Medicare Advantage plans and Medicare Part D prescription drug plans face an extraordinary array of changes as a result of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA). These include:

  • New payment benchmarks for Medicare Advantage (MA) plans, phased in and based on relative fee-for-service (FFS) costs.
  • Other payment related changes including bonuses for higher quality, minimum Medical Loss Ratio (MLR), and annual calculation of the MA coding intensity adjustment.
  • Benefit design changes, including changes to Part D drug coverage.
  • New requirements for MA Special Needs Plans (SNPs), including need for all SNPs to be NCQA accredited.

Following the legislation is tricky, since HCERA amends or replaces language Congress adopted a few days earlier in PPACA.

Fortunately, Milliman actuaries Earl Whitney, Matt Chamblee, and Jian Yu just released an exceptionally clear and concise 7-page briefing paper on the PPACA and HCERA changes affecting Medicare Advantage plans and Medicare prescription drug plans (PDPs).

Meanwhile, Troy Filipek and Brian Anderson, also from Milliman, have written an excellent summary of the changes made to the Part D drug benefit, including the closing of the coverage gap (donut hole) and elimination of federal tax deductibility of the retiree drug subsidy for employers. They nicely lay out the provisions and key implications.

These two briefs may help to tide you over pending release of more detailed guidance and rule changes from CMS.