Policy & Politics

Industry analysts reacted with a shrug on Jan. 31 when CMS released the much-anticipated 2025 Advance Notice of Medicare Advantage and Part D payment changes, which said that health plans can expect to receive a 3.7% average increase in risk-adjusted revenue next year.

The 3.7% figure factors in a 2.45% revenue decline related to fee-for-service normalization and a major risk adjustment model revision that CMS is phasing in over three years, as well as an effective growth rate of 2.44% and a Star Ratings bonus impact of -0.15%. CMS estimated the revenue change from the combination of those proposed policies is -0.16%. After also factoring in an average risk score increase of 3.86%, CMS arrived at its net expected revenue change of 3.7%.

Tensions were unusually high at a Jan. 12 meeting of the Medicare Payment Advisory Commission (MedPAC), which is preparing its annual March report to Congress on the state of Medicare Advantage, among other things. While the routine discussion of the commission’s January status report hit several familiar notes — MA is becoming increasingly popular in an industry plagued by consolidation, excessive coding is driving up program costs, and quality bonus payments don’t reflect high quality care — one commissioner called out the group’s perceived lack of neutrality as the industry prepared for CMS’s 2025 Advance Notice.

MedPAC projects that in 2024, the government will pay $88 billion more than it would pay if MA members were instead beneficiaries of fee-for-service (FFS) Medicare, continuing a trend that has proliferated in recent years. These overpayments, MedPAC analysts outlined for the commission, are driven by MA plans’ enrollment of a largely healthy risk pool, which is then subject to “coding intensity” (i.e., the higher coding patterns due to financial incentives that don’t exist in FFS Medicare).

The Biden administration announced new measures to protect reproductive health care accessibility on the 51st anniversary of the Roe v. Wade ruling, which found that the U.S. Constitution protects the right to have an abortion. HHS, alongside the Labor and Treasury departments, released new guidance that instructs health insurers on how to comply with the Affordable Care Act’s requirements to cover contraception at no cost. For hospitals and provider associations, HHS and CMS launched new efforts to increase awareness about access to emergency medical care — including abortion services — required under the Emergency Medical Treatment and Labor Act.

A year and a half after the Supreme Court’s decision in Dobbs v. Jackson Women's Health Organization — which reversed Roe v. Wade — access to abortion is uneven across the nation. As of January 2024, 14 states have made abortion illegal. Among the states without bans, the majority have at least one restriction on the books, such as limiting abortion access to just those who are early in pregnancy and imposing mandatory waiting periods. Arizona, North Carolina and Wisconsin, for example, currently have six abortion-limiting regulations in place, according to a KFF analysis.

Tyson Foods, Inc. dropped CVS Health Corp.’s Caremark PBM in favor of Rightway, a fee-based PBM partnered with Mark Cuban Cost Plus Drug Co. Rightway promises to save employers 15% on their pharmacy benefit costs. Tyson’s head of benefits, Renu Chhabra, told CNBC that concerning jumps in specialty drug spending were a key reason behind the move. CVS withheld data that Chhabra hoped to use to manage costs, she said. “We were going anywhere between 12% to 14% increases for pharmacy — and on a $200 million spend that’s quite a bit,” said Chhabra. “I wanted to look at Humira, and I wanted to see what the acquisition cost was…it was very difficult to get to those numbers. Part of this was to really get a partner who can help us organize the information, make sure we understand how to manage specialty, and really looking at how to get the best net cost.”

On Jan. 22, the 51st anniversary of the now-overturned Roe v. Wade Supreme Court ruling, the Biden administration seized the opportunity to reaffirm its support for reproductive rights — a stance it appears to be increasingly emphasizing as the 2024 presidential election draws near. As part of that effort, three federal agencies issued new guidance to help health plans and issuers avoid running afoul of the Affordable Care Act’s contraception coverage mandate.

Health policy experts who spoke to AIS Health, a division of MMIT, say that the guidance could be a helpful tool for compliance-focused insurers, as it outlines the narrow set of circumstances in which a health plan doesn’t have to fully cover certain types of birth control.

A bipartisan group of senators has introduced price transparency legislation crafted by the Committee on Health, Education, Labor and Pensions (HELP) that would require plans and providers to publish all of their negotiated rates, codify the Transparency in Coverage (TiC) rule, make data-sharing rules more specific and stringent, and increase fines for noncompliance with data sharing requirements. However, the legislation does not include any site neutrality requirements, although one D.C. insider says that policy is still under discussion in the Senate.

The Senate bill, S-3548, comes on the heels of the House of Representatives passing the Lower Costs, More Transparency Act in December. The House bill would also codify the TiC rule, make data-sharing requirements stricter and increase fines for noncompliance to as much as $10 million. However, unlike the Senate bill, the House bill would include a tentative step toward site neutrality by barring providers from charging facility fees to Medicare for provider-administered drugs given to patients in outpatient departments. The new Senate bill also does not include any PBM reforms — the Senate Finance Committee has taken the lead on that issue.

Health insurer trade groups have several bones to pick with the proposed 2025 Notice of Benefit and Payment Parameters (NBPP), the annual regulation that sets the rules of the road for the Affordable Care Act exchanges. In the case of certain proposals, AHIP and the Blue Cross Blue Shield Association (BCBSA) are even arguing that CMS is exceeding its legal authority.

Those proposed rule changes concern the process that states use to define their essential health benefits (EHB) benchmark plans, according to comments on the 2025 NBPP filed on or before a Jan. 8 deadline. The ACA lists 10 general categories of EHB that all individual market plans must cover — such as emergency services and prescription drugs — allowing states to determine the specific services that are included in those broad categories. To do that, state officials select a benchmark plan among a list of HHS-approved options, and insurers then use that benchmark to design their benefits.

Although 2023 trained a harsh spotlight on the country’s dominant PBMs — pressuring some to introduce new pharmacy pricing models — industry observers tell AIS Health, a division of MMIT, that this year may not be nearly as paradigm-shifting.

Take, for example, potential policy action aimed at changing PBMs’ increasingly criticized business models, particularly those associated with the Big Three PBMs: The Cigna Group’s Express Scripts, CVS Health Corp.’s Caremark, and UnitedHealth Group’s Optum Rx.

While many people had closed their laptops and were gearing up to open presents, the U.S. District Court for the District of Columbia offered a gift to patient advocates that have been fighting for restrictions on private health plans’ use of copay accumulator programs.

In September, Judge John Bates ruled in favor of a challenge brought by patient advocates — including the HIV + Hepatitis Policy Institute, the Diabetes Patient Advocacy Coalition and the Diabetes Leadership Council — to provisions in a 2021 rule that allowed group and individual health plans to apply copay accumulators even when drugs have no therapeutic alternative. Such programs prevent enrollees from counting any drug manufacturer discounts, like copay coupons, toward their deductibles and out-of-pocket maximums. Insurers and PBMs argue that copay accumulators are necessary to prevent copay coupons from steering patients to high-cost branded drugs — raising costs for everyone — but patient advocates contend that those coupons are necessary to promote affordability amid benefit designs that force patients to bear the brunt of their prescription drug costs.

At least 13.3 million people lost their Medicaid or Children’s Health Insurance Program (CHIP) coverage and another 24.9 million had their coverage renewed as of December 2023, according to the KFF Medicaid enrollment and unwinding tracker. Starting April 1, 2023, states were permitted to resume disenrolling people from Medicaid who were no longer eligible or failed to complete the redetermination process after a multiyear pause during the COVID-19 public health emergency.

The disenrollment rate so far has ranged from 62% in Texas to 10% in Maine. Overall, 71% of coverage losses were due to procedural reasons, when individuals didn’t complete their renewal process within a specific time frame or the state was unable to reach them. Over 90% of disenrolled people had their Medicaid coverage terminated for procedural reasons in New Mexico (95%), Utah (94%) and Nevada (91%).