CMS announces new rules for Medicare Advantage plans that aim to protect sick beneficiaries from high out-of-pocket costs

CMS on Monday announced that insurers looking to offer Medicare Advantage plans this year must cap out-of-pocket charges and that the agency will eliminate MA plans that have 10 or fewer beneficiaries, the Wall Street Journal reports.

CMS said insurers will be asked by the government to scale back their charges if they do not cap beneficiaries' annual out-of-pocket costs at $3,400 or less, or if they charge beneficiaries more than traditional Medicare for services such as dialysis and home health care. Insurers also will not be allowed to charge sick, low-income beneficiaries more than what they would contribute under traditional Medicare, according to the new rules (Zhang, Wall Street Journal, 3/31).

In addition, CMS will prohibit a practice by Medicare prescription drug plans that charges both a higher copayment for brand-name medication and the difference between the cost of the brand-name drug and a generic version. Higher copays still will be permitted, but the extra cost for the difference between the drugs will no longer be charged to beneficiaries (Alonso-Zaldivar, AP/Boston Globe, 3/30). Insurers offering prescription drug plans will be required to list on their Web sites "all the tools used by the plan to lower costs and improve outcomes," according to CMS. Insurers also will be required to provide more detailed, easier-to-understand information about coverage during the drug benefit's so-called "doughnut hole" coverage gap, in which beneficiaries pay 100% of prescription drug costs.

CMS said it will bar a number of enrollment incentives for the plans, while considering a separate incentives program to encourage plans to focus more on preventive care. The agency said it also will conduct stricter audits of MA and prescription drug plan data (Reichard, CQ HealthBeat, 3/30).

CMS officials said that reducing the number of MA plans offered would lessen confusion among beneficiaries. According to officials, nearly 1,400 of the 7,000 MA plans offered have fewer than 10 beneficiaries. "These low-volume plans crowd the field and make selecting a plan much more difficult," CMS said in a statement (AP/Boston Globe, 3/30). The statement said that less than 1% of MA beneficiaries would be affected by dropping the plans. According to CMS, eliminating the low-volume plans would allow beneficiaries to see positive changes in benefits, formularies and out-of-pocket costs (CQ HealthBeat, 3/30).