RADAR on Medicare Advantage

CMMI Director Shares Vision for More Physician Accountability

Aligning with the Biden administration’s goal of improving health equity, the CMS Center for Medicare and Medicaid Innovation (CMMI) last year unveiled a “strategy refresh” that included health equity as a key objective in testing models of care for Medicare and Medicaid beneficiaries. Another strategic goal was to increase the number of beneficiaries in a care relationship where the provider is accountable for quality and total cost of care, with the objective of having all Medicare beneficiaries aligned with accountable entities by 2030.

Addressing a few recent changes to existing models, CMMI Director Elizabeth Fowler, Ph.D., said the agency’s goal in redesigning the Global and Professional Direct Contracting (GPDC) Model was to reorient it toward provider participants and respond to feedback from stakeholders. The model had been criticized for furthering the privatization of Medicare and allowing for-profit entities to manage fee-for-service (FFS) Medicare beneficiaries without their full knowledge and consent.

News Briefs: CMS Will Now Cover and Pay for Over-the-Counter COVID-19 tests for Medicare Enrollees

Effective April 4 and through the end of the COVID-19 public health emergency, Medicare will cover and pay for over-the-counter COVID-19 tests at no cost to people with Medicare Part B, including those enrolled in Medicare Advantage plans. Through the new initiative, beneficiaries can obtain up to eight tests per month from participating pharmacies and health care providers, CMS said on April 4. The agency noted that this is the first time that Medicare has covered an over-the-counter self-administered test at no cost to beneficiaries.

UnitedHealth Group on March 29 said it will spend approximately $6 billion in cash to acquire LHC Group, Inc., a home health care company. If the deal goes as planned, LHC will be folded into UnitedHealth’s Optum division; the companies expect to complete the transaction in the second half of the year. The move will make UnitedHealth a major player in home care and hospice care, positioning it alongside rival Humana Inc., which purchased Kindred at Home last year.

MA Stakeholders Take Issue With Bevy of Risk-Related Proposals

From payment related to the growing number of Medicare Advantage enrollees with end-stage renal disease (ESRD) to the proposed exclusion of 2020 data from risk score assumptions, several commenters responding to the 2023 preliminary rate notice questioned various factors that will be used to determine MA plan reimbursement next year. And while AHIP and other MA stakeholders voiced strong support for CMS keeping the coding intensity adjustment at the statutory minimum for 2023, the Medicare Payment Advisory Commission (MedPAC) took the opportunity to reiterate its contention that MA organizations are overpaid and that the adjustment does not adequately account for the differences in coding between MAOs and fee-for-service (FFS) Medicare.

In the 2023 Advance Notice for MA and Part D plans, CMS said it intended to continue to apply an across-the-board adjustment of 5.9% — the statutory minimum — to offset the effects on MA risk scores of higher levels of coding intensity in MA relative to FFS. AHIP, in its March 4 letter to CMS, said it strongly supports retaining that overall risk score reduction but asked for more detail around CMS’s proposal to exclude 2020 data in its annual “FFS normalization” adjustment, its assumption that 2023 FFS risk scores would return to pre-pandemic trends, how it will incorporate 2021 utilization data into the normalization factor for 2024, and how CMS arrived at the MA risk score trend of 3.5% for 2023.

With AEP Switching Low, MAOs Must Monitor Member Experience

Medicare beneficiaries have more plan choices than ever before, in addition to a dizzying array of supplemental benefits and increased PPO options, but plan switching has stalled, according to a new study from Deft Research. That leaves Medicare Advantage plans to consider whether low switching is largely due to members feeling satisfied with their current coverage or overwhelmed with the sheer amount of information being presented to them, observed industry experts during a recent webinar hosted by Rebellis Group LLC. As a result, members’ experience during the Annual Election Period may warrant a closer look as plans think about their strategy for the next AEP.

In its 2022 Medicare Shopping and Switching Study, Deft observed an overall switching rate of 11% during the most recent AEP. That’s compared with 12% seen in 2021 and 23% in 2015, reported George Dippel, executive vice president with Deft, during the March 10 webinar, “With more choices than ever, how will your Medicare Advantage plan stand out in 2023?” The annual survey featured responses from 3,389 Medicare enrollees, including 1,846 seniors who were enrolled in a Medicare Advantage plan in 2021 and 1,183 seniors with Medicare Supplemental (MedSupp) coverage. The remaining 360 respondents had Original Medicare only (OMO).

Ongoing DOJ Lawsuits Heighten MA Risk Adjustment Scrutiny

Health care fraud was the largest driver of False Claims Act recoveries last year, the Dept. of Justice (DOJ) recently reported. Of the more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government for the fiscal year ending Sept. 30, 2021, more than $5 billion related to matters involving the health care industry, including drug and medical device manufacturers, managed care providers and hospitals, the DOJ estimated. Medicare Advantage-related recoveries included a $90 million settlement with Sutter Health to resolve allegations that it submitted unsupported diagnosis codes that led to inflated payments to MA plans and the health system and a $6.3 million settlement with Kaiser Foundation Health Plan of Washington (formerly Group Health Cooperative) over similar allegations.

In Latest Report to Congress, MedPAC Maintains MA Plans Are Overpaid

Serving as a timely companion to its comment letter on the 2023 Advance Notice for Medicare Advantage and Part D plans, the Medicare Payment Advisory Commission (MedPAC) on March 15 released its 2022 March Report to the Congress: Medicare Payment Policy. The first of two annual reports containing policy recommendations, it echoed many of MedPAC’s prior points regarding MA plan reimbursement, namely that plans are overpaid for delivering services at below the cost of fee-for-service (FFS) Medicare.

MedPAC observed that MA plan bids continue to trail FFS, with the average plan bid coming in at 15% below FFS Medicare costs for 2022. When accounting for coding intensity, Medicare payments to MA plans this year will average 104% of FFS spending, like 2021, MedPAC estimated. In other words, “Medicare currently pays 4% more to MA plans for the average enrollee than it would have had that enrollee remained in traditional fee for service,” explained MedPAC Executive Director Jim Mathews, Ph.D., during a March 15 press briefing on the new report.

MedPAC Urges CMS to Take Action on Coding Intensity Overpayments

CMS’s coding intensity adjustment, which is used to account for the estimated difference between risk scores that hypothetical beneficiaries would receive if enrolled in Medicare Advantage vs. fee-for-service (FFS) Medicare, has led to more than $91 billion in payments to MA plans between 2007 and 2022, asserted a March 3 letter from the Medicare Payment Advisory Commission (MedPAC) to CMS Administrator Chiquita Brooks-LaSure. The agency in its 2023 Advance Notice proposed to use the statutory minimum adjustment of 5.9%, which MedPAC estimated will lead to an inflated $16.2 billion in payments — and that’s on the conservative end, the commission noted. MedPAC first raised this issue in 2016, when it urged CMS to consider a new model that would use two years of FFS and MA diagnostic data, exclude diagnoses documented only on health risk assessments from either MA or FFS, and then apply an adjustment that fully accounts for the remaining coding differences. The commission in its March letter reiterated its support for this approach.

News Briefs: City of New York Appeals Court Decision on Retiree Switch to Group Medicare Advantage

New York City is appealing a recent ruling by the New York Supreme Court that bars the city from imposing a premium on public sector retirees who opt out of group Medicare Advantage coverage that starts April 1. Anthem, Inc. was initially contracted to provide MA coverage to an estimated 200,000 retirees and dependents for a Jan. 1 effective date. Manhattan Supreme Court Justice Lyle Frank on March 3 ruled that automatic enrollment of beneficiaries cannot start until April 1, retirees must be able to opt out of the new coverage up to three months after the effective date, and they do not have to pay a fee to retain their traditional Medicare coverage. The city’s attempt to charge $191 monthly is in violation of New York City law, which requires the municipal employer to “pay the entire cost of health insurance coverage for city employees, city retirees and their dependents,” Frank ruled. The city’s Office of Labor Relations on March 4 filed an appeal; the NYC Organization of Public Service Retirees at press time had filed a cross-appeal and was gathering signatures for a petition urging Mayor Eric Adams (D) not to pursue the appeal.

Revamped Direct Contracting Model Still Holds Promise for MAOs

After progressive Democratic lawmakers urged CMS to shut down a fee-for-service Medicare model aimed at fostering more value-based care arrangements, the agency’s Center for Medicare and Medicaid Innovation (CMMI) on Feb. 24 unveiled a revamped version that it said more closely aligns with its “vision of creating a health system that achieves equitable outcomes through high quality, affordable, person-centered care.” While the three types of Accountable Care Organizations (ACOs) that may participate starting next year appear to largely mirror the Direct Contracting Entities (DCEs) of the current Global and Professional Direct Contracting (GPDC) Model, CMS aims to ensure that participants in the new model operate as provider-led organizations, have a proven track record of providing care in underserved communities and will not be shifting any enrollees into Medicare Advantage — a key concern expressed by lawmakers and advocates.

Geographic Expansions Assisted 2022 AEP Winners’ Major Gains

Medicare Advantage membership has grown by 8.5% since February 2021 to top 28.6 million lives, according to AIS Health’s analysis of data that included enrollment during the 2022 Annual Election Period (AEP). While nearly two-thirds of all new enrollees selected a plan from market leaders UnitedHealthcare, Humana Inc. or CVS Health Corp.’s Aetna, several regional insurers performed well above average, driven largely by service area expansions, provider pacts and benefit enhancements. (Per AIS’s research methodology, the following figures do not include lives enrolled in CMS’s Financial Alignment Initiative demonstration plans serving about 451,000 Medicare-Medicaid dual eligibles or participants in Programs of All-Inclusive Care for the Elderly.)