How to Spend: MLR and COVID-19

I am reminded of the effect the public health emergency (PHE) has had on 2020 plan spending on a weekly basis. I field numerous questions on what creative spending would fall in line with the permissible flexibilities previously issued by the Centers for Medicare & Medicaid Services (CMS). In my opinion, the most creative Medicare Advantage (MA) and Part D stakeholders are in sales and marketing, so perhaps those folks need to have a seat at the table!

In a July post, I mentioned benefit enhancements as the topic became more prevalent in my discussions. I am hard-pressed to identify any plan sponsor who could have forecasted the PHE or the benefit utilization stats that are present today.

This leads us to the importance of medical loss ratio (MLR) and the CMS requirements surrounding it. Section 1857(e)(4) of the Social Security Act (“the Act”) requires MA organizations to maintain a MLR of at least 85%. CMS knows this is a concern of the entire industry, and released some Q&As in July regarding spending related to COVID-19.

More recently, CMS issued an enforcement action related to a MA organization’s failure to maintain a MLR of 85% for three years. This does not happen often, but paired with the PHE, it is a stark reminder that many MA organizations may find themselves under the 85% threshold for the first time this year. My tip: field those creative spending solutions, align them with CMS’ permissive actions guidance, and notify your account manager.

COVID-19 Permissible Activities and CMS Enforcement

On May 22 of this year, the Centers for Medicare & Medicaid Services (CMS) informed the industry via memo they will exercise its enforcement discretion and adopt a temporary policy of relaxed enforcement with the prohibition on mid-year benefit enhancements, such as expanded or additional benefits, or more generous cost-sharing, as the enhancements are provided in connection with the COVID-19 outbreak. These enhancements must be beneficial to enrollees and provided uniformly to all similarly situated enrollees. They will do this until is determined that the exercise of this discretion is no longer necessary in conjunction with the COVID-19 outbreak.

What is a mid-year benefit enhancement? Back in the old days, these were permissible changes to a plan benefit. An excerpt from revision 87 of the Medicare Managed Care Manual Chapter 4, dated June 8, 2007 reads:

Excerpt from CMS MMCM manual Chapter 4 defining mid year benefit enhancements

As a result of the public health emergency, many Medicare Advantage Organizations (MAOs) have made the decision to enhance benefits through the end of the year. You see this communicated on plan websites, taking the form of enhanced benefits or waived cost-sharing. However, these permissible activities may only be provided in connection with the COVID-19 outbreak. As it stands now, the current public health emergency has been extended a second time, set to expire on October 23, or earlier if terminated by Secretary Azar.

Mid-year benefit enhancements prior to their prohibition were typically put into effect for the remainder of a contract year. So, the question is if the public health emergency is not renewed after October, will the agency still exercise enforcement discretion relative to a mid-year benefit enhancement put into place through the end of this contract year? Or, will the expectation be that MAOs reconfigure their systems to return back to their original benefit design?

I recently posed this question during CMS office hours. Mr. Demetrios Kouzoukas, Principal Deputy Administrator of CMS and Director of the Center for Medicare, acknowledged this is a question that has been received in the past and the agency is working to develop a response. Without additional commitment or clarity, MAOs should prepare to flip the switch back as the permissible activities are currently only permissible while the public health emergency is in place. Keep your eyes open for additional guidance released by the agency.

You Don’t Need to Drink the Sea: 2021 Program Audit Protocols 30-day Comment

On June 4, 2020, the Centers for Medicare & Medicaid Services released 95 ever-loving pages of industry comments received for the draft 2021 Program Audit protocol. The document includes their responses and actions taken, including what edits they have made to the 60-day package released a few months ago. In my opinion, there is a general feeling of streamlining and simplification to focus on the agency’s areas of priority. 

As I was pulling out clarifications that I am unsure will end up in any FAQ, methodology, or audit process document, I realized the entire responses document should have a proper place on the shelf along with the finalized protocols. Why? Because not all clarifications provided resulted in changes to instructions or data request information. This document can be helpful in communicating expectations to employees and first tier entities alike. 

While it seems like a lot to digest, there was no sign of eliminating an entire review area, or creating a new care delivery branch of review, which is the current focus at the moment due to the public health emergency. If you reviewed the 60-day package thoroughly, the 74-page crosswalk posted with the 30-day package could be your best friend. Therefore, take the comments, hold a meeting, divide and conquer to make sure your business partners and colleagues understand the changes. Comments on this collection must be received by July 6, 2020.

PRA Listing: 2021 ANOCs and EOCs and Network Adequacy

Over the past month or so, we’ve seen a number of items posted in the Paperwork Reduction Act, or PRA, listing. Today I’m focusing on a couple and provide some thoughts.  

On April 6, the Centers for Medicare & Medicaid Services (CMS) posted the Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) models along with their summary of changes based on the 60-day Federal Register public comments. The supporting statement packaged with the ANOCs outlined the standard information, including estimates of labor burden. The agency estimates 732 Medicare Advantage (MA) Organizations and 63 Part D sponsor contracts will be responsible for producing ANOCs and EOCs. Hours and wage estimates and total burden of hours are also included. They estimate it will take an average of 12 hours to develop and submit the required information to CMS. This estimate has to include different factors, such as number of plan benefit packages a sponsor has, and the fact that ANOCs are much smaller than EOCs. They again anticipate the average EOC will be 238 pages. 

In recent years, these documents have been posted as final, but are followed by supplemental memoranda with additional corrections. If you notice anything substantively amiss in these documents, alert the agency now, as it may save you time and corrections later. 

Also, on April 6, CMS posted CMS-10636 regarding the triennial network adequacy review. CMS reviews MA provider networks on a 3-year cycle, unless there is an event that triggers an intermediate full network review. According to the agency, when selecting contracts for the triennial review period, they will pull a random sample from the list of active contracts, including contracts that have never undergone a full network review and other active contracts, regardless of when the contract’s last full network review occurred in the Health Plan Management System (HPMS). CMS will review all contracts that have never undergone a full network review in HPMS. In the posted package, CMS removed some references to procedural changes, and they note there are no changes to network adequacy requirements. 

This will be an interesting one to follow, looking at the numbers. As part of the network reviews, they expect to review 140 of an estimated 633 contracts in the first year of the triennial review cycle. Keep in mind, between June 2018 and June 2019, CMS performed full network reviews on 438 of the active contracts at that time. 

Another interesting factor is that CMS has proposed in CMS-4190-P to codify network adequacy methodology for MA plans, including proposing to reduce the required percentage of beneficiaries that must reside within the maximum time and distance standards from 90% to 85%. It is unclear if CMS has data showing if this slight adjustment would help sponsors meet the adequacy requirements, as each rural area tells its own story. We shall see if this provision is finalized.

Compliance is the Conscience

I’ve been struggling to consider what might be helpful, applicable information to apply during this health crisis. The questions abound: Should we still do credentialing? Do I need to send written appeal responses? When will program audits start up again? How long do waivers last?

After weeks of reading updates, guidance, the new law signed on Friday, and emails from just about every retail store I’ve patronized, I’ve returned to the foundation to offer advice for my buried audience. It is the first principle as outlined in the Code of Ethics for Health Care Compliance Professionals published by the Health Care Compliance Association

Principle I, Obligations to the Public: “Health care compliance professionals should embrace the spirit and the letter of the law governing their employing organization’s conduct and exemplify the highest ethical standards in their conduct in order to contribute to the public good.”

It is incredibly difficult for even the most astute to read through the CMS Current Emergencies guidance. Who is keeping track of the changes and business decisions your organization and vendors are considering? As CMS said on a recent industry call for PACE and states, they understand the desire for everyone to get more guidance for every specific scenario, but this is a rapidly evolving circumstance. The bottom line: you need to evaluate how to meet your obligations with consideration to health and safety needs. 

The compliance officer is the conscience of the organization. And right now, public health is paramount like I’ve never seen, and like our parents have never seen. Therefore, when reviewing memos, waivers, and fact sheets, please let your obligations to the public, now more than ever, drive your decision-making. The public includes not only your members, but also your employees, contractors, and your surrounding community. Document any modifications and rationale with start and end dates. This is not the time to stop the presses: CMS reminded us on March 10 that business continuity plan requirements are codified. This is the time to get creative.