President Joe Biden laid out an ambitious proposed budget for the next fiscal year that includes some major changes for Medicare Advantage (MA) plans if enacted, from new restrictions on supplemental benefits to covering the cost-sharing for mental health services.
While presidential budgets don’t always get enacted word for word—especially amid a divided Congress—it does give an illustration of the administration’s priorities for the MA program.
Here are some of the proposals that could affect MA plans:
- New medical loss ratio (MLR) requirements for supplemental benefits. One of the biggest selling points that MA plans rely on is supplemental benefits not offered by traditional Medicare. These benefits can range from dental and vision coverage to interventions for tackling social risk factors like food insecurity.
However, there is no minimum that plans must spend on the benefits themselves. This stands in stark contrast to Affordable Care Act exchange plans that must spend 85% of every premium dollar on medical claims and the rest on administration.
The Department of Health and Human Services (HHS) is worried that without an MLR, “there is an incentive for Medicare Advantage plans to offer benefits that attract enrollment but are not widely used by beneficiaries,” the agency’s budget blueprint said. HHS is calling for applying the 85% MLR to any supplemental benefits.
- Require coverage of behavioral health visits without cost-sharing. Mental health has become a massive priority for HHS in recent years, especially in light of the emotional toll of the COVID-19 pandemic.
HHS is therefore proposing a requirement that Medicare Part B to cover up to three behavioral health visits a year without any cost-sharing starting in 2025. Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure confirmed during a press conference that this requirement will apply to MA plans.
Currently, Part B includes the coverage of a behavioral health clinician or therapist but a deductible and coinsurance apply to such visits. The goal of the proposal is to improve “access and adherence to treatment, creating a pathway to better overall health outcomes,” the blueprint said.
- Applying pay parity to Medicare. Currently, Medicare is not subject to federal requirements that an insurer covers both physical and behavioral health at the same level, even though such requirements exist for commercial plans. HHS is calling for incorporating such parity requirements into Medicare.
This measure can ensure that parity applies to “mental health and substance use disorder benefits offered by Medicare Advantage plans so that enrollees do not face greater limitations on reimbursement or access to care relative to medical and surgical benefits,” the blueprint said.
Mental health parity has become an issue in Congress as well. Sen. Ron Wyden, D-Oregon, attempted to include parity reforms during the last congressional session but was not able to pass anything through the Senate.
- Limiting Medicare Part D cost-sharing for certain generics. HHS wants to standardize the generic formulary tier that is in most Part D drug plans, as currently the cost-sharing and drugs are covered vary by plan.
This legislative proposal would apply a new requirement for Part D and MA prescription drug plans to offer a standard list of generics that are available for only $2 for a 30-day supply. Offering such drugs at a “stable and predictable co-payment” will increase beneficiary adherence to chronic care medications, the blueprint said.
HHS’ budget proposals come as CMS is introducing several reforms for the popular MA program. In late January the agency finalized a rule that overhauled risk adjustment audits of MA plans, and in February released a proposed advance notice that calls for changes to the program’s risk adjustment model.
The agency and the insurance industry have been at loggerheads over whether the advance notice will result in a cut to MA plans. The administration estimated the rule will result in a 1% increase and industry assertions to the contrary are false.
HHS Secretary Xavier Becerra called out “deceptive commercials” from insurers that are arguing the plans will see payments cut.
“This budget does not cut funding for … Medicare Advantage. It increases funding over last year for MA plans,” he said during the conference.