Proposed Rule Targets PBMs’ Medicaid Practices, Creates Pharma Pricing Audit

In a new regulation released on May 23, the Biden administration proposed increasing drug price transparency reporting by pharmacy benefit managers and pharmaceutical manufacturers supplying Medicaid — and requiring Medicaid managed care organizations to remove pharmacy benefit administration costs from medical loss ratio (MLR) reporting. Experts say the proposed rule is a marginal but meaningful step forward in prescription drug cost containment, but they add that the proposed rule won’t do as much as bills under serious discussion in Congress to rein in controversial PBM business practices such as spread pricing.

The proposed rule, which CMS says in a fact sheet “implement[s] new statutory authorities included in the Medicaid Services Investment and Accountability Act of 2019,” is meant to improve the Medicaid Drug Rebate Program by “proposing new policies that would assure greater consistency and accuracy of drug information reporting, strengthened data collection, and efficient operation of the MDRP.” Per the fact sheet, notable elements of the regulation include:


New PA Constraints May Not Satisfy Lawmakers’ Appetite for Industry Change

Over the next few years, Medicare Advantage organizations face a host of new requirements around the use of prior authorization (PA), including recently finalized policies that take effect next year. While some of the changes promulgated by CMS aim to curtail the use of PA, they’re not likely to satisfy lawmakers who are keeping a close watch on the MA industry, especially as the program serves more and more seniors.

For one, the proposed 2022 Interoperability and Patient Access Rule, which was first issued in 2020 and later updated to include MA organizations and new implementation timeframes, establishes various application programming interfaces (APIs) for the sharing of patient information. That rule also aims to automate certain PA functions with the implementation of a Fast Healthcare Interoperability Resources Prior Authorization Requirements, Documentation, and Decision API.


CMS Rule Finalizes Marketing Changes, Leaves Out Ban on Sharing Beneficiary Contact Info

In a final rule making policy and technical changes for contract year 2024, CMS on April 5 finalized multiple provisions aimed at ensuring continuity of care for Medicare Advantage members, improving health equity and easing behavioral health access. And while the rule finalized most of the Biden administration’s proposals around misleading marketing practices in MA, industry experts say CMS walked back and modified a few proposals as it waits to see how some of the new requirements play out in practice.

In a fact sheet on the final MA and Part D rule, CMS said it finalized 21 out of 22 marketing provisions that appeared in the proposed rule. But CMS left out one notable provision that would have potentially disrupted a plan’s ability to purchase leads from third parties and indicated it will consider it in future rulemaking.


On Top of RADV and Other Enforcement Tools, MA Insurers Should Watch False Claims Act Space

As the federal government seeks ways to accelerate recovery of overpayments made to Medicare Advantage organizations, the False Claims Act (FCA) remains a critical tool in combating fraud, waste and abuse and enforcing program requirements. Of the more than $2.2 billion in settlements and judgments reported by the Dept. of Justice (DOJ) for the fiscal year ending Sept. 30, 2022, more than $1.7 billion related to matters involving the health care industry, including drug and medical device manufacturers, durable medical equipment, home health vendors and managed care providers. While much of the DOJ’s recent recovery efforts have centered on fraud in pandemic relief programs, the government remains focused on allegations involving MA insurers submitting inaccurate diagnosis information for the purposes of receiving higher risk-adjusted reimbursement.


With Final RADV Rule Out, MAOs Are Advised to Clean Up Risk Adjustment Practices

Medicare Advantage organizations may not have gotten the outcome they were hoping for in CMS’s recently finalized Risk Adjustment Data Validation rule, but industry experts say they weren’t surprised by the position CMS ultimately took after years of pressure to close out RADV audits and recover identified overpayments. And while one aspect of the rule could expose it to litigation and further delay CMS’s attempts to collect overpayments from MAOs, experts say plans still would be wise to sharpen their risk adjustment practices in order to limit their audit exposure.

Issued on Jan. 30, the final rule (88 Fed. Reg. 6643, Feb. 1, 2023) pertains to contract-level audits that CMS began conducting more than a decade ago to verify the accuracy of payments made to MA organizations and recover improper payments. The agency in 2012 said it planned to adopt a “fee-for-service adjuster” to account for any impact from unaudited diagnosis codes in FFS data that are used to calibrate the MA risk adjustment model. But in a November 2018 proposed rule (83 Fed. Reg. 54982, Nov. 1, 2018), CMS said its plans to recoup improper payments would not involve an FFS adjuster and that it may apply an extrapolation methodology when finalizing audits dating back to payment year 2011. The RADV provisions of the 2018 proposed rule received pushback from insurers and were never finalized by the Trump administration.


2023 Outlook: Holistic Approach, Competitive Benefits Are Keys to Success in MA

With upcoming changes to marketing regulations, the Star Ratings program, and various other aspects of Medicare Advantage — combined with ongoing scrutiny of MA plan payments and a pending rule that could significantly boost the federal government’s collection of overpayments through Risk Adjustment Data Validation audits — achieving success in MA continues to be a balancing act. For our annual series of Outlook stories on the year ahead, we asked a range of industry experts to weigh in on how doing business in 2023 might differ from previous years. Here’s the second installment, on the investments and strategies that will drive success in 2023, as told to AIS Health, a division of MMIT.


News Briefs: Centene Shakes Up C-Suite

Centene Corp. on Dec. 14 made several C-suite changes in order to “position the company for its next stage of growth.” Ken Fasola, who is currently the firm’s executive vice president of Health Care Enterprises, will be Centene’s new president, while current Executive Vice President and Chief Transformation Officer Jim Murray will become EVP, chief operating officer and report to Fasola. In addition, Dave Thomas will transition from EVP of Markets to CEO of Markets and Medicaid, and President and Chief Operating Officer Brent Layton will become senior adviser to CEO Sarah London “as he begins his transition towards retirement,” the company said.

Separately, Centene on its investor day projected total revenues in the range of $137.4 billion to $139.4 billion and adjusted diluted earnings per share (EPS) in the range of $6.25 to $6.40 in 2023. The firm also said it expects a health benefits ratio (also known as medical loss ratio) of 87.2% to 87.8% next year. “CNC’s ’23 outlook included EPS as expected, though revenue was light,” Jefferies analyst David Windley advised investors in a Dec. 18 research note. He added that Centene’s long-term targets for revenue growth by segment and consolidated EPS growth “are favorable to recent performance, and squarely within a common range across MCOs.”


As PACE Program Grows, CMS Ups the Auditing Ante in 2023

As Programs of All-Inclusive Care for the Elderly (PACE) grow across the U.S., sponsoring entities can expect CMS to put additional scrutiny on their operations. New PACE organizations are subject to audits in their first three years of operation, and updated audit protocols for 2023 include expanded collection of data around both the clinical services provided to participants as well as the non-clinical program features such as transportation, according to BluePeak Advisors, a division of Gallagher Benefit Services, Inc. This will require significantly more man hours and readiness on the part of the sponsoring PACE organization, adds BluePeak, which helps PACE organizations and Medicare Advantage organizations prepare for audits.


New Prior Authorization Rule Aims to Quicken Senior Access to Care

Building on previous interoperability regulations, CMS on Dec. 13 published a proposed rule that seeks to improve the efficiency and transparency of prior authorization processes in Medicare Advantage and other federally funded health care programs. Industry experts say the rule should ultimately speed access to care, potentially alleviating some but not all of the concerns expressed by providers, patient advocates and lawmakers about the burden of prior authorization, particularly on seniors.

In issuing the proposed rule, the agency said it withdraws and replaces a previously proposed rule (CMS Interoperability and Prior Authorization Proposed Rule, 85 Fed. Reg. 82586), and addresses public comments received on that rule. Published in December 2020, the aforementioned rule proposed to place new requirements on Medicaid and Children’s Health Insurance Program managed care plans, state Medicaid and CHIP fee-for-service programs, and Qualified Health Plan (QHP) issuers to improve the electronic exchange of health care data, and streamline processes related to prior authorization. The rule included five sets of proposals and five requests for information but did not specifically apply to MA.


News Briefs: CMS Issues Sweeping MA, Part D Rule Cracking Down on Marketing, Utilization Management

In a sweeping proposed rule issued Dec. 14, CMS addresses a variety of hot-button aspects of the Medicare Advantage and Part D programs, including Medicare marketing, prior authorization and overpayments. The 957-page proposed rule, scheduled for publication in the Dec. 27 Federal Register, seeks to protect MA and Part D enrollees from misleading marketing by banning the use of advertisements that “do not mention a specific plan name as well as ads that use words and imagery, such as the Medicare name or logo, that may confuse beneficiaries in a way that is misleading, confusing, or misrepresents the plan,” according to a fact sheet. It also proposes to adopt the False Claims Act definition of “knowing” and “knowingly” regarding when an MA or Part D sponsor identifies an overpayment, thereby removing the “reasonable diligence” standard. In addition, CMS proposes new requirements to ensure continuity of care, such as requiring that an approved prior authorization remain in place for a beneficiary’s full course of treatment and that all MA plans annually review their utilization management policies to maintain consistency with traditional Medicare’s coverage guidelines. Moreover, the rule proposes the creation of a health equity index in the Star Ratings program that would encourage plans to improve care for enrollees with certain social risk factors, starting with measurement data from 2024. In a statement on the proposed rule, Better Medicare Alliance President and CEO Mary Beth Donahue called it a “thoughtful, comprehensive proposed rule” and said BMA “appreciates the agency’s engagement with stakeholders across the health care spectrum ahead of the rulemaking process.” CMS on Aug. 1 published a request for information seeking input on how to address various aspects of the MA program; it received nearly 4,000 comments.