Fact Sheets

2019 Medicare Advantage and Part D Advance Notice Part II and Draft Call Letter

2019 Medicare Advantage and Part D Advance Notice Part II and Draft Call Letter

Today, the Centers for Medicare & Medicaid Services (CMS) released Part II of the 2019 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part D Payment Policies (the Advance Notice), and Draft Call Letter. CMS released Part I of the Advance Notice on December 27, 2017. CMS will accept comments on all proposals through Monday, March 5, 2018, before publishing final versions on April 2, 2018. The proposed updates will continue to create more choices for Medicare beneficiaries selecting MA and Part D plans in 2019.

2019 Advance Notice
Through the 2019 Advance Notice, CMS is proposing updates to the methodologies used to pay Medicare Advantage plans and Part D sponsors.

Net Payment Impact
The chart below indicates the expected impact of the proposed policy changes on plan payments relative to last year.  

Year-to-Year Percentage Change in Payment1




Advance Notice

Effective Growth Rate




Change in Star Ratings


Medicare Advantage coding intensity adjustment


Risk Model Revision


Encounter Data Transition


Employer Group Waiver Plan Payment Policy




Expected Average Change in Revenue


1This table does not project the effect of underlying coding trend on risk scores.

2Rebasing/re-pricing impact is dependent on finalization of average geographic adjustment index and will be available with the publication of the 2019 Rate Announcement

The Expected Average Change in Revenue reported above does not include an adjustment for underlying coding trend.  For 2019, CMS expects the underlying coding trend to increase risk scores, on average, by 3.1%. 

2019 Part C Risk Adjustment Model Proposals
As previously discussed in Part I of the Advance Notice, we are proposing changes to the CMS-HCC Risk Adjustment model that is used to pay for beneficiaries enrolled in Medicare Advantage plans. Under the proposed models, plans would receive payments that reflect the needs of the patients they serve. These proposals reflect changes to improve risk adjustment required by the 21st Century Cures Act, including an evaluation of adding mental health, substance use disorder, and chronic kidney disease conditions to the risk adjustment model and making adjustments to take into account the number of conditions an individual beneficiary may have, as well as a variety of additional technical updates. Further, the 21st Century Cures Act requires that CMS fully phase in the required changes to the risk adjustment model by 2022. We are therefore proposing to begin the phase in of this new model in 2019, starting with a blend of 75% of the risk adjustment model used for payment in 2017 and 2018 and 25% of the new risk adjustment model proposed.

In addition to this proposal for the CMS-HCC risk adjustment model, CMS is also proposing to update the CMS-HCC ESRD risk adjustment model and the Part D risk adjustment model for 2019. 

Using Encounter Data
The quality of encounter data has improved, and CMS is committed to continuing to drive improvement in the data. As also was previously announced in December, the risk adjustment model we are proposing in Part 1 of the Advance Notice makes technical updates, including calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and supplementing encounter data used in payment with inpatient data submitted to the historical risk adjustment data collection system (the Risk Adjustment Processing System (RAPS).

CMS calculates risk scores using diagnoses submitted by Medicare Fee-For-Service (FFS) providers and by Medicare Advantage organizations. Historically, CMS has used diagnoses submitted into CMS’ RAPS by Medicare Advantage organizations. In recent years, CMS began collecting encounter data from Medicare Advantage organizations, which also includes diagnostic information. In 2016, CMS began using diagnoses from encounter data to calculate risk scores, by blending 10% of the encounter data-based risk scores with 90% of the RAPS-based risk scores. For 2017 and 2018, CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25% encounter data and 75% RAPS in 2017, and 15% encounter data and 85% RAPS in 2018. For 2019, CMS proposes to calculate risk scores by adding 25% of the risk score calculated using diagnoses from encounter data and FFS diagnoses with 75% of the risk score calculated with diagnoses from RAPS and FFS diagnoses. Since the quality of the encounter data has improved, CMS believes it is appropriate to move forward with the proposed increased percentage of encounter data in the blend. CMS is also proposing to implement the phase-in of the new risk adjustment model by calculating the encounter data-based risk scores exclusively with the new risk adjustment model, while maintaining use of the current risk adjustment model for calculating risk scores with RAPS data. 

Coding Pattern Adjustment
Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between Medicare Advantage organizations and FFS providers. In CY 2019, CMS proposes to apply a coding pattern adjustment of 5.90 percent.

Medicare Employer Retiree Plans
Medicare Employer Retiree Plans (Employer Group Waiver Plans or EGWPs) serve specific employer groups, and are either offered through negotiated arrangements between Medicare Advantage plans and employer groups or by the employer directly. For 2019, CMS is proposing to complete the transition to administratively-set rates for Retiree Plans that was originally scheduled to be completed in 2018, but is considering alternative policies for paying these Plans and is soliciting comment on the final approach to implement in the Rate Announcement.

Puerto Rico
In Puerto Rico, a far greater proportion of Medicare beneficiaries receive benefits through Medicare Advantage than in any state or territory. The policies proposed and under consideration for 2019 will provide stability for the Medicare Advantage program in the Commonwealth and to Puerto Ricans enrolled in MA plans. These policies include basing the Medicare Advantage county rates on the relatively higher costs of beneficiaries in fee-for-service Medicare who have both Medicare Parts A and B, interpreting the criteria used to determine which counties qualify for an increased quality bonus adjusted benchmark, and applying an adjustment to reflect the nationwide propensity of beneficiaries with zero claims. In addition, in recognition of the impact that recent natural disasters might have on the underlying operational and clinical systems that CMS relies on for accurate performance measurement in the Star Ratings program, CMS is proposing a variety of strategies to address Star Ratings issues related to plan contracts impacted by extreme and uncontrollable circumstances, in Puerto Rico and elsewhere. This includes adjusting the 2019 and 2020 Star Ratings to take into account the effects of extreme and uncontrollable circumstances that occurred during the 2017 performance period, such as Hurricanes Harvey, Irma, and Maria, and the wildfires in California. 

2018 Draft Call Letter
Improving Drug Utilization Review Controls (Opioids)

CMS’s Medicare Part D opioid overutilization policy focuses on patient safety. The policy has evolved incrementally to address prescription opioid overuse in Medicare Part D from a medication safety perspective, while preserving beneficiary access to medically necessary drug regimens.

CMS’s oversight through the overutilization monitoring system (OMS) has reduced very high risk overutilization of prescription opioids in the Part D program, but is just one of several key tools CMS uses to combat opioid overuse. Given the urgency and scope of the continuing national prescription opioid epidemic, we will propose new strategies to more effectively address this issue for patients in Part D, including: 

  • Enhancing the OMS by such that it identifies high risk beneficiaries who use “potentiator” drugs (such as gabapentin and pregabalin) in combination with prescription opioids to ensure that plans provide appropriate case management. Potentiators are drugs that when taken with an opioid increase the risk of an adverse event. OMS already flags concurrent benzodiazepine use by plan enrollees.
  • Implementing technical revisions to the Pharmacy Quality Alliance (PQA) measures used by CMS to evaluate Part D sponsors’ progress in combatting the opioid crisis, and consideration of a new PQA measure, Concurrent Use of Opioids and Benzodiazepines. Given the danger of combining opioids and benzodiazepines, we seek feedback in the Call Letter on starting to track a new measure to address this issue. This measure assesses the percentage of individuals 18 years and older with concurrent use of opioids and benzodiazepines.
  • Expecting all sponsors to implement hard formulary-level cumulative opioid safety edits at point-of-sale (POS) at the pharmacy (which can only be overridden by the sponsor) at 90 morphine milligram equivalent (MME), with a 7 days supply allowance.
  • Implementing a supply limit for initial fills of prescription opioids (e.g., 7 days) for the treatment of acute pain with or without a daily dose maximum (e.g., 50 MME).
  • Expecting all sponsors to implement soft POS safety edits (which can be overridden by a pharmacist) based on duplicative therapy of multiple long-acting opioids, and request feedback on concurrent prescription opioid and benzodiazepine soft edits.

Star Ratings Enhancements
Each year, CMS provides updates to the Part C and D Star Ratings through the Call Letter, including new measures and changes in existing measure specifications.

The more significant proposals include the following new measures for the 2019 Star Ratings: Statin Use in Persons with Diabetes (Part D) and Statin Therapy for Patients with Cardiovascular Disease (Part C). These measures have previously been announced. Also previously announced, CMS is proposing to remove from the 2019 Star Ratings the Beneficiary Access and Performance Problems Measure. As has been done in the past, the updated Categorical Adjustment Index values will be proposed in the Call Letter with analyses based on the 2018 Star Ratings data. Finally, based on feedback from plans, CMS is proposing scaled reductions for data completeness issues for the Part C and D appeals measures. The scaled reductions would avoid potentially disparate impacts on plans based on when the plan is audited and would ensure that the impact on plans is more commensurate with the identified issue. 

Expanding Health Related Supplemental Benefits  
The proposal will help drive patient access to types of services they do not have today. Some Medicare Advantage plans offer supplemental benefits so that enrollees have more healthcare benefits and options than what they would receive under the Medicare FFS Program. Medicare Advantage plans use rebate dollars and plan premiums to fund supplemental benefit offerings. The statute limits supplemental benefits to health care benefits; CMS defines a supplemental health care benefit as an item or service (1) not covered by Original Medicare, (2) that is primarily health related, and (3) for which the Medicare Advantage plan must incur a direct medical cost.

Previously, CMS has not allowed an item or service to be eligible as a supplemental benefit if the primary purpose includes daily maintenance. However, in the draft Call Letter, CMS discusses a reinterpretation of the statute to expand the scope of the primarily health-related supplemental benefit standard. Under this reinterpretation, CMS would allow supplemental benefits if they compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization. This expansion will effectively increase the number of allowable supplemental benefit options and provide patients with benefits and services that may improve their quality of life and health outcomes. 

Uniformity Flexibility
The draft Call Letter reminds plans that CMS has determined that plans can provide certain enrollees with access to different benefits and services. Specifically, Medicare Advantage plans can offer targeted cost sharing and supplemental benefits for specific enrollee populations based on health status or disease state in a manner that ensures that similarly situated individuals are treated uniformly. This flexibility helps Medicare Advantage plans better manage health care services for particularly vulnerable enrollees. CMS previously announced this new interpretation in the preamble to the Part C and D proposed rule for 2019, released on November 28, 2017[1]. 

Comments on the proposals set forth in Part I and Part II of the proposed Advance Notice, as well as the Draft Call Letter must be submitted by Monday, March 5, 2018. The final 2019 Rate Announcement and final Call Letter will be published by Monday, April 2, 2019.

To submit comments or questions electronically, go to, enter the docket number “CMS-2017-0163” in the “search” field , and follow the instructions for ‘‘submitting a comment.’’ 

The 2019 Advance Notices (Part I and Part II) and draft Call Letter may viewed by going to: and selecting “2019 Advance Notices.”