Featured Health Business Daily Story, June 17, 2014

CMS Gives Plans More Flexibility In Rewards, Incentives Programs

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.

By James Gutman, Managing Editor
June 5, 2014Volume 20Issue 11

One of the least publicized but most welcome changes for Medicare Advantage plans in the final MA and Part D rule CMS released last month (MAN 5/22/14, p. 1) was provisions giving MA plans more flexibility in offering rewards and incentives as part of wellness programs.

The significant changes include authorizing MA plans to grant rewards even if the entire goal has not been reached, instead of the proposed provision limiting such rewards to the “completion of” the program. By making this change under which “MA organizations may reasonably define the scope” of their programs, CMS said in the final rule, it will be possible for “smaller increments of service or activity to be defined as the ‘entire service or activity’” qualifying for a reward.

The agency also clarified that “at this time, we will rely on the MA Organizations to reasonably value the activities/services for which they offer rewards and incentives. In this final rule, we neither identify limits for how often rewards and incentives may be offered nor do we set a maximum monetary value for the rewards and incentives.” CMS did add, though, that if it decides such limits are needed in the future, it will arrange for this through “subregulatory guidance.”

The statements constitute an “important clarification” for MA sponsors, says Mark Joffe, a Washington, D.C.-based attorney who represents numerous MA plans. Joffe tells MAN that by enabling plans to pay rewards for meeting “incremental goals” rather than just for achieving the full target of a difficult program such as weight loss, it will help the sponsors “promote healthy behavior.”

CMS itself in the final rule cited a different example: smoking-cessation programs. “The MA organization may decide to give smaller rewards for each class attended or give one larger reward for completing a set number of classes, as long as the value of the reward reflects the value of the service and adheres to the monetary cap designated by CMS,” the rule states. This cap now is $15 “per instance” and $50 per year for a member, points out Joffe, who notes that the revised CMS policies take effect 60 days after the May 23 publication of the final rule in the Federal Register.

The changes in the final rule weren’t just in one direction, though. CMS said, for instance, that “in response to comments, we have strengthened the regulation to ensure that rewards and incentives programs will not be discriminatory.” The agency explained that its concern is that the program could be used to “unfairly benefit healthier enrollees while excluding or disadvantaging enrollees who are less healthy or have a disability.”

Despite such tightening, it seems clear that MA plans see the changes in the rewards and incentives provisions as overwhelmingly positive.

“It is the flexibility that my clients are excited about, a willingness on the part of CMS to consider different compensation levels and plans for good health behavior,” says, for instance, Linda Armstrong, executive vice president and health insurance practice leader at marketing firm DMW Worldwide, which has many MA clients.

“Some of the plans we work with have been hesitant to incent healthy behavior based on the previous guidelines and the way they were interpreted,” she tells MAN. “This, to them and to us, is a more open look mindset on the subject by CMS.” She adds, “The ability to even incent people who may not complete the full regimen of a healthy activity is a great part of this new [policy]. Sometimes if people know they don’t necessarily have to make it through what looks like a long process and that they will still be rewarded for even going some of the way, they will start. It’s often the getting them started that is the most difficult.”

DMW’s client plans, according to Armstrong, see the net impact of the new guidance as giving them “the ability to put together some exciting new health and wellness planning that they may have been hesitant to do before.”

There weren’t many changes between the proposed and final rule’s provisions on awards and incentives, notes Joffe, but MA plans could benefit from CMS’s changed attitude, as shown in the final rule, that rather than create new restrictions on awards and incentives now, it will look at what plans do and then decide. The agency wants “legitimate incentives for healthy behavior” and not for plans to use these programs as a mere “marketing tool,” he asserts.

Joffe says he has several plan clients that are very interested in expanding use of awards and incentives in light of the new CMS statements. But he cautions that plans will have their own limits on what they can do because of the cost of the rewards programs.

View the final rule, including the new rewards and incentives regulations, which are described in section 25, by visiting the May 22 From the Editor entry at your subscriber-only Web page: www.aishealth.com/newsletters/medicareadvantagenews.

© 2014 by Atlantic Information Services, Inc. All Rights Reserved.

Find out what provisions in the final rule will have the greatest impact on your organization — and how plan sponsors can prepare for the upcoming changes — during AIS’s June 26 Webinar, Final Medicare Advantage/Part D Rule: Impact on Plans, PBMs and Pharma. Click here for more information and to register.

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