What Medicare plans should know about CMS’ recent health equity-focused initiatives

The U.S. government has recently amplified its commitment to health equity, as evidenced by the release of documents such as the “CMS Framework for Health Equity 2022—2032”¹ and “The U.S. Playbook to Address Social Determinants of Health.”²This renewed focus provides a unique opportunity for Medicare Advantage Organizations (MAOs) to reassess their health equity strategies and align them with the latest and forthcoming legislative requirements. In this article, we delve into three recent CMS initiatives that have significant implications for MAOs and explore how these organizations can effectively prepare for them.

Initiative 1: Annual health equity analysis of utilization management policies and procedures

Description⁴

CMS proposes an explicit health equity self-evaluation of each MAO’s Part D utilization management criteria. This evaluation will allow MAOs and CMS to determine whether prior authorization requirements contribute to disparities among enrollees with certain social risk factors. Specifically, CMS proposes the following requirements:

• Every utilization management committee must have expertise in health equity. Expertise can be defined by educational degree(s), credential(s), and/or relevant expertise.
• The utilization management committee must conduct an annual health equity analysis on the use of prior authorization. The analysis must compare metrics related to the use of prior authorization for beneficiaries with social risk factors and those without. CMS defines social risk factors in this context as income (low income/dually eligible versus non-subsidized) and eligibility classification (disabled versus aged). Proposed metrics include percentage of approvals and denials and a timeframe review.
• MAOs must make the results of the health equity analysis publicly available on their website without barriers.

Timeline for implementation⁵

This is currently a proposed rule. If finalized, the utilization management committee must have a member with equity expertise by January 1, 2025, and the first analysis must be posted on the MAO’s website by July 1, 2025.

Areas of impact

All MAOs offering Part D benefits are included in this rule. This rule will most directly impact formulary development and annual bid submissions, as findings from the annual equity analysis may warrant changes to utilization management criteria.

How MAOs can prepare

MAOs should ensure that all parties involved in the formulary development process (including the pharmacy and therapeutics [P&T] committee, utilization management committee, actuaries, clinicians, pharmacy benefit managers [PBMs], etc.) are aware of this proposed requirement. Utilization management is an important piece of formulary development that is likely to increase in importance in the future, given cost pressures from the Inflation Reduction Act.⁶ As MAOs evaluate their formulary and utilization management criteria in the coming years, plans will need to consider the impact to beneficiaries with social risk factors and ensure that their utilization management criteria is not discriminatory.

MAOs should also ensure that they have the data and skillsets required to complete the proposed prior authorization equity analysis. This may require hiring or outsourcing health equity and CMS data analytical expertise.

Initiative 2: Health equity measures in Star Ratings

Description⁷

CMS is modifying the Star Ratings rewards system to incorporate a health equity focus. The new emphasis features a health equity index, which rewards contracts for improving care for populations with social risk factors (similarly defined as in the prior initiative by low income/dually eligible status and disabled eligibility classification). Contracts must have a portion of beneficiaries with social risk factors higher than the median to qualify for the maximum reward (or at least one-half of the median to qualify for any reward).

Timeline for implementation⁸

This initiative goes into effect starting with 2027 Star Ratings (2028 payment year), which will be based on data from 2024 and 2025.

Areas of impact

All MAOs are included in this rule, though only MAOs meeting the minimum threshold of beneficiaries with social risk factors are eligible for rewards. Star Ratings are a critical piece of MAO strategy because they directly impact plan revenue. Based on a simulation, CMS expects about 2% of contracts to gain one-half Star and 13% of contracts to lose one-half Star as a result of the health equity index replacing the current system. CMS expects this change to result in program savings of $670 million for the federal government in 2028, driven by a reduction in rebate dollars.⁹

How MAOs can prepare

MAOs should consider if there is any opportunity to enroll and better serve beneficiaries with social risk factors (dual-eligible, low-income, and disabled populations) starting immediately, as current performance will impact Star ratings measured when the initiative takes effect in 2027. MAOs may consider working with care management teams and PBMs to improve outcomes in the medical and pharmacy systems, respectively.

Initiative 3: Physician payment rule advancing health equity

Description¹⁰

CMS is refining physician fee schedules to “further advance Medicare’s overall value-based care strategy of growth, alignment, and equity.” In addition to making payment when practitioners train caregivers to support patients with certain diseases or illnesses in carrying out a treatment plan, this rule includes separate coding and payment for certain services to help facilitate access to community-based social services to address unmet SDOH needs:¹¹

• Separate payment for community health integration, SDOH risk assessment, and principal illness navigation services to account for resources when clinicians involve certain types of healthcare support staff, such as community health workers, care navigators, and peer support specialists in furnishing medically necessary care.
• New coding and payment for SDOH risk assessments (a) to recognize when practitioners spend time and resources assessing SDOH that may be impacting their ability to treat the patient, (b) added to the annual wellness visit as an optional, additional element but with no patient coinsurance nor deductible, and (c) furnished with an evaluation and management or behavioral health visit.

Timeline for implementation¹²

This initiative goes into effect starting January 1, 2024.

Areas of impact

All MAOs offering a medical benefit using the Medicare Physician Fee Schedule as a basis for physician reimbursement are impacted. MAOs with populations with social risk factors (defined by low income/dually eligible status and disabled eligibility classification) may benefit from optimizing accessibility to individuals with specialized training, such as those providing caregiving, community health integration, and/or principal illness navigation services. Up-to-date SDOH risk assessments will assist these individuals and others involved in the patient’s care by more efficiently identifying and mitigating potential social risk factors.

MAOs will need to better understand parameters for the changes to coding and payment. For example, the SDOH risk assessment added to the annual wellness visit will more than likely be reimbursed once per year, but it is still to be determined how often beyond this the risk assessment can be performed and reimbursed.

How MAOs can prepare

MAOs should be aware of this change and ensure that their claims systems and fee schedules are updated and in compliance with this rule. MAOs might also consider implementing a monitoring system to identify patterns in the claims data to flag for review and possible escalation for resource assignment as needed.

Conclusion

CMS offers many resources with a health equity focus. CMS maintains a page dedicated to health equity technical assistance, including research reports and data sources, which is accessible here. Additionally, CMS makes available research posters from past conferences, accessible here.

The three initiatives outlined in this paper are not an exhaustive list of health equity-focused efforts from CMS and the White House. It is critically important that MAOs keep up to date with all relevant legislation. Equity-focused efforts are becoming a larger focus of regulations and guidance, making them an essential area for MAOs to track.

¹Centers for Medicare and Medicaid Services (April 2022). CMS Framework for Health Equity 2022-2032. Available at: https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.

²U.S. White House (November 2023). The U.S. Playbook to Address Social Determinants of Health. Domestic Policy Council, Office of Science and Technology Policy. Available at: https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.

³Centers for Medicare and Medicaid Services (September 2023). Health Equity Terminology and Quality Measures. Available at: https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology.

⁴The Federal Register (November 2023). Medicare Program; Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications. Available at: https://public-inspection.federalregister.gov/2023-24118.pdf.

⁵Ibid.

⁶Cline, M., Karcher, J., Klaisner, J.K. & Klein, M. (August 2022). Weathering the reform storm: The Inflation Reduction Act’s changes to Medicare and other healthcare Markets. Milliman. Available at: https://www.milliman.com/en/insight/weathering-the-reform-storm.

⁷The Federal Register (April 2023). Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly. Available at: https://public-inspection.federalregister.gov/2023-07115.pdf.

⁸The Federal Register (November 2023). Medicare Program; Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications. Available at: https://public-inspection.federalregister.gov/2023-24118.pdf.

⁹Rogers, H., Smith, M.H. & Yurkovic, M. (October 2023). Future of Medicare Star Ratings: The reimagined CMS bonus system. Milliman white paper. Available at: https://www.milliman.com/-/media/milliman/pdfs/2023-articles/10-6-23_medicare-star-ratings-white-paper_20231005.ashx.

¹⁰The Federal Register (November 2023). Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies; and Basic Health Program. Available at: https://www.federalregister.gov/documents/2023/11/16/2023-24184/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other.

¹¹Centers for Medicare and Medicaid Services (November 2023). Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule. Available at: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule.

¹²The Federal Register (November 2023). Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies; and Basic Health Program. Available at: https://www.federalregister.gov/documents/2023/11/16/2023-24184/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other.