Last week the Centers for Medicare & Medicaid Services (CMS) announced significant policy changes for Medicare Advantage (MA) and Part D programs. On April 1, 2019, CMS released the calendar year 2020 Rate Announcement and Call Letter, and on April 5, 2019, CMS release the unpublished version of a final rule revising the MA and Part D program regulations for 2020 and 2021 (scheduled to be published April 16, 2019). These documents include many important policy changes for MA plans—including opportunities to offer broadened supplemental benefits packages and expanded telehealth services.

Supplemental Benefits for the Chronically Ill

Traditionally, CMS has interpreted section 1853(a) of the Social Security Act to allow MA plans to offer supplemental benefits (items or services not covered by original Medicare) when they are “primarily health related,” offered uniformly to all enrollees, and result in the MA plan incurring a non-zero direct medical cost. “Primarily health related” means an item or service that is “used to diagnose, compensate for physical impairments, acts to ameliorate the functional/psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization.” For 2019, CMS introduced new flexibility into the uniformity requirement by allowing MA plans to offer supplemental benefits to some—but not all—vulnerable enrollees.

In the Bipartisan Budget Act of 2018, Congress amended section 1852(a) of the Social Security Act to allow MA plans to offer chronically ill enrollees supplemental benefits that are neither primarily health related nor uniformly offered. As amended, a chronically ill enrollee is an individual who: (i) has “one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee;” (ii) has a “high risk of hospitalization or other adverse health outcomes;” and (iii) requires “intensive care coordination.” Congress also specified that supplemental benefits must provide a reasonable expectation of improving or maintaining a chronically ill person’s health or overall functioning before they can be offered.

CMS will allow MA plans to offer supplemental benefits to individuals identified by their plan as meeting the statutory definition of chronically ill beginning in 2020. Supplemental benefits may include (but are not limited to) meal delivery, transportation for non-medical needs, pest control, indoor air quality equipment and services, benefits to address social needs, and structural improvements such as ramps or the widening of hallways. Initially, CMS will consider any enrollee with a chronic condition described in section 20.1.2 of Chapter 16b of the Medicare Managed Care Manual to qualify as having a “comorbid and medically complex” condition as required by statute. A technical advisory panel will be formed to periodically update this list for future years. MA plans will have broad discretion to determine which supplemental benefits provide a reasonable expectation of improving or maintaining a chronically ill person’s health.

Expanded Telehealth Services

Historically, telehealth services were only available through original Medicare to seniors living in rural areas. That changed this year when seniors living in urban and rural areas gained the option to pay for virtual check-ins with their doctors.

Compared to original Medicare, MA plans have always had the ability to offer comparatively more telehealth services to enrollees through supplemental benefits packages. The Bipartisan Budget Action of 2018 created new section 1852(m) of the Social Security Act which empowers MA plans to offer “additional telehealth benefits” as part of their basic Medicare benefits package, rather than solely as a supplemental benefit. The statute limits these additional telehealth benefits to those available through Medicare Part B.

In the final rule released last week, CMS leveraged this new statutory authority to grant MA plans broader flexibility around telehealth services. Beginning in 2020, MA plans can offer Part B telehealth benefits as part of their basic benefits package. Plans cannot replace in-person visits with telehealth visits—if a plan offers a Part B services as an additional telehealth benefit, it must provide access to the service through in-person visits as well. Additionally, MA plans can continue to offer supplemental telehealth benefits for services that don’t qualify for this expanded coverage either because they aren’t covered under Part B or original Medicare.

This push for more access to telehealth services reflects CMS’s intent to foster more innovation and competition into MA plans’ offerings. CMS expects this flexibility to result in more plans offering expanded telehealth services, regardless of what part of the country enrollees live in.

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Additional rulemaking finalizing proposed changes to protected classes of drugs and potential flexibility for MA plans using prior authorization and step therapy for Part B drugs is expected soon. Further guidance regarding proposed changes to the rebate safe harbor also will arrive in the coming months. Stay tuned for future updates and analysis.