红领巾瓜报

This week, our In Focus section reviews the Centers for Medicare & Medicaid Services (CMS) for the Medicare Advantage (Part C) and Part D Prescription Drug Programs published on January 31, 2024. Alongside the advance notice, CMS published draft CY 2025 . This guidance includes CY 2025 payment updates as well as additional proposed technical and methodological changes to Medicare Advantage (MA) and Part D. CMS previously released a  in November 2023 that included proposed policy changes to MA and Part D for CY 2025.

The proposed payment policies signal CMS is working to ensure the stability of MA and Part D programs, while also addressing concerns about the appropriateness of payments to plans. Furthermore, CMS remains highly focused on the impact methodological changes could have on payment to plans that enroll beneficiaries who are dually eligible for Medicare and Medicaid services. Proposals to align quality measures across programs and strengthen the measures used to assess the quality of beneficiary experiences and services provide directional information on CMS鈥檚 plans for the forthcoming annual payment rules for 2025.

Following are highlights from the 2025 Advance Notice and Part D Redesign Program Instructions. The deadline for submitting comments is Friday, March 1, 2024. CMS will announce the MA capitation rates and final payment policies for 2025 no later than April 1, 2024.

Payment Impact on MA: CMS is projecting that federal payments to MA plans will increase on average 3.7 percent from 2024 to 2025. The increase reflects multiple factors, including growth rates in underlying costs, change in Star ratings, continued implementation of the new risk adjustment model and fee for service (FFS) normalization, and risk score trends. Actual impacts of the proposed payment policies will vary from plan to plan.

Risk Adjustment: CMS is proposing to continue its three-year phase in of the updated Part C risk adjustment model, first published in the CY 2024 Rate Announcement. In CY 2025, risk scores will be calculated by blending 67 percent of the risk score using the 2024 CMS hierarchical condition categories (HCC) risk adjustment model and 33 percent using the 2020 CMS-HCC risk adjustment model. In addition, the MA risk score trend is being calculated separately under each model, then blended by the respective percentage to determine a CY 2025 risk score trend of 3.86 percent.

CMS is proposing a new methodology for calculating the FFS normalization factor to accurately address the effects of the COVID-19 pandemic without excluding any years of FFS risk scores.

CMS also proposes to apply the statutory minimum MA coding pattern difference adjustment factor of 5.90 percent for CY 2025.

Frailty Adjustment for FIDE SNPs and PACE Organizations. For CY 2025, CMS is proposing to blend the frailty score calculated for fully integrated dual eligible (FIDE) special needs plans (SNPs) consistent with the phase-in of the 2024 CMS-HCC model. The FIDE SNP frailty score is the sum of:

• 33 percent of the score calculated with the 2020 CMS-HCC model frailty factors
• 67 percent of the score calculated with the 2024 CMS-HCC model frailty factors

CMS also intends to use only the full Medicaid frailty factors to calculate frailty scores for FIDE SNP enrollees in order to align with the requirement that FIDE SNPs must have exclusively aligned enrollment, meaning that enrollment in FIDE SNPs will be limited to full-benefit dually eligible individuals, beginning in CY 2025. CMS will use the frailty factors associated with the 2017 CMS-HCC model to calculate frailty scores for Program of All-Inclusive Care for the Elderly (PACE) organizations in CY 2025.

Star Ratings: CMS reiterates its plan to further implement the 鈥渦niversal foundation鈥� of quality measures. CMS first announced this subset of metrics in 2023, with the goal of aligning a core set of metrics across the agency鈥檚 programs while continuing to allow for program specific measures. CMS reminds plans that beginning with the 2024 measurement year (2026 Star Ratings), the weight of patients鈥� experience, complaints, and access measures will be reduced from a weight of four to a weight of two.

CMS proposes several updates and refinements to the Star Ratings program, including:

• Retiring the Care for Older Adults 鈥� Pain Assessment (Part C) measure, starting as early as the 2025 measurement year
• Making changes to the Plan Makes Timely Decisions About Appeals and Reviewing Appeals Decisions (Part C) measures for cases submitted electronically to the independent review entity
• Adding Social Need Screening and Intervention (Part C) to the display page for the 2025 Star Ratings and giving notice that National Committee on Quality Assurance (NCQA) is evaluating the potential addition of a utilities insecurity screening and intervention rate for this measure in the future
• Adding Depression Screening and Follow-Up for Adolescents and Adults (Part C) and Adult Immunization Status (Part C) to the display page for the 2026 Star Ratings
• Updating the Members Choosing to Leave the Plan (Part C and D) measure for the 2026 Star Ratings
• Possibly adding the Initiation and Engagement of Substance Use Disorder Treatment (Part C) and Initial Opioid Prescribing for Long Duration (IOP-LD) (Part D) measures
• Revisions to the Care Coordination (Part C) measure, and other changes through future rulemaking

Part D Impact

The advance notice reviews the significant changes to the Part D benefit occurring in 2025 as required in the Inflation Reduction Act (IRA). The IRA鈥檚 Part D changes effective in CY 2025 include:

• Eliminating the coverage gap phase. A newly defined standard Part D benefit will consist of three phases: annual deductible, initial coverage, and catastrophic coverage. There is no initial coverage limit, and the initial coverage phase will extend to the maximum annual out-of-pocket threshold, after which the catastrophic phase begins.
• Setting the out-of-pocket threshold at $2,000.
• Sunsetting the Coverage Gap Discount Program and implementing of the Manufacturer Discount Program (Discount Program).
• Making changes to the liability of enrollees, plans, manufacturers, and CMS.
• Updating the definition of incurred costs to include, among other categories of costs, supplemental coverage and other health insurance, which was previously excluded. Manufacturer discounts provided under the Discount Program also will be excluded.
• Premium stabilization will continue to be in effect.

CMS is recalibrating the RxHCC risk adjustment model to account for IRA changes and is proposing to calculate separate normalization factors for risk scores used to pay MA-PD plans versus PDPs.

Key Considerations

The impact of the MA risk score trend on payment will vary across individual MA plans. Plans will want to analyze these effects to inform their comments to CMS.

In the advance notice, CMS emphasized the strong growth in the dual SNP market for 2024. This market continues to present growth opportunities. CMS has sought to ensure that changes to payment accuracy better reflect more recent cost and utilization patterns and the risk profile of the sickest and most complex enrollees. Plans will want to consider payment incentives in the context of major policy, reimbursement, and operational changes required to improve integrated care for dually eligible individuals. MA organizations considering becoming FIDE SNPs and wishing to obtain frailty payments in 2025 will need to understand the specific requirements to be eligible for such payments.

The 红领巾瓜报 Medicare team will continue to analyze these proposed changes. We have the depth and breadth of expertise to assist with tailored analysis, to model policy impacts across the multiple rules, and to support the drafting of comment letters on this notice.

If you have questions about the contents of CMS鈥檚 MA Advance Notice and payment policies and how these would affect MA plans, including SNPs, providers, and Medicare beneficiaries, contact our experts below.

This week, our In Focus section highlights a new report released on January 25, 2024, Analyzing the Expanded Landscape of Value-Based Entities: Implications and Opportunities of Enablers for the CMS Innovation Center and the Broader Value Movement. The analysis explores the growing ecosystem of new entities designed to assume accountability for the total cost and quality of care in order to understand the growth of this market and consider the role these entities play in advancing accountable care in Medicare, Medicaid, and the broader healthcare sector. The report combines the value-based payment (VBP) policy and market expertise of 红领巾瓜报 (红领巾瓜报) and Leavitt Partners, an 红领巾瓜报 company, with support from Arnold Ventures.

At the start of the movement, value-based arrangements primarily involved traditional providers and payers engaging in relatively straight-forward and limited contractual arrangements. In recent years, the value-based care market has expanded to include a variety of risk-bearing healthcare delivery organizations and provider enablement entities, with capabilities and business models aligned with the functions and aims of accountable care. Despite their prevalence, little formal research has been conducted to determine the role, growth, and impact of these entities to date, and publicly available information is limited.

The report introduces a framework for classifying these entities and estimates the size of this market for the first time. Using insights from 60 interviews with entity leaders, providers, and policymakers, and extensive secondary research into approximately 120 organizations, the report details the common offerings, partnership models, and growth strategies of these entities. The research investigated primary care-focused entities as well as risk-bearing delivery organizations and VBP enablers focused on select specialty areas that align with total cost of care models (i.e., kidney care, oncology, cardiology, behavioral health, and palliative care). Authors examined providers鈥� experiences selecting and collaborating with enablement partners and the role of these entities within Medicare accountable care models, as well as the broader value movement, to inform a set of guiding principles that help providers and policymakers evaluate the attributes of ideal partners.

Market Landscape

For the past decade, the Centers for Medicare & Medicaid Services (CMS), through its Innovation Center (CMMI), has been leading the movement toward value. Going forward, the agency is focused on scaling accountable care adoption to achieve its 2030 goal, but also seeks to ensure that transformation is equitable and sustainable. These entities are helping providers to engage in accountable care, but our guiding principles and policy recommendations aim to support CMS in ensuring that their growth aligns with provider and patient priorities.

In assessing the value-based care market, the report divided the organizations into three main categories by their core business model: VBP enablers (which are not involved in the direct provision of care, but in assisting others to adopt VBP models); risk-bearing delivery organizations (entities designed to deliver value-based care and assume payment risk for the cost of care); and organizations that are a hybrid of the two (companies that own assets that enable other organizations and those that deliver care).

From risk-bearing delivery organizations with business models that hinge on effective population health management and longitudinal patient relationships, to VBP enablers that provide the population health functions needed to succeed in accountable care while sharing responsibility for those outcomes, these entities are creating more opportunities for clinicians to deliver the type of coordinated, proactive, whole-person care that is unsupported in a fee-for-service system.

A Growing Market

Fueling the growth of value enablers are signals from federal and state policymakers that value-based payment (VBP) is here to stay. The certainty of this approach is already leading to increased focus on underserved populations and safety net providers as CMS places greater focus on expanding VBP contracts in Medicaid and other public insurance programs.

As the market matures and pressure to participate in accountable care mounts, organizations will have several paths forward to implementation of alternative payment models. The growth and availability of enablement entities that are designed with the explicit purpose of helping providers overcome barriers to participation 鈥� and whose own financial success hinges on the success of their provider partners 鈥� could represent a promising gateway toward achieving accountable care.

The research found several similarities across most entities in this space, demonstrating a highly competitive market, with organizations focused on similar priorities in target providers, geographies, and key populations. Entities often use hybrid, high-touch clinical models to support physicians with patient navigators and other clinical extenders and support staff. They heavily rely on health information technology, and often develop homegrown, proprietary tech assets to better address provider pain points. Finally, most entities depend on outside capital and investment to fuel growth, and investor interest in the space seems to be robust and growing, along with the evolution of value-based care models.

Guiding Principles and Policy Recommendations

The report concludes by proposing a set of guiding principles to describe the optimal attributes of value-based enablement entities aligned with CMS, provider, and patient goals. Authors point to steps CMS can take to best engage with this expanded ecosystem in support of its efforts to scale accountable care while ensuring appropriate guardrails are in place to protect patients and providers.

As CMS works to accelerate adoption of accountable care to achieve its 2030 goal and beyond, the agency must find ways to bring in new providers who have yet to engage meaningfully in these models, while retaining current participants and advancing model designs for the next phase of VBP and delivery reform. The report makes policy recommendations to 1) drive new and sustained provider participation and 2) ensure high-quality partnerships for CMS and providers.

Link to Report

What鈥檚 Next

With its acquisition of Leavitt Partners and Wakely Consulting, along with its strong and growing Medicare policy practice, 红领巾瓜报 is developing a diverse and robust set of solutions for entities engaging in value-based care and payment. On March 5 and 6, 红领巾瓜报 will be devoting its spring event to the topic. The report authors will be featured prominently and will lead a session on the report鈥檚 implications. More information about the Spring Workshop, Getting Real about Transforming Healthcare Quality and Value, can be .

For details about this research, please contact the report authors below.