Individual stop-loss is now optional for Next Generation ACOs

Next Generation Accountable Care Organizations (NGACOs) now need to choose between whether they want to have their annual financial reconciliation based upon capped claims or uncapped claims. Previously, they didn’t have a choice and reconciliations were based upon capped claims. For some NGACOs, the choice between an annual financial reconciliation based upon capped claims or uncapped claims could have a significant impact. Milliman consultants provide more perspective in this paper.

CMS proposed rules would impact Part D drug costs and plan designs

On November 16, 2017, the Centers for Medicare and Medicaid Services (CMS) released 713 pages of proposed changes to Medicare Advantage (MA) and the Medicare Part D prescription drug benefit. The proposed changes (file code CMS-4182-P) would take effect for contract year 2019 and are intended to manage utilization of opioids, reduce costs, and provide more plan choices. The updates present major changes to the way the programs operate. According to CMS, “the proposed changes would result in an estimated $195 million in savings a year for the Medicare program over 5 years (2019 through 2023).”

Some significant impacts on Part D that plans need to be aware of would include:

Midyear formulary changes: Plans would have more flexibility to immediately incorporate generic drugs as soon as they are available.

• Plans could assess the cost impact of each new generic drug based on member utilization to weigh against administration and disruption issues.
• This proposed rule could be significant, especially if the increases in generic approvals continue. According to Milliman’s internal research, there were about 14 and 31 significant first generic launches in 2015 and 2016, respectively. And this year the U.S. Food and Drug Administration (FDA) has continued to speed up the generic approval process.

Opioid treatment: Plans would be able to restrict access and manage opioid utilization. The proposed rules codify and expand upon the current Part D Opioid Drug Utilization Review Policy and Overutilizing Monitoring System.

Biosimilars: Plans would be able to categorize certain low-cost biosimilars as generics for low-income subsidy (LIS) cost sharing and non-LIS catastrophic cost sharing. Because the LIS copays will be $3.35 for generics and $8.35 for brands in 2018, this is likely not to have a large impact on 1) lowering member costs or 2) increasing biosimilar utilization.

Point-of-sale costs: The proposal includes a request for information (RFI) regarding applying price concessions and rebates at the point of sale, which could lower member cost sharing when taking brand medications that offer rebates, but may increase premiums and government cost.

Meaningful differences testing: With the elimination or modification of this testing, plans may be able to add more enhanced alternative Part D plans to their product portfolios in the same region.

A link to the Fact Sheet issued by CMS can be found here. CMS is accepting comments until January 16, 2018.

Regulatory roundup

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

CMS issues revocation notice bulletin
The Centers for Medicare and Medicaid Services (CMS) released a notice by issuer or third party administrator for employer/plan sponsor of revocation of the accommodation for certain preventive services. The bulletin addresses notice requirements in the recently published interim final rules addressing the religious and moral exemptions from the requirement to provide contraceptive benefits in group health plans and health insurance coverage.

For more information, click here.

Ninety delay of applicability date for disability claims procedure amendments
The Department of Labor (DOL) has announced a 90-day delay of the applicability date for ERISA plans to comply with a final rule amending the claims procedure requirements applicable to disability benefits.

The three month delay of the applicability date announced today is intended to give interested stakeholders the opportunity to submit, and for the DOL to consider, data and information related to concerns by some insurance industry and employer groups, and some members of Congress, that the claims procedure amendments will drive up disability benefit plan costs, cause an increase in litigation and, in so doing, impair workers’ access to disability insurance benefits.

The final rule amending the disability benefits claims procedure requirements for ERISA plans was published in the Federal Register on Dec. 19, 2016. The amendments were to become applicable to claims for disability benefits filed on or after Jan. 1, 2018.

For more information, click here.

Impact of Mental Health Parity and Addiction Equity Act

What has happened to utilization and costs for mental health and substance use disorder benefits as the mental health parity laws and associated rules were slowly rolled out? This paper by Milliman consultants presents an analysis of healthcare utilization and cost patterns during the six-year period from 2008 through 2013 and suggests that the Mental Health Parity and Addiction Equity Act has driven increases in access to, and benefit richness for, mental health and substance use disorder benefits.

Financial implications for Next Generation ACO Program

The Centers for Medicare and Medicaid Services has released the 2016 financial results for each of the Next Generation Accountable Care Organizations (NGACOs). The financial results may influence key decisions that each NGACO needs to make very soon regarding the magnitude of their risk parameters for 2018.  In this article, Milliman consultants explains those results and offer considerations for NGACOs to think about.

Medicare Advantage proposed rule could have a profound impact on product development for 2019 and beyond

The Medicare Advantage (MA) and Prescription Drug (PD) Benefit Program proposed rule for 2019 discusses important policy updates that may have a significant impact on the product development process for 2019. The proposed changes provide new opportunities for plans to innovate benefit designs and tailor packages for selected enrollees. The Centers for Medicare and Medicaid Services (CMS) is also requesting feedback on Part D rebates and price concessions that could have a profound impact on the way formularies and pharmacy benefits are managed. Finally, we also highlight additional proposed changes in enrollment policies that may result in strategic implications.

The key advantage for product development is CMS’s proposal to discontinue the use of “meaningful differences” requirements. By removing the restriction that limits the number of plans a Medicare Advantage Organization (MAO) could offer, MAOs would be in a position to develop a more diverse portfolio of products. In addition, plans can focus on creating product designs that are meaningful to beneficiaries instead of making benefit decisions based on the results of the CMS out-of-pocket cost (OOPC) calculator prescribed methodology. CMS did not propose waiving the Total Beneficiary Cost (TBC) requirements, meaning that plans would still need to rely on the OOPC methodology to determine year-over-year plan changes.

CMS is proposing additional flexibility in the benefit design process. One proposal would allow plans to offer different cost sharing and/or additional supplemental benefits for specific subsets of enrollees based on defined health conditions (e.g., zero cost share for diabetic supplies for patients diagnosed with diabetes). In addition, CMS also proposes to allow additional flexibility with plan designs for segments within plans by being able to offer different supplemental benefit packages by segment. Finally, CMS also discusses the possibility of additional maximum out-of-pocket (MOOP) levels and associated cost-sharing limits to allow plans a greater range of options versus the currently prescribed mandatory levels and to encourage plan offerings with lower MOOP limits.

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