CMS Should Institute Special Enrollment Period in 2025 For Medicare Beneficiaries

CMS needs to stop hiding the ball on coverage impacts and make amends for misleading Medicare beneficiaries

I am generally a supporter of the Centers for Medicare and Medicaid Services (CMS). I think it tries very hard to help deliver quality care and regulate Medicare Advantage (MA) and providers reasonably. As a former government official and regulator, I am sympathetic to the agency’s need to constantly walk a tight rope when it comes to policy decisions. I have even backed some CMS decisions when the health plan industry has been vehemently opposed.

But I am sorry to say that I have lost some faith in CMS recently. In blogs and newsfeeds I have questioned some of the agency’s actions. I see the agency reacting much more politically of late. This is especially true for MA and Part D decision-making in the last year or so.

What happened in Medicare Advantage?

While MA plans deserve some blame for overextending themselves with rich benefits and losing focus on Star quality ratings, CMS too has misstepped in MA. In the MA world, CMS implemented a new risk model that will take as much as 7% out of rates through 2026. It in essence zeros out any rate hike in 2024, 2025, and 2026. I don’t question the need to rein in incorrect coding and reform risk adjustment. But I do question the timing of the model, given CMS knew plans were struggling with rising utilization, inflation, and on Star revenue. The agency should have understood the massive fallout on beneficiaries when they moved forward with the risk model changes for 2024 to 2026.

CMS, too, came out with what I think is a horrible rule regarding prior authorization in MA. Bowing to Capitol Hill and provider lobby pressures, CMS has essentially taken the managed care out of MA. It has instituted a new rule that largely bars MA plans from using their own evidence-based criteria and decision-making in favor of following the traditional program rules. This is especially troubling in terms of inpatient stays and post acute care. Over time, the rule will add considerably to MA plan costs and hurt benefits. The change is at least part of the rising utilization and costs that MA plans are now seeing.

In addition, CMS instituted a risk adjustment rule that goes far beyond reasonableness. Again, changes are needed here as well, but the lack of a fee-for-service (FFS) adjuster, retroactive year recoupment, and extreme extrapolation of penalties are major concerns on the part of the industry.

Last, I would note the truly abominable approach CMS took on Star 2024. I support CMS’ efforts to constantly enhance quality metrics to reduce costs and improve quality. But I disagree with what CMS did for 2024 Star ratings. In an effort to further reduce MA plans’ revenue, CMS sought to implement the new Tukey outlier formula (which removes certain plan outlier peformance to make it tougher to achieve high scores) and cut points in clear violation of regulations. The agency got spanked by two federal court judges in blistering rulings. CMS’ approach seriously unsettled the industry, leading to additional cuts in benefits.

All of this created a perfect storm for MA, where about 2 million people will now have to look for new 2025 benefit plans due to plan geographic exits, product sunsets, and major benefit reductions in remaining products (including premium hikes, cost-sharing increases, and reduced benefits). In most years, less than 100,000 people need to change because their plan or product is going away.

What happened in Part D?

The Part D problem goes back to the passage of the changes in the Inflation Reduction Act (IRA) and impacts both MA and standalone Part D (PDP) plans. Democrats and the administration championed the changes that reduced consumer costs in Part D in a major way, including a $2,000 out-of-pocket (OOP) cap and major changes to reduce cost-sharing. Sounds tremendous on paper. The problem is that it was not paid for – there was largely no government appropriation to fund the more generous benefits. The bill included a premium stabilization program, but it was limited to the base benefit in Part D. We know that Medicare beneficiaries have come to rely on a much more generous benefit funded in part by plans and in part by premiums.

The OOP changes increased costs to plans for both the base and enhanced benefits. With no government funding, plans had to reduce choice, reduce benefits, or increase premiums across the benefit. In essence, everyone paid for the reduction in OOP costs in other ways. While some folks benefited overall, most did not. When 2025 bids were submitted to CMS, the agency immediately saw that premiums were rising dramatically. In what I think is an extra-legal move, it hastily created a second premium stabilization program to deal with the impacts to premiums beyond the base benefit. The program did reduce premium increases but will cost $5 billion over three years.

Yet, even with the new PDP demonstration program, there still are major problems in 2025:

  • Plans still had to pursue higher premiums, deductibles, and cost-sharing to get to competitive premiums.
  • Choices were also reined in.

A Kaiser Family Foundation (KFF) looked at available 2025 data and found that: “While CMS’s headline emphasized stability in terms of average Part D premiums, a quick review of the data shows that many insurers are increasing premiums for their stand-alone drug plan offerings, but not across the board. Some major plan sponsors, including Aetna and UnitedHealthcare, are also reducing their stand-alone prescription drug plan offerings, and overall, there will be fewer PDPs in 2025 than in 2024 – 524 plans nationwide, down from 709 in 2024.” The impact on choice is huge.

Democrats have championed the changes in political ads, but the bill was clearly not thought through. I have made the case that these IRA Part D changes could jeopardize the stability of the program in the future after the demonstration goes away. Politics of the day trumped good policymaking.

Hiding the ball

In both the MA and PDP world, CMS has been disingenuous about what is occurring for seniors. I see this as political as well. CMS has touted that premiums are remaining about the same or being reduced in both MA and PDP. It does not tell the true story as I have outlined above. That is a massive disservice to the seniors and disabled who rely on the programs for their healthcare. The reason for the silence on the negative impacts as well as the extra-legal PDP demonstration program is obvious:  the current administration’s presidential nominee, Vice President Kamala Harris, is in a tight race with former President Donald Trump.

What should CMS do?

CMS has a duty to come clean and explain the real impacts to Medicare beneficiaries. It knows as well as anyone the millions of members impacted. It has all the data. CMS could reach out to them and urge them to review options closely and seriously as well as explain the status of the beneficaires current plan. CMS falls back on the fact that there is a Medicare & You handbook, plan Advance Notices of Change (ANOCs), the Medicare.gov resource, and State Health Insurance Assistance Programs (SHIPs). But CMS knows very well that most seniors and people with disabilities do not do their homework on plan changes annually in part because Medicare is complex and overwhelming. KFF finds that just 43% checked for changes in their Medicare benefits and just 31% looked at other benefit packages for 2021 enrollment.

Given the major impacts on 2 million people in MA and those that will be impacted by changes in PDP, CMS should also craft a special enrollment period (SEP) to allow people who do not have time to make the right decision a second chance later. The SEP should be broader than the current provider network SEP as this is as much about providers as it is costs and benefits in Parts C and D. It should apply to MA and PDP enrollees. Enrollees should be able to declare the SEP on their own given the major MA and PDP changes. The one-time SEP should go at least through June 30, 2025. Given all the changes and confusion, more time is needed beyond the early 2025 enrollment change period that ends March 31. Enrollees should also be free to move from MA back to traditional fee-for-service (FFS) and acquire Medicare Supplement if that is best for them. Plans may not agree with my proposal here and it could impact the Star disenrollment measures (CMS could solve this too). But beneficiaries need to be protected.

The above is the least CMS should do given its and Congress’ short-sightedness on MA and PDP of late as well as CMS’ chicanery on 2025 benefits and premium announcements. The impact on millions of Medicare recipients could be serious if the agency does not make amends.

#cms #medicareadvantage #partd #pdp #coverage

— Marc S. Ryan

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