Roberta Buell E-Reimbursement Newsletter February 2023 – 2/15/23

E-Reimbursement News: Celebrate Our 33rd Year! HCCs, MA and Part D, Drug Inflation Penalties, and more, more, more 02-13-2023
E-Reimbursement Newsletter

Issue 12 Volume: #32 February 2023

Hello Roberta Buell,

Welcome to the 33rd year of this crazy newsletter! We are super excited to be back after a chaotic holiday season and a very rainy January in California. Even sadder, our Niners capped off their miracle season by losing 2 Quarterbacks in the playoffs. Congratulations to the Eagles and the Chiefs. At least I won $50.00 in Fantasy Football. 

Not much happened in January. But February is popping with news. In this issue, we give you a mini-course on the Hierarchical Condition Categories. We have done this in the past, but HCCs cause many capitated plans and providers to overcharge the federal government and employers. Plus, HCCs are used to gauge risk in terms of cost in the MIPS QPP program. So, a review of how HCCs work is overdue.

In addition, the proposed parameters for Parts B and C were issued in CMS' annual Advance Notice. This provides you with info on the coding for HCCs and the structure of Part D for next year. This year is even more chock-full of information about the Inflation Reduction Act's ("IRA") implementation in 2024.

And, speaking of the IRA, the inflationary rebates for Part B went into effect in January. CMS just issued the information on how this will lower patients' prices and put money in your pocket. How cool is that? Due to some calculation complications, drug companies will NOT have to pay fines initially. So, for right now, all is good.

Error in our last newsletter: I gave the wrong date for the onset of the confusing Two-Midnight Rule. Dr. Ronald Hirsch would like you to know that it was issued 3423 days ago from the expected release of this newsletter. If you have not seen Ron's website, it is a library of information about hospital rules.

Have a big cup of hot cocoa with those silly little marshmallows,

Da' Mistress

HCCs: Why Do We Care?

For years, practices have called me wondering what the heck these Medicare Advantage and other commercial plans are doing auditing their records. Welp, they were trying to up their HCC scores and get more money for treating your patients. You may have heard about Centene, CIGNA, United, and Sutter Health paying back huge sums of money to Medicare and Medicaid. We have more about this in Sound Bytes below. These overpayments were originally due to the upcoding of HCCs which got them way too much money. So, you first need to know that HCCs make capitated plans, and/or participating providers get higher per-member per-month payments.

But how does this help my organization reimbursement-wise? HCCs adjust your cost scores in MIPS and value-based programs such as the Oncology Care Model or Accountable Care Organizations. Everyone is pretty much involved with them. So, understanding HCC coding has become necessary for healthcare organizations to succeed in new payment models. HCC coding enables providers and billing/coding folks to account for future health risks and costs at the patient level. If your patients are not correctly coded, your patients may be assigned to the incorrect risk group, and if you are capitated, that can be a killer. Inaccurate risk classification has significant financial implications for the potential payments your practice or hospital will receive. Here are some steps you can follow:

  • Adhere to the M.E.A.T. Criteria--While you need to only code an HCC once per calendar year, the codes must meet (no pun intended) certain standards to be correctly counted. They just cannot be extracted from old records and other documentation. M.E.A.T. is at the heart of risk management. To be captured for risk adjustment, the documentation for a valid diagnosis should provide evidence of how the condition is monitored, evaluated, assessed, or treated (M.E.A.T.). M.E.A.T is the only way to support a diagnosis worthy of HCC inclusion for a face-to-face visit. Each encounter should be treated as distinct and in accordance with M.E.A.T. criteria, as follows:
  • Monitor: signs, symptoms, disease progression, and disease regression.
  • Evaluate: test results, medication effectiveness, and treatment response
  • Assess: Ordering tests, discussion, reviewing records, and counseling
  • Treatment: Medication, therapies, and other treatment options
  • Educate providers: As HCC coding is far from intuitive, educating clinicians along the way is critical. The most crucial educational point is emphasizing the importance of accuracy to providers, not the score itself. Day in and day out, we see non-specific coding causing claim rejections. The same principles apply here. For example, look at the financial implications of using a diabetes code rather than coding diabetes with CKD. Your providers can be taught about the clinical and monetary value of specificity in your specialty. They can also be told how to best document the fact that they have met M.E.A.T. criteria.
  • Maintain an Accurate Problem List: For years, healthcare organizations have entered data into an EMR, resulting in a large amount of data and, most likely, an inaccurate problem list. This goes along with the cutting and pasting of history and physical components. The objective here is not to have the longest problem lists of all providers but rather to have lists of the diagnoses and problems you are actually addressing. To ensure an accurate problem list, remove duplicate and inactive diagnoses, identify critical areas with discrete data in the EMR, and prioritize results using a diagnosis preference list that includes specific codes in terms of laterality, specific disease sites, and etiology and manifestation.
  • Track Performance: For those with very large groups or if you are capitated with some plans, it is smart to have a skilled HCC coder or coders in your organization. HCC coders analyze HCC data and explain how certain areas can be improved while identifying poor documentation areas. If you are a smaller group, send your billers to HCC workshops and ensure they check billed codes regularly. The coder review process should be completed concurrently rather than retrospectively for complex patients. Coder reviews should take place before claims are submitted to reduce rework, duplication of efforts, and the necessity for alternate submission forms to adjust initial claims. All thanks to coding experts!
  • Prepare for Each Encounter: Advanced Practitioners and Nurses often review charts before patients arrive. Preparing health care providers for complex HCC patients ahead of time allows them to address chronic conditions and capture HCCs more wholly and accurately. Then, they can get to the M.E.A.T. of the case! The process can be performed as part of the morning report or pre-day prep, or it can be done through EMR alerts. When prepared, providers can better diagnose, treat, and document patients, regardless of the method.
  • SDoH: One thing that occurred to me when these Z-codes came out was that these would factor into HCC scores. And a whole lot of organizations are pressuring to have these codes included. Well, guess what--they do not yet count as HCCs! Blows me away.

For questions regarding HCCs, there are many references, articles, and classes. Here is a really good article for physicians. Here is one for coders and billers.

Medicare Advantage and Part D 2024

On February 1, 2023, the US Centers for Medicare & Medicaid Services (CMS) released the Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and D Payment Policies. For years, I kind of ignored this thing. But, pharmacy drugs and Medicare Advantage have grown to a gargantuan size. So, here goes...The Advance Notice is released annually, much earlier than other future rules. The Advance Notice always includes proposed updates to the capitation and risk adjustment methodologies (hence, our first article) used to calculate payments to MA plans, as well as other payment policies that impact Part D. Comments are due March 3, 2023.

Among other provisions, the Advance Notice includes the following proposals:

  • Payment Changes / Growth Rates: CMS estimates the expected average change in revenue for MA organizations (MAOs) increase by 1.03% in CY 2024, down from an 8.50% increase in CY 2023. The reasons for the drop include normalization of and changes to the Part C risk adjustment model resulting in a -3.12% decrease, plus a -1.24% decline due to changes in "Star Ratings" for these plans are driving the lower increase in revenue.
  • Part C Risk Adjustment Model Revision: CMS proposes several changes to the Hierarchical Condition Category (HCC) risk adjustment model. Plus, there is an additional rule for validating the risk profiles recorded by MA plans. Remember all the plans who tried to up their HCC scores and got fined? CMS wants to make it hard and also reduce rates to account for HCC up-coding. The impact of the proposals on MA risk scores is projected to be -3.12%, which represents $11.0 billion in estimated net savings to the Medicare Trust Fund in 2024. The proposed changes include:
  • Restructuring of condition categories using the ICD-10 code classification system instead of the ICD-9 classification system. It has only taken eight years!
  • Updating the FFS data years underlying the model from 2014 for diagnoses and 2015 for expenditures to 2018 for diagnoses and 2019 for expenditures--whatever that means.
  • Revising the denominator year used to determine the average per-capita predicted expenditures to create relative factors in the model from 2015 to 2020.
  • Clinical revisions to the model adding constraints and removing several HCCs to reduce the effect of MA coding variation from FFS on risk scores (e.g., removal of HCC 47 Protein-Calorie Malnutrition).

Specifically, the Advance Notice discusses:

  • Clinical Revisions: CMS explains that it reviewed conditions where coding variation in MA was highest relative to FFS with its clinical experts to identify conditions with discretionary coding variation. Discretionary diagnostic categories particularly subject to intentional or unintentional discretionary coding variation or inappropriate coding by health plans/providers, or that are not clinically or empirically credible as cost predictors, should be excluded from the model. 
  • Changing HCCs: CMS would increase the number of payment HCCs from 86 in the current model to 115 in the proposed model. This is due to newly created HCCs and the splitting of existing HCCs due to moving from ICD-9 to ICD-10. The number of ICD-10 diagnosis codes mapped to an HCC for payment would decrease from 9,797 to 7,770. The proposed reclassifications reflect CMS’ assessment of conditions coded more frequently in MA relative to FFS.
  • ESRD Risk Adjustment Model: For CY 2024, CMS will continue to use the 2023 ESRD risk adjustment models for MA plans. Again, this is to account for these higher-cost patients.

Inflation Reduction Act of 2022 (IRA): The Advance Notice discusses several updates made by the IRA for 2024, including the following:

  • Part D Drug Cost Sharing: Cost sharing for covered Part D drugs will be eliminated for beneficiaries in the catastrophic phase. Part D sponsors will be on the hook for 20% of the costs incurred after a Part D beneficiary’s costs exceed the annual out-of-pocket threshold, compared to roughly 15% of costs in prior years.
  • Low-Income Subsidy (LIS) Program: The income limit for the full LIS benefit will increase from 135% to 150% of the federal poverty level (FPL). In 2024, individuals who earn between 135% and 150% of the FPL and meet specific resource criteria will now be eligible for the full low-income premium and cost-sharing subsidies, as well as a $0 deductible.
  • Insulin Cost Sharing: In the initial coverage and coverage gap phases, cost-sharing may not exceed $35 for a month’s supply of covered insulin products. The deductible will not apply to Part D-covered insulin products.
  • Adult Vaccine Cost Sharing: The deductible will continue to not apply to adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP). At any point in the benefit, these vaccines are exempt from cost sharing when administered consistent with ACIP’s recommendations. Part D sponsors will provide this coverage as a basic benefit, and such costs should be reflected in plan bids.
  • Base Beneficiary Premium: The base beneficiary premium growth will be capped at 6% in 2024. IRA provisions that take effect in 2025 and later will be addressed in future Advance Notices and Rate Announcements.

Part C and D "Star Ratings": These Star Ratings are the quality measures for health plans in Parts C and D. CMS includes in the Advance Notice a list of the measures used to calculate the 2024 Star Ratings, as well as a list of the emergency areas that were affected by emergency declarations in 2022 for purposes of making adjustments under the extreme and uncontrollable circumstances policy.

Annual Adjustments to Part D Benefit Parameters: CMS must update the parameters for the defined standard Part D drug benefit each year. This is meant to ensure that the actuarial value of the drug benefit tracks changes in Part D expenses. For non-LIS beneficiaries, the Advance Notice outlines the benefit parameters for defined standard benefits in 2024 in this document.

For more information regarding proposed changes to Parts C and D, see the original document.


CMS Explains Drug Rebate for Part B Drugs

As rebates for inflation will soon be part of Part B (they became part of Part D in October), further explanation is due. So, last Friday (February 10), CMS issued The Fact Sheet: Medicare Prescription Drug Inflation Rebate Program Initial Guidance. Unlike much Medicare guidance, it is easy to read and enhances understanding of these rebates for inflation.

As part of the Inflation Reduction Act, pharmaceutical companies will pay rebates to Medicare when their prescription drug prices increase faster than the inflation rate for certain drugs dispensed to people with Medicare. Quarterly rebate reports may be issued to manufacturers as early as July 1, 2023; however, CMS may delay sending reports to manufacturers for 2023 and 2024 until September 30, 2025. The delay is due to the interaction with 340B and Medicaid rebates. Manufacturers must pay rebates within 30 days of receiving the rebate report, so the earliest rebates would be due is August 1, 2023.

The Department of Health and Human Services announced the next steps outlining how it will implement the new program, which should lower drug costs for millions of Americans. 

For decades, Americans have spent more on prescription drugs than people in other countries, paying two to three times more for the same drugs. The Biden-Harris administration’s law changes Medicare so that millions of people with Medicare should spend less on their prescriptions. For the first time in Medicare, drug companies will have to pay for increasing prescription drug prices faster than the inflation rate. In addition, people with Medicare may pay a lower coinsurance for certain Medicare Part B drugs. The big question is: what will YOU be paid?

Effective January 1, 2023, the Inflation Reduction Act of 2022 requires drug companies that raise their prices for certain Medicare Part B drugs faster than the rate of inflation to pay Medicare a rebate. Starting April 1, 2023, beneficiary coinsurance for certain Part B drugs (including biological products) with prices that increased at a rate faster than the rate of inflation will be adjusted, so beneficiary coinsurance is based on the lower inflation-adjusted payment amount. This new inflation rebate applies to certain Medicare Part B single-source drugs and biological products, including biosimilar biological products.

Starting April 1, 2023, when the Medicare Part B payment amount for a Part B rebatable drug for a calendar quarter is higher than the inflation-adjusted payment amount:

  • Patient coinsurance will be based on 20% of the inflation-adjusted payment amount for the quarter and will be reflected as a percentage (less than 20%) of the Medicare Part B payment amount.
  • The Medicare portion of your payment will increase for the difference between the Medicare Part B payment amount and patient coinsurance, minus any Part B deductible and sequestration. Say what??? You are actually going to get paid for the inflation--holy guacamole!!
  • For example, if the Medicare Part B payment amount for the drug is $100 and the patient coinsurance is 18.525%, you would charge the patient $18.52. Typically, the Medicare portion of the payment to practitioners for Part B drugs and biologicals is limited to 80%. When the patient coinsurance is adjusted, the percentage of the Medicare portion of the payment to you will be higher. In this example, the percentage of the Medicare portion would be 81.475% or $81.48 of the Medicare Part B payment amount.
  • You must charge patients the correct amount of coinsurance, which may change quarterly. Read on for how this will work.

To help you out, CMS will:

  • Publish Medicare Part B payment amounts for all drugs and biologicals in the quarterly drug pricing files
  • Publish patient coinsurance percentages for all drugs and biologicals, including adjusted patient coinsurance percentages if the Medicare Part B payment amount is greater than the inflation-adjusted amount, in the quarterly drug pricing files
  • Show in the quarterly drug pricing files:
  • Your Medicare portion of the payment and the patient coinsurance percentage for each HCPCS code of a drug or biological so that you can charge patients correctly
  • Inflation-adjusted coinsurance in the Notes column if the coinsurance for a Part B drug or biological should be less than 20% of the Medicare Part B payment amount

CMS is seeking comments for the implementation of the Part B inflation rebates on topics such as:

  • The process CMS intends to use to determine the number of drug units for calculating rebates;
  • The process CMS intends to use to identify and remove 340B units for calculating rebates (since those drugs already are rebated);
  • The process CMS intends to use to identify and remove units for which a Medicaid drug rebate was paid for a covered outpatient drug;
  • Operational considerations related to the inclusion of units furnished to beneficiaries enrolled in Medicare Advantage plans;
  • The processes CMS intends to use to reduce or waive the rebate amount in the case of a drug shortage or severe supply chain disruption;
  • The process CMS intends to use to allocate the financial responsibility for the rebate amount for a calendar quarter where there is more than one manufacturer of the Part B rebatable drug; and 
  • The process CMS intends to use to ensure the integrity of the rebate determination process.

Comments are due March 11, 2023. Read the full press release.


Imagine if you had an absolutely horrid, debilitating disease that will ultimately take your life. Now, imagine if your insurance company will not pay for the drug that might help you. That payer is our dear friend, CIGNA who is restricting a new drug for ALS. The health insurer’s national formulary considers Amylyx Pharmaceuticals’ Relyvrio to be “experimental, investigational or unproven for any use,” and now does not recommend covering it."CIGNA states in the policy: Due to the lack of clinical efficacy data, approval is not recommended for Relyvrio". This really sucks for these patients...The Public Health Emergency will end on May 11. Further, Medicare will not cover over-the-counter rapid tests for COVID-19 after the public health emergency ends on May 11, according to CMS...Medicare Advantage continues to receive criticism for its prior authorization process and denials. Over 35 million prior authorization requests were submitted to 515 Medicare Advantage contracts in 2021, representing 23 million beneficiaries. This translates to 1.5 requests per beneficiary. At the low end, Kaiser Permanente received 0.3 requests per beneficiary, while Anthem received a high of 2.9 requests per beneficiary.Out of 35.2 million prior authorization requests, 33.2 million were favorable, indicating that the requested item or service was fully covered. Six percent of the requests, or 2 million, were denied fully or partly. Most of these determinations (1.6 million) were denied fully, while 380,000 requests had a service or item that was partially covered. Insurers that received more requests generally denied a lower share of the requests, with the exception of Centene, which had a high number of determinations (2.6 per beneficiary) and one of the highest denial rates (10 percent). CVS/Aetna and Kaiser Permanente had the highest denial rates of 12 percent, while Anthem and Humana had the lowest ones at 3 percent. Among the 2 million prior authorization requests denied, 212,000, or 11 percent, were appealed. The share of appealed denials ranged from 1 percent for Kaiser Permanente to 20 percent for CVS/Aetna...Amgen has launched the first Humira biosimilar. Here’s the official press release documenting the launch of Amjevita™ (adalimumab-atto). As the release notes, Amjevita will be available at different two wholesale acquisition cost (WAC) list prices: a price that is 5% below Humira’s current WAC, and a price that is 55% below Humira’s current WAC. This crazy pricing is a direct result of PBM greed. Read a very fine article regarding this from Dr. Adam Fein. Expect to see more of this playing to the PBMs in the future...We have talked a lot about RISK in this edition of the newsletter. In addition, under federal rules, CMS has the authority to conduct annual audits to ensure MA payment integrity through a process called RADV. On January 30, CMS released the final MA RADV rule. CMS noted that it expects to recoup approximately $4.7 billion over 10 years through RADV based on the updated policies. This is really in the weeds for many of you, but if you want to know more, read this great article from our friends at Avalere...Two more drug companies -- Germany-based Bayer HealthCare Pharmaceuticals and EMD Serono, a subsidiary of Germany-based Merck KGaA -- have announced they will restrict the number of contract pharmacies hospitals and clinics can use to dispense discounted drugs under the 340B program. The new policies are expected to go into effect on March 1, making the companies the 20th and 21st drug makers to impose such restrictions since 2020. The announcements come just after the Third Circuit Court of Appeals ruled that drug companies are permitted to limit 340B entities to using just one contract pharmacy to distribute discounted drugs....Want to know all of the drug pricing changes in February? Our friends at have just what you need! Just click right here and they will appear! Magic!....A Commonwealth Fund report found the US has the highest infant and maternal mortality rates, highest death rates from treatable and preventable conditions, the highest percentage of people with multiple chronic conditions, and lowest life expectancy at birth than any other high-income country, despite spending the most on health care. An analysis of health statistics from international sources showed US healthcare spending was nearly twice as much as the average for OECD countries in 2021...Centene will pay $143 million to settle allegations from attorneys general in two states that a pharmacy benefit manager subsidiary misrepresented costs to obtain Medicaid overpayments...Plus they are even paying MORE in California. Ohio's attorney general Dave Yost filed a suit against Centene in March alleging that its Envolve Pharmacy Solutions subsidiary failed to represent costs to the Ohio Department of Medicaid and that the PBM would submit reimbursement requests for amounts that third parties had already paid. Centene is the parent company of Ambetter, Harmony Health, HealthNet, Wellcare, and a host of other terrible payers. A similar investigation was conducted in Mississippi. Centene will pay $88 million to Ohio and $55 million to Mississippi to resolve the case, with Yost's lawsuit to be dismissed. Centene claims no fault in that arrangement and denies liability in the settlement, the insurer said. Centene added that it is in discussions with a plaintiff's group to resolve similar allegations in other states and has recorded a reserve estimate of an additional $1.1 billion related to this issue...A Texas federal judge granted wins last Monday to plaintiffs in a consolidated lawsuit challenging a federal surprise medical billing rule relating to an arbitration system for handling payment fights between out-of-network providers and health insurers, finding the rule places "a thumb on the scale" in insurers' favor. What a shock. On Friday, February 10, the Biden Administration halted the IDR settlements based on the Judges's decision. The No Surprises Act has been in hot water since the beginning.






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This newsletter is a brief interpretation of information. It may be subject to typos, misinterpretation, and misapplication. This company and its parent assume no liability for the content herein. Moreover, this is not consultative or legal advice. Billing of claims and payment thereof is individual to payers and circumstance. Providers should check with each payer prior to billing. This information is time-sensitive and may change at any time. Please ensure that you constantly check for new information.