Fact sheet

2020 Medicare Advantage and Part D Advance Notice Part II and Draft Call Letter

2020 Medicare Advantage and Part D Advance Notice Part II and Draft Call Letter
Fact Sheet

On January 30, 2019, the Centers for Medicare & Medicaid Services (CMS) released Part II of the 2020 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 20, 2018. CMS will accept comments on all proposals in Part I and Part II through Friday, March 1, 2019, before publishing the final Rate Announcement and Call Letter by April 1, 2019. The proposed updates will continue to modernize and maximize competition among Medicare Advantage and Part D plans, as well as include important actions to address the nation’s opioid crisis. 

2020 Advance Notice

Through the 2020 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


1The Expected Average Change in Revenue reported above does not include an adjustment for underlying coding trend. For 2020, CMS expects the underlying coding trend to increase risk scores, on average, by 3.3 percent. 2Rebasing/re-pricing impact is dependent on finalization of average geographic adjustment index and will be available with the publication of the 2020 Rate Announcement

2020 Part C Risk Adjustment Model Proposals
As previously discussed in Part I of the Advance Notice, we are proposing changes to the CMS- Hierarchical Condition Category (HCC) Risk Adjustment model that is used to pay for beneficiaries enrolled in Medicare Advantage plans. The 21st Century Cures Act requires CMS to make adjustments to the risk adjustment model to take into account the number of conditions an individual beneficiary may have, and to make an additional adjustment as the number of conditions increases. For 2020, we are proposing to implement the model proposed, but not finalized in the 2019 Rate Announcement. This model adds variables that count the number of conditions a beneficiary may have that are in the risk adjustment model (“payment conditions”). In addition to the proposed model, we are presenting an alternate Payment Condition Count model that is similar, but also includes additional condition categories not in the current risk adjustment model for pressure ulcers and dementia. We are soliciting comment on which version of the model to begin implementing with 2020 payments.

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 2020, starting with a blend of 50 percent of the risk adjustment model first used for payment in 2017 and 50 percent of the new risk adjustment model proposed.

Using Encounter Data
The model we are proposing in Part I of the Advance Notice for 2020 builds upon the model being used for 2019 risk adjustment payments that includes technical updates such as calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and including additional condition categories for mental health, substance use disorder, and chronic kidney disease.

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’ Risk Adjustment Processing System (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 blending 10 percent of risk scores calculated using diagnoses from encounter data with 90 percent of risk scores calculated with diagnoses from RAPS. CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25 percent encounter data and 75 percent RAPS in 2017, 15 percent encounter data and 85 percent RAPS in 2018, and 25 percent encounter data and 75 percent RAPS in 2019. For 2020, CMS proposes to calculate risk scores by adding 50 percent of the risk score calculated using diagnoses from encounter data, RAPS inpatient diagnoses, and FFS diagnoses, and 50 percent of the risk score calculated with diagnoses from RAPS and FFS diagnoses. 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 continuing use of the risk adjustment model first implemented for 2017 payment 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 2020, CMS proposes to apply a coding pattern adjustment of 5.9 percent, which is also the minimum adjustment for coding intensity required by the statute.

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 completed the transition to administratively-set rates for Retiree Plans that was originally scheduled to be completed in 2018. For 2020, CMS is proposing to continue the payment policy that was finalized for 2019.

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 2020 would continue to 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 in Puerto Rico on the relatively higher costs of beneficiaries in fee-for-service Medicare who have both Medicare Parts A and B, continuing the statutory interpretation that permits certain counties in Puerto Rico to qualify for an increased quality bonus adjusted benchmark, and applying an adjustment to reflect the nationwide propensity of beneficiaries with zero claims.

2020 Draft Call Letter

Improving Drug Utilization Review Controls (Opioids)
Opioid pain medications are effective at treating pain in certain circumstances, but have serious risks such as addiction, abuse, misuse, overdose, and death. CMS is deeply concerned about the magnitude of the opioid epidemic and its impact on our communities, and is committed to a comprehensive and multi-pronged strategy to combat this public health emergency. It is a top priority of this Administration to address the opioid epidemic.

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. Many new policies are being implemented in 2019 – including Part D drug management programs for high risk opioid users, and improved safety alerts, such as the 7-day supply limit for opioid naïve patients. CMS will evaluate the success and impact of these policies in 2019, and is proposing to continue them into 2020.

Given the urgency and scope of the continuing national opioid epidemic, CMS is proposing a number of additional policies for 2020 to help Medicare plan sponsors prevent and combat prescription opioid overuse.

  • Pain Management and Complementary and Integrative Treatments in Medicare Advantage: CMS is encouraging plans to take advantage of the new flexibilities to offer targeted benefits and cost sharing reductions for patients with chronic pain or undergoing addiction treatment.
  • Access to Opioid Reversal Agents: CMS is strongly encouraging Part D sponsors to provide lower cost-sharing for opioid-reversal agents, such as naloxone.
  • Star Ratings: CMS is proposing to take steps to advance opioid-related measures through the Star Ratings development process. We are updating the methodology for measures currently on or under consideration for our display page, including: Use of Opioids at High Dosage and from Multiple Providers (OHDMP) (current display measure); Use of Opioids at High Dosage (OHD) and Use of Opioids from Multiple Providers (OMP) measures (proposed display measure); and Concurrent Use of Opioids and Benzodiazepines (COB) (proposed display measure). Reporting measures on the display page is a necessary step before the measure can be formally adopted as part of the Star Ratings through rulemaking. 

Star Ratings Enhancements
As part of the Administration’s effort to increase transparency and advance notice regarding enhancements to the Part C and D Star Ratings program, CMS codified the methodology for the Part C and D Star Ratings program in the CY 2019 Medicare Part C and D Final Rule, published in April 2018 for the 2021 Star Ratings. Historically, the Part C and D Star Ratings methodology was adopted and updated through the Part C and D Call Letter, with additional guidance issued in annual technical notes. As codified in the CY 2019 Final Rule, the removal of measures from the Star Ratings program based on standards in the new regulations will be announced through the Call Letter process prior to the measurement period. The 2020 Star Ratings is the final year when all changes to the methodology for calculating the ratings and any changes in the measurement set must be fully proposed in the draft Call Letter. 

CMS is proposing a policy to adjust the 2020 Star Ratings in the event of extreme and uncontrollable circumstances, such as major hurricane weather events. The proposed policy to adjust star ratings in the event of extreme and uncontrollable circumstances is similar to the policy that CMS implemented for the 2019 Star Ratings and the policy that CMS proposed in the CY 2020 Parts C and D Policy and Technical Changes Notice of Proposed Rulemaking in November 2018. 

In this draft Call Letter, CMS is also proposing several measure updates and announcing the removal of three measures from the 2022 Star Ratings. We are proposing the removal of the following measures from the 2022 Star Ratings program due to the measures showing low statistical reliability:

  • Adult BMI Assessment (Part C)
  • Appeals Auto-Forward (Part D)
  • Appeals Upheld (Part D)

CMS is proposing to temporarily remove the Controlling High Blood Pressure (Part C) measure from the 2020 and 2021 Star Ratings due to a substantive measure specification change to align with the release of new hypertension treatment guidelines from the American College of Cardiology and American Heart Association.

In addition, CMS is seeking feedback on suggestions for new Star Ratings concepts related to Part D appeals. CMS will continue to monitor sponsors’ processing of Part C and D appeals through several means and take enforcement actions as appropriate for access or compliance issues.

Special Supplemental Benefits for the Chronically Ill    
Traditionally, MA plans have only been allowed to offer “primarily health related” supplemental benefits and must offer them uniformly to all enrollees. Beginning with the 2019 plan year, CMS determined that plans can provide certain enrollees with access to different benefits and services. Specifically, Medicare Advantage plans can offer targeted supplemental benefits, including reductions from FFS Medicare-equivalent cost sharing, 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.

The Bipartisan Budget Act of 2018 (Public Law No. 115-123) amended the statute to allow MA plans, beginning CY2020, to offer non-primarily health related supplemental benefits to chronically ill enrollees. The law also permits the Secretary, only with respect to supplemental benefits provided to a chronically ill enrollee under the new provision, to waive uniformity requirements, allowing MA plans to vary these supplemental benefits based on the individual enrollee’s specific medical condition and needs.  Special supplemental benefits for the chronically ill do not have to be uniform across the entire population of the chronically ill and may include, but are not limited to, transportation for non-medical needs, home-delivered meals (beyond the current allowable limited basis), food and produce. In the draft Call Letter, we provide guidance about these new special supplemental benefits for the chronically ill, including the definition of a chronic condition and how to submit these benefits in the MA bid. We are soliciting stakeholder feedback on this proposed guidance.


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 Friday, March 1, 2019. The final 2020 Rate Announcement and final Call Letter will be published by Monday, April 1, 2019.

To submit comments or questions electronically, go to, enter the docket number “CMS-2018-0154” in the “search” field, and follow the instructions for ‘‘submitting a comment.’’

The 2020 Advance Notices (Part I and Part II) and draft Call Letter may viewed by going to: and selecting “2020 Advance Notices.”