2020 cost-of-living adjustments for Medicare

The Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) has announced cost-of-living adjustments (COLAs) for Medicare Parts A and B for 2020. In April this year, CMS announced the 2020 amounts for the Medicare Part D standard prescription drug benefit.

For more perspective, read this Milliman Client Action Bulletin.

Pharmacy Briefing: November 2019

Pharmacy Briefing is a monthly summary of select U.S. Food and Drug Administration (FDA) approvals and launches, treatment guidelines and research updates, and other newsworthy events that have the potential to impact commercial drug utilization or costs.


  • Consumers and third-party payers may be eligible for recent class action lawsuit settlement payments
  • Descovy (emtricitabine/tenofovir alafenamide) is approved for use as HIV pre-exposure prophylaxis (PrEP) therapy
  • Allergan reaches $750 million settlement over antitrust charges
  • California bans “pay for delay” drug manufacturer agreements

FDA Approvals and Launches

  • Descovy (emtricitabine/tenofovir alafenamide) is approved for use as HIV pre-exposure prophylaxis (PrEP) therapy.
    • Prior to this approval, only Truvada (emtricitabine/tenofovir disoproxil) was approved for this indication.
    • Generic versions of Truvada are expected to be available in September 2020.
  • Aklief (trifarotene) cream and Amzeeq (minocycline) foam are approved to treat acne vulgaris.
  • Beovu (brolucizumab-dbll) is approved to treat age-related macular degeneration.
  • Alternative delivery system of Fasenra (benralizumab) is approved to treat eosinophilic asthma, pen allows patients to self-administer at home.
  • Reyvow (lasmiditan) is approved for the acute treatment of migraine.
  • Stelara (ustekinumab) receives additional approval to treat ulcerative colitis.
  • Vumerity (diroximel fumarate) is approved to treat relapsing forms of multiple sclerosis.


Consumers and third-party payers may be eligible for recent class action lawsuit settlement payments

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What are the risks and considerations of Medicaid block grants?

In September 2019, the State of Tennessee, Division of Tenncare, released a draft version of Amendment 42 to its Section 1115 Demonstration Waiver, “Tenncare II Demonstration.” With the exception of pharmacy and certain waiver services, the vast majority of Tennessee’s Medicaid program services are funded under this Section 1115 Demonstration Waiver authority. Amendment 42 makes Tennessee the first state to take concrete steps to engage the Centers for Medicare and Medicaid Services in a proposed block grant funding methodology.

A block grant funding arrangement is attractive from a federal financing perspective because it establishes an authorized level of spending, creating an incentive for states to better control costs. States could also find this structure attractive because it includes a savings component if efficient management of the program produces costs below the authorized spending levels.

This paper by Milliman’s Jeremy Cunningham and Mat DeLillo discusses the risks and considerations of changing Medicaid’s funding formula to a general block grant structure.

Medicare Advantage plans filling dental benefits gap

Medicare provides 61 million beneficiaries nationwide with healthcare coverage. Dental services, however, are not included in standard Medicare benefits. As such, seniors and other Medicare recipients can face a dental coverage gap.

Part C Medicare Advantage (MA) plans are helping to fill that gap by covering some dental services as a supplemental benefit. MA dental benefits can range from basic preventive dental care to comprehensive coverage of all major dental services categories, can come as a value-added “free benefit” in a zero-premium MA plan, embedded in an MA plan carrying a premium, or offered as an optional “buy-up” benefit. The dental benefits offered in an MA setting may be administered by the MA plan itself or as part of a contracted arrangement with a dental insurer.

In this article, Milliman’s Joanne Fontana and Jacob Bryniarski, using publicly available data from the Centers for Medicare and Medicaid Services, explore the current landscape of dental benefits offered in MA plans and discuss the ramifications for both insurers and consumers.

What should qualified health plans understand about the CMS Quality Rating System?

The Centers for Medicare and Medicaid Services (CMS) issued a Quality Rating Information Bulletin in August 2019, announcing that public display of 2019 quality rating information by all exchanges will begin during the individual market open enrollment period for the 2020 plan year. The initial guidance regarding this program was released in October 2018, and there have been several deadlines for health plans to meet throughout 2019. However, there may be some uncertainty for both plans and consumers regarding what the quality scores represent, how they are developed, and/or how they may be used now or in the future.

This paper by Milliman’s Dustin Grzeskowiak, Darin Muse, and Daniel Perlman provides some clarity on these topics, general background on the program, and a summary of the 2019 quality information published by CMS in the public use file.

Insurers need to brush up their dental care rate manual

Compared with medical lines of business, dental products typically have more predictable claim patterns, lower overall claim dollar amounts, and much lower risks and severities of catastrophic claims. This predictability can foster complacency in dental rate-setting. Some companies go several years without a robust dental rating manual review or refresh. Companies instead may choose to focus on rating manual updates for higher-risk lines of business, and insurers may simply “trend forward” their dental rating manuals year after year without taking a critical look at what they should change.

It’s important to periodically review dental rating methodologies for actuarial soundness and to maintain competitive rates. If the starting claim costs and pricing factors in a rating manual are stale, premiums likewise will be stale and competitive positioning in the market could suffer as a result.

In this paper, Milliman’s Tom Murawski and Sean Hilton discuss why actuarially sound rating manuals are essential to adequate and competitive pricing of dental insurance rates.