Fee-for-service Medicare

No News Is Bad News for MAOs Hoping to See Pay Hike in 2025

The April 1 release of final rate projections for Medicare Advantage and Part D plans was largely uneventful as CMS maintained the same all-in estimate of what plans can expect to see, on average, in terms of a reimbursement update next year. But the market did not respond well: MA-exposed insurers’ shares took a tumble and equity analysts warned that a revenue decline — before coding trend — could lead to benefit cuts and footprint reductions.

Industry trade groups did not respond favorably, either. In a statement released immediately after the rate announcement, AHIP President and CEO Mike Tuffin said the finalized policies would “put even more pressure on the benefits and premiums of 33 million Medicare Advantage beneficiaries who will be renewing their coverage this fall,” particularly as the MA and Part D programs face regulatory and legislative changes.

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© 2024 MMIT

New Survey Digs Into Highs and Lows of MA vs. Traditional Coverage

Most seniors are happy with their health benefits, whether they get coverage via Medicare Advantage or traditional Medicare, but some pain points persist across programs. And when it comes to supplemental benefits that have attracted members to MA, a sizable portion of beneficiaries aren’t even using them. That’s according to new research from the Commonwealth Fund, which released results from its 2024 Value of Medicare Survey last month.

The nationally representative survey of 3,280 Medicare beneficiaries found that a whopping 96% of MA members said their coverage fully or somewhat met their expectations, vs. 93% of traditional Medicare enrollees. Medicare-Medicaid dual eligibles, meanwhile, were much more satisfied with MA than their counterparts in traditional Medicare. The most common reasons beneficiaries reported any dissatisfaction with their coverage were a lack of covered services, uncertainty about benefits and affordability issues. MA beneficiaries were slightly more likely to report frustrations with costs and coverage limitations.

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Coding Intensity, Favorable Selection Fuel MedPAC’s Push for MA Pay Reform

In its latest report to Congress, the Medicare Payment Advisory Commission (MedPAC) asserted that the federal government now pays approximately 22% more for Medicare Advantage enrollees than it would if they were enrolled in traditional fee-for-service (FFS) Medicare, for projected higher spending of $83 billion in 2024. That figure came in slightly below projections provided at a January meeting but higher than MedPAC’s previously estimated differences in spending, largely because it accounted for favorable selection. And while the commission said it “strongly supports the inclusion of private plans in the Medicare program,” it maintains that the current payment system is ripe for reform.

According to MedPAC’s latest Report to the Congress: Medicare Payment Policy, released March 15, the federal government in 2023 paid MA plans roughly $455 billion for serving approximately 31.6 million enrollees — 52% of Medicare beneficiaries with both Parts A and B coverage.

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News Briefs: BMA-Sponsored Paper Predicts $33 PMPM Cut to Supplemental Benefits

A recent report commissioned by the Better Medicare Alliance (BMA) estimated that Medicare Advantage per-member per-month (PMPM) payments could drop by 1.0% if CMS finalizes proposals contained in the 2025 Advance Notice. It also estimated that the PMPM value of supplemental benefits, or reductions to premiums and cost sharing, would decline by an average of $33 or more. In its preliminary rate notice released in January, CMS projected that MA plans could see an average revenue increase of 3.70%, which included an estimated a -2.45% revenue decline due to a combination of risk model changes that are being phased in and fee-for-service Medicare normalization, an effective FFS growth rate of 2.44%, and an average risk score trend of 3.86%. The report, prepared by Berkeley Research Group (BRG), projected that MA medical cost inflation will rise by 4% to 6% in 2025 and that CMS’s estimated pay increase will not adequately cover increased medical expenses. Citing a National Association of Insurance Commissioners analysis, BRG pointed out that PMPM medical costs in MA increased by an estimated 7.3% for the first nine months of 2023, while recent insurer earnings reports suggest medical costs will continue to grow in 2024.

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© 2024 MMIT

News Briefs: SCAN Group, CareOregon Abandon Combo Amid Regulatory Scrutiny

More than a year after unveiling their intent to form HealthRight Group, SCAN Group and CareOregon have abandoned their plans to combine. According to news reports, the parties called off their proposed combination on Feb. 13 after the Oregon Health Authority twice delayed offering a recommendation on whether to approve the deal, which would have created a $6.8 billion Medicaid and Medicare Advantage insurer. “SCAN and CareOregon share a commitment to preserving and protecting nonprofit, locally based healthcare and that has always been our goal in combining under the HealthRight Group,” said SCAN, the parent company of not-for-profit Medicare Advantage insurer SCAN Health Plan. “Our intent in coming together was to support Oregon’s healthcare system and the people that CareOregon serves. However, despite our efforts, there are still questions about our combination. As a result, SCAN Group and CareOregon have mutually agreed to withdraw our applications with the Oregon regulatory agencies and to terminate our affiliation agreement.” SCAN and CareOregon, which serves Medicare and Medicaid enrollees in Oregon, in December 2022 told AIS Health, a division of MMIT, that the partners aimed to be a “formidable not-for-profit partner” in the government program space.

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What Was in MedPAC’s Controversial MA Status Report?

Tensions were unusually high at a Jan. 12 meeting of the Medicare Payment Advisory Commission (MedPAC), which is preparing its annual March report to Congress on the state of Medicare Advantage, among other things. While the routine discussion of the commission’s January status report hit several familiar notes — MA is becoming increasingly popular in an industry plagued by consolidation, excessive coding is driving up program costs, and quality bonus payments don’t reflect high quality care — one commissioner called out the group’s perceived lack of neutrality as the industry prepared for CMS’s 2025 Advance Notice.

MedPAC projects that in 2024, the government will pay $88 billion more than it would pay if MA members were instead beneficiaries of fee-for-service (FFS) Medicare, continuing a trend that has proliferated in recent years. These overpayments, MedPAC analysts outlined for the commission, are driven by MA plans’ enrollment of a largely healthy risk pool, which is then subject to “coding intensity” (i.e., the higher coding patterns due to financial incentives that don’t exist in FFS Medicare).

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Risk Adjustment, UM Practices Would Be Likely Targets if Lawmakers Pursue MA

With the recent filings of two proposed class action lawsuits against major Medicare Advantage insurers’ use of a computer algorithm to deny patient care, upcoming CMS audits of MA plans’ utilization management (UM) tactics and progressive lawmakers’ push for CMS to collect more data on coverage denials, the MA program is starting the year off under a microscope. And while major new policy developments are unlikely to come out of a split Congress this year, industry experts agree that prior authorization — along with risk adjustment and coding intensity — will continue to garner attention from lawmakers and regulators.

HealthScape Advisors Principal Cary Badger and Managing Director Alexis Seeder Levy point to three possible scenarios to watch for in 2024:

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Direct Contracting Model Achieves Savings, But ACOs’ Mileage Varies

Despite the program receiving continued pushback from progressive lawmakers, data from the since-renamed Global and Professional Direct Contracting (GPDC) Model suggests that it is making significant strides, with participants driving gross savings exceeding $870 million in 2022, more than seven times the $117 million in gross savings reported for performance year 2021. At least five known Medicare Advantage sponsors have subsidiaries participating in the model, which allows Accountable Care Organizations (ACOs) to share risk and receive capitated payments for serving fee-for-service (FFS) beneficiaries.

CMS, in a fact sheet highlighting the performance year 2022 data, observed that the total financial savings increased year over year because of “growth in model participation, a longer performance period in PY2022 (12 months vs. 9 months in PY2021), and performance improvements by model participants as they gained experience.” Last year, 99 Direct Contracting Entities participated in the model, up from 53 DCEs in 2021, with 21 million beneficiary months, compared with 3 million beneficiary months in 2021.

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With Mixed Results Across ACOs, Direct Contracting Model Serves Up Seven-Fold Increase in Savings

Despite the program receiving continued pushback from progressive lawmakers, data from the since-renamed Global and Professional Direct Contracting (GPDC) Model suggests that it is making significant strides, with participants driving gross savings exceeding $870 million in 2022, more than seven times the $117 million in gross savings reported for performance year 2021. At least five known Medicare Advantage sponsors have subsidiaries participating in the model, which allows Accountable Care Organizations (ACOs) to share risk and receive capitated payments for serving fee-for-service (FFS) beneficiaries.

CMS, in a fact sheet highlighting the performance year 2022 data, observed that the total financial savings increased year over year because of “growth in model participation, a longer performance period in PY2022 (12 months vs. 9 months in PY2021), and performance improvements by model participants as they gained experience.” Last year, 99 Direct Contracting Entities participated in the model, up from 53 DCEs in 2021, with 21 million beneficiary months, compared with 3 million beneficiary months in 2021.

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© 2024 MMIT

News Briefs: House Members Urge CMS to Reform Broker Compensation in MA

One week after the Senate Finance Committee held a hearing on misleading marketing and broker compensation practices in Medicare Advantage, Reps. Frank Pallone, Jr. (D-N.J.) and Richard Neal (D-Mass.) wrote CMS Administrator Chiquita Brooks-LaSure urging the agency to increase oversight and transparency of broker participation and compensation. Specifically, they asked Brooks-LaSure to address this in the upcoming Contract Year 2025 Part C and D Policy and Technical Changes proposed rule, which was submitted to the White House Office of Management and Budget on Aug. 24 and cleared OMB on Oct. 27, with publication still pending as of AIS Health press time. “We appreciate the previous actions taken by [CMS] to prioritize the health and well-being of our nation’s seniors by ensuring that beneficiaries have access to accurate and unbiased information about Medicare coverage. These policies protect the integrity of the Medicare program and ensure that seniors are able to access affordable health coverage,” wrote Pallone, who is ranking member of the House Energy and Commerce Committee, and Neal, ranking member of Ways and Means. But they encouraged CMS to build on those policies and reform total broker payments by setting standardized limits on compensation. Ensuring such payments are set at “reasonable amounts” would eliminate “incentives that encourage enrollment in plans with the highest broker payment that may not be best suited for seniors’ health needs,” they wrote.

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© 2024 MMIT