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On February 1, 2017, the Centers for Medicare & Medicaid Services (CMS) issued its draft 2018 Call Letter, an annual set of proposed rules, guidelines and clarifications for Part C Medicare Advantage (MA) and Part D plans that wish to participate in Medicare in the following calendar year.  In collaboration with several other advocacy organizations, the Center for Medicare Advocacy drafted and submitted comments on the draft Call Letter. Here is a link to the Center’s full comments:

Last week, on April 3, 2017, the Centers for Medicare & Medicaid Services (CMS) released their final 2018 Call Letter (also see accompanying CMS press release and fact sheet). The final version was largely unchanged from the draft.   While the Call Letter addresses a range of issues, this Alert touches only on Medicare Advantage payment rates, certain issues that were not addressed in either the draft or final Call Letter, and an additional request for information issued by CMS.

Medicare Advantage Payment Rates

Perhaps the one issue that receives the most attention in the annual Call Letter is Medicare Advantage (MA) payment rates.  Although the Affordable Care Act (ACA) implemented changes to bring Medicare Advantage (MA) plan payments in line with costs under the traditional Medicare program, various factors contribute to fluctuations in such payment.  CMS retains discretion over some, but not all, of these factors.  Overall, payment to MA plans will be going up, by a larger margin than anticipated in the draft Call Letter.

The final 2018 Call Letter represents a further weakening or delay of previous MA payment policy proposals that may have made MA payment, on the whole, more equitable, with respect to safeguarding public funds. For example, CMS is now delaying transition to a new payment methodology for Medicare Advantage employer-based retiree plans (also called Employer Group Waiver Plans or EGWPs) aimed at more accurately capturing EGWP costs and eliminating incentives to submit bids that are higher than actual projected costs.  Similarly, CMS is engaged in an effort to use more MA plan claims information – referred to as encounter data – in calculating MA risk scores so that risk adjusted payment based upon enrollees’ conditions can be better gauged by actual care provided by MA plans.  Instead of using a higher percentage of encounter data to calculate payment, CMS is reducing the original proposed amount from 50% down to 15% for 2018.  

These and other changes that relax efforts to more accurately pay MA plans operate with a backdrop of significant inappropriate payments to MA plans – by some estimates, wasting billions of dollars a year.[1]  MA “upcoding” – when an MA plan inappropriately reports an enrollee as being more sick than they actually are in order to obtain a higher risk-adjusted payment from the Medicare program – remains an ongoing  problem that policymakers must address.  According to MedPAC, “after accounting for all coding adjustments, payments to MA plans were about 4 percent higher than Medicare payments would have been if MA enrollees had been treated in [traditional] Medicare.”[2]

The Center is deeply concerned by these ongoing improper payments to MA plans and CMS’ lack of progress in recouping previous payments and deterring future misconduct.  In order to ensure that the traditional Medicare program is not further disadvantaged by inappropriate overpayments to MA plans, CMS must employ more rigorous oversight of MA payment.

Issues Unaddressed in 2018 Call Letter

In the Center’s comments to the draft Call Letter, we raised a number of beneficiary-focused topics that were not addressed in either the draft or the final Call Letter, including the following:

  • Seamless Conversion Enrollments

The Medicare statute and implementing regulations allow insurance plan sponsors to petition CMS to auto-enroll an individual currently in one of their commercial or Medicaid products into an MA plan when that person becomes Medicare-eligible, a process known as “seamless conversion enrollment.”  Out of concern that existing consumer protections were not adequate to prevent such enrollments without informed consent, the Center worked with partner organizations and CMS to address these concerns. In October 2016, CMS issued a temporary moratorium on its acceptance of any new seamless conversion proposals and released previously unavailable data concerning plan sponsors’ use of this process.  As CMS is reviewing the current seamless conversion enrollment policy, we urge CMS to add stronger consumer protections and transparency to the process before lifting the moratorium.

  • MA Network Adequacy

In 2015 the General Accounting Office (GAO) released a report entitled “Medicare Advantage: Actions Needed to Enhance CMS Oversight of Provider Network Adequacy”. GAO examined several factors relating to CMS’ oversight of MA organization (MAO) network adequacy, and made corresponding findings, including: how CMS defines network adequacy and how its criteria compares with other programs; how and when CMS applies its network adequacy criteria; the extent to which CMS conducts ongoing monitoring of MA organization networks; and how CMS ensures that MA organizations inform beneficiaries about terminations.

While CMS has made efforts to address some of the deficiencies highlighted by GAO, so far such efforts appear to be primarily directed at provider directories alone.  CMS noted in the draft 2016 Call Letter that “[t]he data collected through our monitoring activities could drive additional reviews of network adequacy, as well as future monitoring and/or audit-based activities” [emphasis added].  We urge CMS to more broadly expand its oversight and definition of network adequacy, as suggested by GAO.

  • Provider Network Terminations

We remain disappointed that CMS has taken no further action, either in Call Letters or in rulemaking, to strengthen consumer protections surrounding MA plan mid-year provider network terminations. The most effective way to protect consumers from being trapped in their plans after their own doctors are involuntarily terminated is to prohibit MA plans from terminating network providers mid-year without cause.  Not only did CMS retreat from this option in the final 2015 Call Letter, but there has been no attempt to extend the current 30-day advance notice to affected beneficiaries, as also suggested in the 2015’s Draft Call Letter.  Further, CMS has failed to strengthen or otherwise expand the limited special enrollment period (SEP) right available only to beneficiaries affected by “significant” network terminations.  In addition, the availability of this limited SEP right is not adequately expressed in beneficiary-oriented materials, including those issued by plan sponsors (e.g. the Annual Notice of Change) or by CMS (e.g. Medicare & You and the website).  More accurate provider directories, while a welcome improvement in consumer information, is not a solution to this problem.

CMS Request for Information

In the final Call Letter, CMS issued a Request for Information. In describing this request, CMS states:

“CMS is committed to exploring other avenues for simplifying and transforming the MA and Part D programs in order to encourage innovation and expand beneficiary choice, and is looking forward to working with stakeholders to achieve those shared goals.  To facilitate this new approach, CMS is requesting that stakeholders and the public share their ideas for changes to the program’s regulations, sub-regulatory guidance, and practices and procedures.”

CMS is accepting comments on the Request for Information through April 24, 2017 at (include “2017 Transformation Ideas” in the subject line).  This is an important opportunity for beneficiary advocates to express their concerns.

D. Lipschutz, April 12, 2017

[1] See, e.g., the following: Center for Public Integrity, “Why Medicare Advantage costs taxpayers billions more than it should” (June 2014), available at:; Center for Public Integrity, “Medicare Advantage audits reveal pervasive overcharges” (August 2016), available at:;      Kronick, R., “Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years,” (Health Affairs: February 2017), available at:;  and GAO, “Medicare Advantage: Fundamental Improvements Needed in CMS’s Effort to Recover Substantial Amounts of Improper Payments” (April 2016), available at:
[2] 2 Medicare Payment Advisory Commission (MedPAC), Report to the Congress: Medicare Payment Policy (March 2017), Chapter 13, p. 367, available at:

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