On February 1, the Centers for Medicare & Medicaid Services (CMS) released Part II of the 2019 Advance Notice and Call Letter (ANCL). The ANCL is an annual regulatory policy document that describes the agency’s proposed payment and coverage policies for Medicare Advantage (MA) and Part D plans for the upcoming plan year. While normally a single document, this year’s ANCL was separated into 2 parts.

Specifically, on December 27, 2017, CMS released Part I of the 2019 ANCL, which proposed changes to the MA risk adjustment model. Under the 21st Century Cures Act, CMS is required to make changes to the model and allow for a 60-day comment period.

Overall, the policies proposed in the 2019 ANCL reflect significant changes to MA payment policy updates compared to previous years, which may have a direct impact on plan sponsors. Conversely, for Part D, CMS’ highlighted approaches are consistent with the 2018 Rate Announcement and Final Call Letter.

In looking at the MA program, some of the most significant proposals applicable to plan sponsors— including changes to the risk adjustment model, as well as the planned transition to increased use of encounter data—were already discussed in Part I of the ANCL. Overall, the impact of these changes is tied to the demographic and disease profile of each plan. In Part 2, CMS reiterated its new interpretation of uniformity requirements that plans have flexibility in benefit provisions to enrollees with defined disease conditions. CMS is also proposing the extension of supplemental benefits to nonmedical maintenance items if they compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization. This is a marked departure from past policy and is a step towards acknowledgement of the role of non-medical factors in health maintenance. CMS also points out that Special Needs Plan (SNP) authorization will sunset on December 31, and if there is no reauthorization 2019 SNP plans bids will be void. Health plans and beneficiaries could be seriously impacted absent Congressional action.

For Part D, CMS took a more modest approach, continuing to monitor benefit structure and formulary tiering for non-preferred drugs. Looking ahead, plans and manufacturers will want to carefully consider CMS’ proposal to analyze cost-sharing for prescription drugs placed on the non-preferred tiers of Part D formularies. Further, sponsors will want to review CMS’ strategies being considered to manage chronic prescription opioid overuse among Part D beneficiaries.

Notably, the ANCL does not implement major policies outlined in the proposed rule on CY 2019 Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program. This includes but is not limited to the Request for Information on passing through rebates at the point-of-sale, implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA) provisions, elimination of the meaningful difference requirement, and changes in the Part D transition policy. CMS notes in the ANCL that the agency plans to finalize this rule in time for sponsors’ 2019 bid proposal timeline.

MA plans armed with comprehensive, data-driven insights are empowered to understand the potential impact of proposed policy changes, such as the 2019 ANCL, to maintain compliance with the evolving regulatory landscape, and—ultimately, to drive improvement to their quality outcomes and risk score accuracy. To learn more about how Inovalon can support your organization’s goals, contact us by email at info@inovalon.com or by phone at 301.809.4000 x4321.