Featured Health Business Daily Story, Feb. 8, 2016

2016 Outlook: Expect More Regulation of MA as End of Administration Nears, Big Issues Remain

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Sign up for an $87 two-month trial subscription today.

By James Gutman, Managing Editor
January 28, 2016Volume 22Issue 2

All of the signals — as well as the timing of the elections cycle — point to one thing about Medicare Advantage plan regulation this year. As Bruce Merlin Fried, managing partner in the Washington, D.C., office of the Dentons law firm, puts it, “We’re going to see a heightened level of audit and regulatory scrutiny and enforcement in 2016.” He notes that CMS has been “ramping up oversight and enforcement activities” in MA for a while. And the fact that 2016 is not just a big election year but also the last full year of a two-term presidential administration makes now-or-never thinking more likely.

The “sum and substance” of all the overhanging factors is that CMS will be looking, even more than before, to “hold the [MA] industry accountable,” says Fried, who was the health plan overseer in CMS predecessor HCFA during the Clinton administration.

There are several areas in which enhanced MA regulatory scrutiny is likely, both Fried and other industry observers tell MAN. They include provider-network adequacy, risk scores, health risk assessments (HRAs), medication therapy management (MTM) and fraud, waste and abuse (FWA). Insurer consolidations that affect MA, including the big pending deals unveiled last summer (MAN 7/30/15, p. 5), also will get major scrutiny — albeit mainly from the Department of Justice and Federal Trade Commission rather than CMS — but all of the observers queried predict the deals will go through.

Perhaps the hottest area for MA organizations (MAOs) in 2016 is network adequacy. The more robust version of CMS’s Network Management Module (MAN 5/21/15, p. 1) is now operational, says Michael Adelberg, a former top CMS MA official who is senior director at FaegreBD Consulting, so the question is how CMS will use the NMM. By the time the final 2017 Call Letter is out April 4, he tells MAN, we’ll know whether the agency will push ahead with a national provider database for use in assessing network access, or perhaps do something “less centralized” such as issuing specifications for MA plans to use in having their network information “machine readable.”

Medicare Advantage News

Given that whatever CMS does on this issue will affect MAO application and bid intentions, the agency probably won’t put out detailed regulations on network adequacy till mid-2016 and will make any changes effective for 2017, says Danielle Moon, an attorney and former top CMS Medicare plan contracts official who now is specialist leader in the life sciences and health care practice of consulting firm Deloitte. Moon notes that the MA network-adequacy audits CMS expects to conduct this year would be on a pilot basis and thus not used in enforcement, so any 2016 enforcement activity is more likely to involve accuracy of MAOs’ provider directories.

She also points out that last November CMS revised regulations slightly so that MA provider directories would have to be updated only quarterly rather than monthly, an apparent acknowledgment of the difficulty in getting accurate availability information quickly.

Difficulties notwithstanding, Fried expects to see “tightening of network adequacy” standards for MA plans in 2016, with CMS using a “data-driven approach” to assessing adequacy. He cautions that the standards will be applied to both new applicants and the annual submissions of existing MA plans and that if the data suggest access for members is inadequate, MAOs will be told to improve it or have their applications turned down. MAOs, however, he adds, still will be able to have narrow networks as long as the insurers can prove that the networks can serve additional members, calling this CMS stance a “more nuanced approach than before.”

One factor in assessing adequacy, says John Gorman, executive chairman of Gorman Health Group, LLC, will be the model network-access standards developed by the National Association of Insurance Commissioners. CMS realizes that network access is substantially a state issue but wants to ensure that such aspects as waiting time for appointments are taken into account, he says.

More Scrutiny of Risk Scores Is Likely

If network adequacy likely is the biggest regulatory area for MA in 2016, risk scores — including how diagnoses used in risk adjustment are obtained and verified — are not far behind. With continued news articles and reports about alleged upcoding by MA firms, there will be increasing pressure on CMS to perform more audits of MA plans’ risk-score practices, says Adelberg.

Some of this pressure is coming from Congress and consumer advocates, he says. And one result of it might be CMS returning to the concept, which it presented several years ago but hasn’t yet used, of extrapolating the results of risk adjustment data validation (RADV) audits to the entire contracts of MAOs. Adelberg predicts CMS could start such extrapolation this year, as long as its methodology is “cautious,” and would have support from Republicans as well as Democrats if it does.

Such cautious methodology presumably would entail that penalties against MAO contracts found to have overpayments would run less than the hundreds of millions of dollars discussed when RADV audit extrapolation first was proposed years ago.

Consultant Stephen Wood, a principal in Clear View Solutions, LLC, says the threat of using RADV extrapolation may cause enough anxiety to make MA plans more careful in their risk-score practices. The investment community, perhaps with that in mind, doesn’t expect “dramatic things” on RADV extrapolation in an election year, Wood tells MAN.

One way CMS could attempt to get risk adjustment more accurate without RADV extrapolation is via use of the encounter data MA plans have been required to submit for several years. These encounter data will account for 10% of risk adjustment this year, CMS has said, and Gorman forecasts that the agency could propose a bigger percentage for 2017 in the draft Call Letter next month.

The other related issue that could resurface in the Call Letter is the use of home HRAs for obtaining diagnoses used in coding. CMS, of course, has proposed restrictions on HRAs for this purpose several times before but backed off each time in the face of numerous and varied objections ranging from the definition of HRAs to the difficulty of requiring patients to have clinical follow-up.

Brian Collender, specialist leader in the health actuarial practice at Deloitte, tells MAN he envisions a “40% chance” that the agency actually will adopt HRA restrictions for MA in this year’s document. And Gorman, acknowledging he’s predicted this before, forecasts that CMS finally in 2016 will “raise the bar” on HRAs in MA by requiring something like clinical follow-up or “another form of code verification.”

He also predicts that “this will be the year of the medication review.” Speaking of the concepts of MTM and comprehensive medication reviews (CMRs) via use of MTM, Gorman notes that CMS “has banged the drum on this for a long time.” In 2016, he says, there will be a substantial number of audits of CMRs MA plans have done, and they will result in many plans getting only a one- or two-star rating on that scoring measure.

CMS is looking for ways to enhance the usage of MTM, says Deloitte’s Moon, since the vast majority of MA plans just follow the minimum requirements. She tells MAN that the agency’s pilot MTM audits, which it had hoped to conduct last year but instead will do in 2016, will look at concepts for potential enforcement steps, but there won’t be enforcement actions until 2017.

The other big Part D regulatory issue — what CMS now calls “preferred cost sharing pharmacies” — also will get more attention, Collender says, with the agency checking to ensure that materials for beneficiaries exhibit clarity about which are the preferred pharmacies.

Another area in which more regulatory activity is likely for MA is the overall subject of FWA, says Washington, D.C., managed care attorney Mark Joffe, who has numerous MA clients. CMS is revising its program-audit program regarding FWA, he explains, and is particularly interested in how MA plans address such fraud issues as what to do when providers bill too high, including in cases when they coded too high. CMS wants to see what plans are doing to get the money back promptly for the government in these cases, Joffe tells MAN.

© 2016 by Atlantic Information Services, Inc. All Rights Reserved.

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