Radar on Medicare Advantage

As part of a late-term rulemaking blitz, the Trump administration on Nov. 20 finalized a controversial HHS rule designed to eliminate the use of drug manufacturer rebates in Medicare Part D and ensure that such rebates are passed through to consumers at the point of sale. Although the rule could face legal challenges and/or be reversed by the incoming Biden administration (see box, p. 6), Medicare Advantage Prescription Drug (MA-PD) plan sponsors preparing their 2022 plan year bids must act as though the rule will take effect and may seek ways to maintain $0 premium and supplemental benefit offerings without the availability of rebate funds, industry experts advise.

Effective Jan. 1, 2022, the final rule (85 Fed. Reg. 76666, Nov. 30, 2020) will make significant changes to the Anti-Kickback Statute by removing safe harbor protections for rebates paid by manufacturers to sponsors of Medicare Part D plans. At the same time, it establishes a new safe harbor protecting certain pharmacy point-of-sale price concessions provided to Part D sponsors and Medicaid managed care organizations, such as those based on formulary placement. The rule was first proposed in February 2019 but met with opposition from pharmacy benefit managers and managed care stakeholders, and it was ultimately withdrawn after several entities (including the Congressional Budget Office and the CMS Office of the Actuary) projected it would increase government spending.

✦ The White House Office of Management and Budget (OMB) at press time had concluded its review of HHS’s controversial “rebate rule” that would effectively eliminate pharmaceutical manufacturer rebates in Medicare and Medicaid. The original rule, introduced by HHS in January 2019, was withdrawn after regulators estimated that it would increase federal spending by nearly $200 billion over 10 years (RMA 7/18/19, p. 1). President Donald Trump in July directed HHS to “complete the rulemaking process.” That executive order, however, stated that HHS must publicly certify that the policy would not increase premiums, federal spending, or Medicare beneficiaries’ out-of-pocket costs, “effectively meaning that the new rule currently at OMB could look different from the original,” wrote Citi analyst Ralph Giacobbe on Nov. 17. If finalized, it is likely to face legal challenges and “may never be implemented or may be reversed by the incoming Biden administration,” suggested Evercore ISI analysts on Nov. 19. “Still, if it were implemented, there would be no direct impact on the economics of the drug channel for PBMs, Part D plans, distributors or drug manufacturers (the rule has been supported by manufacturers).” In a statement from the Better Medicare Alliance, BMA President and CEO Allyson Schwartz warned, “It would be deeply unfortunate to see CMS risk undermining its own progress in lowering health care costs for seniors in the final weeks of the current administration with finalization of this ill-conceived rule.” Visit https://bit.ly/36OUA3j.

✦ Kaiser Foundation Health Plan of Washington, formerly known as Group Health Cooperative (GHC), agreed to pay $6,375,000 to resolve allegations that it knowingly submitted invalid diagnoses for Medicare Advantage beneficiaries in order to receive higher payments from the Medicare program, according to the Dept. of Justice (DOJ). The allegations were originally made in a False Claims Act lawsuit filed by former GHC employee Teresa Ross. The DOJ said its intervention in the suit reflects its “emphasis on combating health care fraud.” The matter was handled by the DOJ Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of New York and the HHS Office of Inspector General. It did not involve any determination of liability. Visit https://bit.ly/3nyD22b.

Select publicly traded insurers reporting third-quarter 2020 earnings this past month predicted big gains in Medicare Advantage enrollment during the current Annual Election Period (AEP), and noted that growth in government products helped offset the impact of commercial losses and COVID-19 costs in the recent quarter.

Reporting third-quarter 2020 earnings on Nov. 6, CVS Health Corp. said a 3.5% year-over-year increase in overall revenues was due in part to growth in its Health Care Benefits segment, which includes Aetna. Revenues in that segment rose 8.8% from the prior-year quarter to $18.7 billion, primarily driven by membership increases in Aetna’s government products and the favorable impact of the return of the Affordable Care Act health insurer fee for 2020. Those gains were partially offset by the divestiture of Aetna’s stand-alone Medicare Part D Prescription Drug Plans (PDPs) — a condition of its acquisition by CVS — membership losses in commercial products, and COVID-19 related investments, CVS Health explained.

As the Medicare Advantage program continues to expand at a relentless pace, Aetna in recent years has made growing MA a key strategic priority and identified Medicare Part D as an important enabler of its overall Medicare growth strategy. This month marks the two-year anniversary of Aetna’s acquisition by CVS Health Corp., and the insurer anticipates a strong 2021 Annual Election Period (AEP) driven by $0 premium offerings, increased integration with CVS Health and differentiated MA plan offerings that include plans designed to complement health care coverage for veterans.

AIS Health spoke with Aetna Medicare President Christopher Ciano about the company’s trajectory in MA and how its portfolio has evolved in recent years.

Two years after CMS proposed its long-awaited alternative to an “overly prescriptive” Obama-era Medicaid rule and just days after U.S. voters elected Joe Biden as their next president, the Trump administration on Nov. 9 issued the 2020 Medicaid & CHIP Managed Care final rule. For Medicaid managed care organizations, the rule contained several positives, such as clarifying how much states can adjust capitation rates during a rating period and prohibiting retroactive changes to risk-sharing mechanisms in MCO contracts, industry experts tell AIS Health.

The 289-page final rule finalized many policies contained in the Notice of Proposed Rule Making issued in November 2018, which was intended to reduce administrative burden, streamline the 2016 managed care regulatory framework and “promote transparency, flexibility, and innovation in the delivery of care” (RMA 11/15/18, p. 1). It was compiled with the input of a work group CMS formed with the National Association of Medicaid Directors and state Medicaid directors.