CMS has issued its final 2017 Medicare Advantage (MA) and Part D Rate Announcement and Call Letter, which includes a series of policy and payment changes related to these programs. CMS estimates that the final policies will increase MA rates by an average of 0.85%, down from the expected 1.35% increase in the advance notice released in February; CMS attributes the smaller-than-estimated increase to technical updates in the risk adjustment normalization factor. Considering coding trends, the agency expects revenues to increase by 3.05% as a result of the final policies. Plans with high “star ratings” are eligible for quality bonus payments. CMS will make an interim adjustment to star ratings for 2017 to reflect enrollees’ socioeconomic and disability status. CMS also is implementing its proposed MA risk adjustment model that is intended to better account for the costs of serving Medicare-Medicaid dual eligible beneficiaries. CMS also is adopting payment policies that are intended to stabilize the MA program in Puerto Rico.

With regard to Part D, CMS is finalizing several policies to address drug utilization. For instance, CMS is allowing Part D plans to limit initial supplies of designated drugs to one month to reduce waste if the beneficiary discontinues therapy; an extended supply would be available for subsequent periods. CMS also is encouraging plan sponsors to inform beneficiaries of mid-year formulary additions that may provide more value or better quality options. Furthermore, CMS is adopting policies to address opioid abuse, including requirements related to point-of-sale edits to prevent opioid overutilization and access to medication-assisted treatment.