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Date ArticleType
4/5/2016 Payment/Reimbursement
CMS Medicare Advantage Final Announcement and Call Letter

The Centers for Medicare & Medicaid Services (CMS) published the Announcement of Calendar Year (CY) 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter. This document updates Medicare Advantage (MA) and Part D plan payment rates and sets forth policy changes that will determine how MA and Part D plans are regulated in 2017. The Announcement finalizes several payment and policy changes proposed in the 2017 Advance Notice and Draft Call Letter for MA and Part D plans, and addresses stakeholder comments submitted in response to CMS' proposals. For additional information, please refer to AHCA's summary of the 2017 Advance Notice and Draft Call Letter and comments submitted on those provisions most pertinent to SNFs.

AHCA prepared the following highlights of the 2017 Announcement and Final Call Letter include: 

• Payment rates for MA plans will increase by 0.85 percent on average for 2017, according to the Announcement, which is lower than the 1.35 percent increase estimated in the Advance Notice. CMS noted that the change is a result of a technical update in the "risk adjustment normalization factor," which is intended to better reflect historical population trends to improve the accuracy of risk adjustment. When factoring in MA coding trends, the MA plans are expected to experience an average increase of 3.05 percent.
• In 2016, CMS initiated the transition to encounter data based risk scores by blending risk scores from the Risk Adjustment Processing System (RAPS)/FFS and the Encounter Data System (EDS), using weights of 90 percent and 10 percent, respectively. In the Advance Notice, CMS proposed increasing the weight of the EDS risk score to 50 percent for 2017. However, in response to stakeholder feedback, CMS will use a lower percentage of EDS risk scores than was proposed in the Advance Notice. Specifically, risk scores will be calculated using weights of 25 percent EDS risk scores and 75 percent RAPS/FFS risk scores. CMS also states its intent to fully phase-in the use of encounter data for risk score calculations by 2020.
• CMS has long indicated that statistical evidence shows that there may be a causal relationship between the dual-eligible and/or disability status of an MA plan's enrollees and that plan's ability to achieve high ratings on certain Star Ratings measures. While CMS states that additional research is needed to identify a long term solution, CMS finalized its proposal from the Advance Notice to implement an interim analytical adjustment to Star Ratings to account for dual-eligible and/or disability status.
• The Affordable Care Act (ACA) placed a mandatory maximum annual limit on all out-of-pocket medical costs for MA plans, which is referred to as the Maximum Out of Pocket (MOOP). MA plans may also elect a lower voluntary MOOP in exchange for increased flexibility in establishing cost sharing amounts for individual service categories. In the Final Call Letter, CMS finalized its proposal to reduce the cost sharing limit for voluntary MOOP plans for SNF days 1-20 from $40 per day and reiterated its intent to further reduce the cost sharing limit for SNF days 1-20 from $20 per day to $0 per day for CY 2018 MA plans so that SNF cost sharing will align with Original Medicare for both voluntary and mandatory MOOP.

AHCA will review the Final Announcement and Call Letter in its entirety and will keep you informed of any key changes from CMS' initial proposals that may impact SNFs. AHCA will continue to monitor any developments and will keep you apprised of any additional announcements. Please contact AHCA's Narda Ipakchi at nipakchi@ahca.org with any questions.