The Medicare Advantage and Part D Programs

Transcription

1 The Medicare Advantage and Part D Programs American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues March 25, Agenda The Medicare Advantage Program Medicare Part D Research Resources 2 1

2 Introduction to Medicare Advantage Eligibility Benefits Payment Consumer Protections Current Legal Issues 3 The Medicare Advantage Program The MA program is a private-sector option for Medicare beneficiaries to receive their Medicare coverage. Medicare coverage is through a private health insurance plan, subject to CMS regulation and paid by the Medicare program, but privately operated and managed by private insurers. 4 2

3 The Medicare Advantage Program The private sector managed care option for Medicare has been available since 1976, but didn t start to become relevant until the late-1990s (Medicare+Choice). Currently, about 17 million Medicare beneficiaries (33%) receive their benefits through an MA plan. The theory behind MA is that private sector plans can offer benefits more efficiently than the federal government. 5 Medicare Advantage Eligibility Generally, any individual who is entitled to Medicare Part A or eligible to enroll in Medicare Part B can enroll in an MA plan Exception for individuals with End Stage Renal Disease (ESRD) cannot enroll in a plan; can remain in a plan if diagnosed after enrollment. 6 3

4 MA Plan Benefits Beneficiaries are entitled to the standard Medicare A/B Benefit Package. MA plans must offer all Original Medicare benefits. Plans may, however, design cost sharing and benefit design differently than Original Medicare, so long as the benefit design is actuarially equivalent to Original Medicare E.g., SNF three-day prior hospitalization rule 7 MA Plan Benefits Special Rules for cost-sharing: for four benefits, MA plans must offer costsharing that is identical to Original Medicare: Renal dialysis services Chemotherapy administration services Skilled nursing care; and Other benefits specified by CMS 8 4

5 MA Plan Benefits Coverage Decisions In general, MA plans must abide by all CMS national coverage decisions If a particular NCD will result in a significant change in costs compared to the MA plan s bid, it can defer the adoption of the NCD for one year Local coverage decisions MA plans must apply LCDs applicable in their region MA plans that serve multiple regions can choose to apply an LCD across their entire plan service area. 9 MA Plan Benefits Coverage Decisions What about where there is no applicable coverage decision? CMS Manual: An [MA Plan] may adopt the coverage policies of other [MA Plans] in its service area. If none, the [MA Plan] [m]ust make its own coverage decision. CMS position remains: if a beneficiary is entitled to an item or service under Original Medicare, they must get it from their MA plan. 10 5

6 MA Plan Payment Four different payment regimes The current payment methodology The star rating program Risk Adjustment 11 MA Plan Payment The history of private sector plan payment : Payment to MA plans based on 95% of AAPCC : Payment to MA plans based on one of three payment buckets ; plans received the highest of the three : Correcting for BBA underpayments 2011 present: Correcting for MMA overpayments 12 6

7 MA Plan Payment Methodology Plans submit a bid to CMS that reflects their revenue requirements to offer the standard A/B Benefit package to the average Medicare beneficiary in the county. Plans that bid below the benchmark receive their bid amount PLUS 75% of the difference between the bid and the benchmark This 75% rebate must be given to plan enrollees in the form of extra benefits or buydown of cost sharing Plans that bid above the benchmark get paid the benchmark, but must charge beneficiaries a premium to make up the difference 13 Star Rating Program An MA plan can receive a bonus payment if it scores well (four or five stars) on a five-star rating system. 5% bonus for 4 or 5 star plans 14 7

8 Risk Adjustment The BBA introduced the concept of risk adjustment to Medicare managed care plan payments. Plans bid assuming a beneficiary with a 1.0 risk score. CMS adjusts plan payments based on beneficiary medical records. 15 Risk Adjustment CMS has developed a sophisticated risk adjustment model that has been perfected over time. Beneficiary medical records map to a hierarchical condition category (HCC) that predicts beneficiary costs based upon a weighting factor that is applied to the benchmark to determine payment rates. 16 8

9 Risk Adjustment Observation regarding risk adjustment: whereas the prior (pre-bba) payment system arguably encouraged plans to enroll healthy enrollees, the current system should be agnostic regarding the risk score of plan enrollees. Nevertheless, CMS has noted for years the discrepancy between Original Medicare beneficiary risk scores and MA plan risk scores. CMS has developed the risk adjustment data validation (RADV) program to ensure that beneficiary HCC assignment is supported by medical records. 17 MA Beneficiary Protections MA Enrollees are guaranteed a series of plan protections. Plans cannot deny coverage based on health status factors. Plans have flexibility to design provider networks, but benefits must be available with reasonable promptness And emergency services must be based on a PLP standard Quality improvement process Meaningful grievance mechanisms An appeals process for organization determinations 18 9

10 Current Legal issues Probably the biggest issue in MA in 2014 is the issue of network adequacy: United Health and provider network in Connecticut UPMC and Highmark dispute in western Pennsylvania CMS standard: plans can design their own networks and as long as benefits are available with reasonable promptness, CMS will not intervene. 19 Current Legal Issues Pre-Emption remains a significant issue: States regulate insurers But CMS regulates the MA marketplace So: to what extent can a state regulate a Medicare Advantage Plan? 20 10

11 Current Legal Issues Pre-MMA standard: State laws affecting plans pre-empted only to the extent that the state laws were inconsistent with Part C standards Post-MMA standard: All State laws with respect to MA plans are pre-empted unless they relate to licensure or solvency. Some cases: Harris v. Pacificare; Pacificare v. Rogers; Uhm v. Humana 21 Medicare Part D Overview of Part D The Part D benefit design Definition of covered Part D drug Formulary requirements New developments 22 11

12 Overview of Part D Like Medicare Advantage, Part D is a defined contribution model rather than a defined benefit model. Unlike the MA option, beneficiaries may only receive drug coverage by enrolling in a private plan; there is only limited drug coverage in Original Medicare. Although there is a standard Part D benefit design, its function is more as an actuarial benchmark to bid against rather than an actual plan; fewer than 10% of plan enrollees select the standard Part D benefit. 23 The Part D Benefit Design The standard Part D benefit design: Annual deductible ($320 in 2015) 25% cost sharing for first $2,850 in drug costs Coverage gap between $2,960 and $4,700 in drug costs. The coverage gap, however, is being phased out over 10 years based on ACA changes: 50% manufacturer discount and phase-down of cost-sharing requirement over 10 years. Catastrophic coverage 24 12

13 Part D Covered Drug The entitlement in Part D is to coverage of Part D covered drugs. Four components to definition: Drug must be approved by FDA Can only be dispensed pursuant to a prescription Must be dispensed for a medically accepted indication Coverage not otherwise available under Part A or Part B 25 Part D Covered Drug Current issues Coverage under Part D where coverage is available under another part of the Medicare program Especially incident to Part B drugs: coverage may be available under Part B in some regions of the country and Part D in others. Uniformity of SAD list? 26 13

14 Part D Covered Drug Current Issues Medically Accepted Indication Statute says, with regard to Part D Definition, and such term includes a drug when prescribed and dispensed for a medically accepted indication. Medically-accepted indication is generally off-label use of a drug Question: does a drug used for an off-label indication that is not a medically-accepted indication nevertheless qualify for Part D coverage if it meets the other prongs of the definition? Compare Layzer v. Leavitt; Kilmer v. Leavitt 27 Formulary Requirements The basic rule of Part D is that a plan must cover at least two drugs in every category or class, although not every drug in every category or class. A plan may have a formulary. CMS may not require or institute a formulary, and cannot interfere in negotiations between manufacturers, Part D plans, and pharmacies

15 Formulary Requirements Requirements regarding formulary design Design cannot be one that discourages enrollment in the plan. Requirements regarding development of formulary CMS must approve formulary Plans that adopt USP Model Formulary are deemed to have CMS approval Plans must include at least two drugs in every category or class Six protected class rule 29 New Developments in Part D In January of 2014, CMS issued a major regulation regarding the Part D program that would have fundamentally altered the program. Policy changes included removing protected class status for some Part D drugs; repealing non-interference clause In light of substantial criticism and push-back against CMS on the rule, the agency pulled back and did not finalize many provisions of the proposed rule. CMS has also expressed concerns about preferred pharmacies (or, in the agency s preferred nomenclature: pharmacies offering preferred cost sharing ). Concern is that not all beneficiaries have access to preferred pharmacies; CMS has considered several options to address. New Hepatitis C therapies Plans were extremely aggressive in approaching CMS in 2014 New risk adjustment model proposed for 2016 plan year 30 15

16 Research Resources for Medicare Advantage and Part D Statute Social Security Act (Part C) Social Security Act 1860D D-43 (Part D) Regulations 42 C.F.R. Part 422 et. seq. (MA) 42 C.F.R Part 423 et. seq. (Part D) Manuals Medicare Managed Care Manual Medicare Part D Manual Annual Call Letter 2016 Proposed call letter released February 20, 2015 and will be finalized April Conclusion Q&A 32 16