.
By September 1, 2023, CMS will announce the first 10 Medicare Part D drugs selected for the Drug Price Negotiation Program. Maximum fair prices negotiated[5] for these first 10 Part D drugs will go into effect in 2026.
Additional changes to the Part D program will take effect in CY 2024 including no copay for enrollees who have reached the catastrophic phase, average premium increase for Part D will be limited to 6% or less and low-income subsidy under Medicare Part D will be fully available to certain Medicare beneficiaries with limited resources who earn less than 150% of the federal poverty level starting in 2024.
MAOs are well advised to review the rebasing/repricing impact on their revenues from the proposed methodological changes (see above); the same for MAOs with a large frail population and Special Needs Plans that have benefitted from CAI adjustments.
Although the HEI begins with 2027 STAR ratings, the collection years are 2024 and 2025. To do well in the measure, plan sponsors will have to make process changes to their health risk assessments (HRA) and care coordination. Training has to follow process changes. To prepare for the revised RADV audit methodology, please refer to our blog https://www.integritasmedicare.com/blog for preparatory actions. For the CY 2024 IRA Part D changes[6], drug plans should take them into account for their Part D bids due in June 2023.
MAOs that have collected rebates for their Part B drugs, following in the footsteps of Medicare could save them Part B drug expenditures. CMS may or may not post the Part B drugs which prices exceed the rates of inflation. It does not hurt to request CMS to make the pricing data public.
There are less than 30 days to prepare your informed comments and submit them electronically to www.regulations.gov. Enter the docket number “CMS- 2023-0010” in the “search” field, and follow the instructions for ‘‘submitting a comment”.
Integritas can also help you submit the comments; please contact us at 415-596-5277.
[1] Data collection year for 2024 STAR ratings are in 2022-2023. [2] Inflation Reduction Act: CMS Implementation Timelines. [3] Shingles vaccine, one of the most widely used, is on the recommended list. [4] Drug plan sponsors have until March 31, 2023 to make members whole for their overpayments. [5] Member copays will be based on these negotiated prices at the point of sale. [6] Vaccine and covered insulin subsidies were announced after bid finalization for CY 2023.