In April, the Centers for Medicare and Medicaid Services (CMS) released details for the 2020 Medicare Part D pharmacy hierarchical condition categories (RxHCC) risk score model. The model change will affect health plans differently based on demographics and other factors. Overall the model change increased low-income risk scores and decreased non-low-income risk scores.
In this paper, Milliman’s Adrian Clark and David Koenig summarize the changes in member risk scores resulting from the risk score model update. They also quantify the model change using three separate metrics: the change to the model coefficients, the overall change in risk score for a nationwide population by key enrollee characteristics, and the change to the normalization factor.
The state of Colorado has implemented integrated behavioral
healthcare in primary care medical settings under a Centers for Medicare and
Medicaid Services State Innovation Model Award. This program includes about 325
primary care practices across the state and four community mental health
centers where physical healthcare is being integrated into the mental health
A key challenge of this initiative is the financial
sustainability of the integrated care practices after the federal support ends.
In this paper, Milliman’s Steve Melek, Katie Matthews, and Ally Weaver present a payment model that they believe would support the sustainability of integrated care practices while also helping payers to control healthcare costs. They look first at commercial payer spending on primary care and outpatient behavioral services and then examine the costs of building and maintaining an integrated primary care practice from the providers’ perspective.
They build their integrated primary care practice using a
“teamlet” approach. Their design also addresses the primary care physician
shortage by adding a nurse practitioner and physician assistant to the
integrated primary care practice. It includes medical assistants and licensed
practical nurses to complete the medical team.
On January 9, 2018, the Centers for Medicare and Medicaid Services (CMS) announced a new voluntary bundled payment model, Bundled Payments for Care Improvement Advanced (BPCI Advanced). The model started on October 1, 2018, and CMS has indicated that there will be an additional opportunity for new entrants to start on January 1, 2020, with the application period opening in April 2019. BPCI Advanced replaces the current BPCI models, which have been in operation for five years.
The bottom line for organizations interested in pursuing BPCI Advanced is whether the potential rewards for participating offset the risks and costs associated with that participation. The BPCI Advanced program offers proactive industry stakeholders flexibility to develop innovative care and gainsharing models, even if they had not previously participated in BPCI. However, both new entrants and experienced entities in the bundled payment space will need to balance these opportunities with target price and contractual structuring considerations in order to determine how they are best positioned to participate in the program.
In this paper, Milliman’s Daniel Muldoon and Pamela Pelizzari examine several factors, which can influence an organization’s decision to enter BPCI Advanced, and, if appropriate, its decision to share risk with a convening organization.
Ropes & Gray’s Devin Cohen, Evander Williams, and Michael Lampert also co-authored the paper.
For plans offered in 2019, Medicare Advantage organizations
were allowed to provide access to particular benefits for members with certain
disease states under what is known as the Uniformity Flexibility (UF) benefit option.
Milliman’s Julia Friedman has reviewed available information from the Centers for Medicare and Medicaid Services (CMS) on the UF benefit option and found:
- About 3% of Medicare Advantage plans took
advantage of the increased flexibility and offered benefits under the UF option
in contract year 2019, and most of the plans offering UF are general enrollment
- Of the plans that offered UF, about 27% offered
both reduced cost sharing and additional benefits, approximately 44% offered
additional benefits only, and the remainder offered reduced cost sharing only.
- The condition most commonly targeted was
diabetes. A number of other conditions were also targeted, including congestive
heart failure, opioid use disorder, and chronic pain syndrome.
- The most common benefits offered for those with
diabetes were professional services, in particular eye exams, and additional
benefits such as meals and remote access technologies.
To read more about the UF benefit option, including its background and additional summary results, read Julia’s paper “Medicare Advantage Uniformity Flexibility benefit offerings.”
In January 2019, the Centers for Medicare and Medicaid
Services (CMS) released Part II of the 2020 Advance Notice and Draft Call
Letter, which contains the proposed methodological changes for the 2020
Medicare Advantage (MA) capitation rates along with Part C and Part D payment
In the letter, CMS issued a request for comments on the
potential use of risk-based arrangements for pharmacy benefits in contracts
between MA plans and contracted providers. CMS noted that risk-based
arrangements in contracting for pharmacy benefits may be another tool to drive
down the cost of Part B drugs in MA and Part D drugs for MA and Part D plans.
CMS requested information on the barriers, feasibility, benefits, and drawbacks
for these types of arrangements between MA plans and contracted providers.
As part of its August 2018 proposed rule, CMS asked how
accountable care organizations and Part D sponsors in the Medicare Shared
Savings Program “could structure the financial terms of these arrangements to
reward Part D sponsors’ contributions towards achieving program goals.” There was
also a request for information in that rule regarding “barriers to developing
In this article, Milliman’s Matt Kramer, Simon Moody, and Michael Hunter provide a summary of the key issues providers need to consider before taking on Part D risk, an increasingly common ask from MA organizations, and highlight some of the complexities and common barriers observed when advising provider clients on their strategies for Part D risk.
In February, the Center for Medicare and Medicaid Innovation released a Request for Applications (RFA) for the Medicare Part D Payment Modernization Model (PMM). The PMM is a voluntary program whose goal is to reduce Part D federal reinsurance costs by adding new program flexibilities and introducing a two-sided risk-sharing arrangement around federal reinsurance costs. Interested Part D plan sponsors were required to submit an application to the Centers for Medicare and Medicaid Services (CMS) by March 15 in order to participate in the 2020 plan year.
There are many unknowns and questions regarding the PMM RFA. Some of these questions are:
• Who is eligible to participate (and who would want to)?
• What types of formulary or other program flexibility might be offered?
• What costs are associated with participating?
• Will this really result in Part D savings?
• How should plans determine information required for the application without insight on key program aspects?
• How would the benchmark be calculated?
• How could this be affected by the U.S. Department of Health and Human Services (HHS) proposal to move drug rebates to point of sale?
• What are the financial implications to the bid?
• What are the potential risks with participating?
In this article, Milliman’s actuaries discuss the answers to these questions.