BMA: CMS Should Lessen Medicare Advantage 2021 Bid Uncertainty

Better Medicare Alliance has followed up on its recommendations to CMS and HHS that take into account the uncertainties Medicare Advantage health plans currently face in making bid submissions for 2021.

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In a letter shared with HealthPayerIntelligence by email, Better Medicare Alliance outlined three actions that CMS can take to desist from amplifying the existing uncertainties.

\u201cThere are specific challenges facing health plans as they prepare bids for 2021,\u201d the organization stated. \u201cThese factors create unprecedented systemic instability that will impact coverage and cost in 2021, unless CMS takes action soon to inform the bid submissions due on June 1.\u201d

Better Medicare Alliance has asked that CMS exclude vaccine and novel treatment costs in 2021 from 2021 bids. This means that these treatments will have to be paid for separately and would not affect premiums as much.

Coronavirus vaccines and novel cures are still in development. Some major pharmaceutical manufacturers are predicting vaccines will not be available until early 2021. Better Medicare Alliance stressed that the uncertainty surrounding the costs for these cures will not be cleared up until after premium rates are due, which could lead Medicare Advantage plans to raise their premiums in order to absorb these unknown costs.

The letter also calls attention to the fact that risk adjustments are based on the previous year\u2019s data. However, claims data in 2020 may be much lower because of the ban on non-urgent and elective surgeries and services. Payers expect that there will be a spike in claims after coronavirus.

Better Medicare Alliance requested that CMS rely on 2019 data for 2021 risk adjustment, instead of using 2020 data.

Finally, the normalization factor\u2014a factor in risk adjustment calculations designed to regulate fee-for-service payments across plans and finalized in the final rate announcement\u2014is still too high, according to Better Medicare Alliance.

\u201cLowering the normalization factor is a straight-forward and equitable way to better ensure accurate and adequate payment to all health plans while stabilizing beneficiary premiums and benefits,\u201d Better Medicare Alliance argued.

The normalization factor did not properly take into account low care utilization in 2020 due to CMS discouraging non-urgent and elective surgeries.

\u201cThe increase in the FFS normalization factor is due primarily to changes in the volume and composition of diagnoses used in the CMS-HCC risk score computation,\u201d CMS stated in its final rate announcement, in response to a commentator who said that the normalization factor should be higher. \u201cThe normalization factor is a projection of the trend in risk scores and calculated independently from the estimation of per-capita spending. Therefore, there is not a direct relationship between the normalization factor and per-capita spending.\u201d

Using five years of historical data also helps guard against the uncertainty of projecting costs, CMS added later in the announcement.

The risk score has increased by 1.5 percent annually, CMS estimated, along with the rising normalization factor. And yet, even in an average year, CMS projections have remained 2.75 percent below the actual fee-for-service risk score since 2015, the agency revealed.

Better Medicare Alliance also noted that the Final 2021 Medicare Advantage Rate Notice had promised guidance on the impact of coronavirus which CMS has not yet released. While the organization briefly commended other CMS measures, including expanding telehealth and other benefits and diminishing providers\u2019 administrative burden, Better Medicare Alliance underscored the grave affect the delay in further guidance could have in adding to present uncertainties.