Fee-for-service Medicare

Overwhelming consolidation in the dialysis provider market, dominated nationally by two organizations, may have a chilling effect on the financial health of some Medicare Advantage plans, which hold limited negotiating power barring regulatory reform, says a new study.

Since the 21st Century Cures Act loosened enrollment rules in 2021, allowing more patients with a previous diagnosis of end-stage renal disease (ESRD) to join Medicare Advantage, plans have witnessed a significant shift. More than 40,000 fee-for-service (FFS) Medicare members with ESRD switched to an MA plan during the first Annual Election Period under the new policy, according to the consultancy Avalere.

A new study published in Health Affairs urged government leaders to limit market consolidation among the largest dialysis providers as more and more seniors choose Medicare Advantage over fee-for-service (FFS) Medicare. Analyzing 2016 and 2017 outpatient Medicare claims data, the study authors found that MA organizations paid inflated costs for dialysis services compared to what FFS Medicare would have paid, especially to large national dialysis organizations — where the majority of patients receive treatment. Notably, MA plans’ median cost for in-network hemodialysis (the most common form of the therapy) was $301, which was markedly higher than the $232 median cost for out-of-network treatments. Findings were similar for peritoneal dialysis, the less common form of dialysis.

Amid mounting attention to Medicare Advantage organizations’ risk adjustment and prior authorization practices — which were the subjects of intense discussion during a recent House Energy & Commerce Committee hearing — the U.S. Supreme Court last month declined to take up a case brought by UnitedHealthcare (UHC) challenging CMS’s 2014 Overpayment Rule. Industry experts tell AIS Health, a division of MMIT, that this decision means CMS can begin enforcing its rule and may soon finalize its long-awaited extrapolation methodology for conducting Risk Adjustment Data Validation (RADV) audits.

“I think given the makeup of the court, on the one hand it was a bit surprising that they declined to take the case and that the denial of cert was issued without a comment. But on the other hand, given the general political landscape and issues that the court is considering, this is fundamentally an issue of administrative law and they’ve considered some other administrative law cases this term and I can understand why they decided not to take this case,” remarks Lindsey Brown Fetzer, member with Bass Berry & Sims and chair of the firm’s managed care practice.

In the latest settlement with a state Medicaid program over its pharmacy benefit practices, Centene Corp. has agreed to pay $13.7 million to the state of New Mexico. Upon referral from the Office of the State Auditor in collaboration with the New Mexico Health Services Dept. — which oversees the Centennial Care Medicaid program — Attorney General Hector Balderas (D) conducted an investigation focused on “concerns that Centene was layering fees and not passing on retail discounts” to the program, according to a June 13 press release from the AG’s office. Centene has spent millions to settle claims by state Medicaid programs that it overcharged them for prescription drugs and is in the process of restructuring its pharmacy benefit management platform.

While the headline takeaway from the latest Medicare Trustees report was that the Hospital Insurance (HI) trust fund will be exhausted two years later than previously projected, industry experts suggest that the report should light a fire under Congress to take swift legislative action to sustain Medicare financing. During a recent webinar hosted by the Bipartisan Policy Center, a panel of seasoned policy experts agreed that the report underscored the need for comprehensive structural reform to the Medicare program, including potential changes to the way Medicare Advantage plans are paid.

Published on June 2, the Medicare Board of Trustees’ annual report provides previous and projected costs for the Medicare program’s two separate trust funds: the Hospital Insurance trust fund (HI), which helps pay for inpatient hospital and other services covered by Medicare Part A; and the Supplemental Medicare Insurance trust fund (SMI), which helps pay for physician, outpatient hospital, home health and other services covered by Parts B and D.

As CMS continues to seek ways to improve its consumer-facing tools for comparing Medicare coverage options, the agency last month unveiled a series of tweaks to the Medicare.gov website and Medicare Plan Finder (MPF). The MPF in 2019 underwent a major makeover that reportedly cost the Trump administration $11 million but critics say fell short of fixing many of the issues highlighted in a July 2019 report from the Government Accountability Office. CMS has continued to make updates based on consumer feedback, but some industry experts suggest more detail around the supplemental benefits offered by Medicare Advantage plans would be useful.

“CMS is making Medicare.gov easier to use and more helpful for people seeking to understand their Medicare coverage, which is an essential part of staying healthy,” said CMS Administrator Chiquita Brooks-LaSure in a May 18 press release. “We are committed to listening to the people we serve as we design and deliver new, personalized online resources and expanded customer support options for people with Medicare coverage and those who support them.”

Sen. Elizabeth Warren (D-Mass.) and other progressive lawmakers wrote CMS Administrator Chiquita Brooks-LaSure asking the agency to reconsider recently finalized policies that would lead to an average revenue increase of 8.5% for Medicare Advantage plans next year. Citing the Medicare Payment Advisory Commission’s March 2022 Report to the Congress, lawmakers wrote that MA plans last year were paid 4% more per enrollee than fee-for-service Medicare, even though the program was designed to generate savings by paying insurers rates set at 95% of those used by FFS Medicare. “To preserve Medicare and its Hospital Insurance (HI) Trust Fund, we urge CMS to mitigate the announced payment increases for Medicare Advantage plans so they are on par with payments to fee-for-service Traditional Medicare and take additional steps to address overpayments and increase transparency in the Medicare Advantage program,” they wrote on April 20.

Perhaps the biggest headline from the largely uneventful 2023 final rate notice for Medicare Advantage and Part D plans is that they will, on average, receive a slightly higher-than-anticipated pay bump next year. Also, risk scores will not be reduced by any more than the statutory minimum adjustment of 5.9%. However, MAOs are still waiting on the final version of an MA and Part D rule containing some provisions that could impact 2023 bids, and sources at press time suggested its release was imminent.

With the April 4 release of the 2023 Rate Announcement, CMS finalized most aspects of its rate proposal for next year but increased the effective growth rate from 4.75% to 4.88%, bringing the expected average change in revenue to 8.50% — one of the highest updates in recent history. CMS maintained an estimated risk score coding trend of 3.5% and a fee-for-service normalization factor — which is used to offset the trend in risk scores and keep the FFS risk score at the same average level over time — of -0.81%. CMS also said it would continue to apply an across-the-board adjustment of 5.9% to offset the effects of higher levels of coding intensity in MA relative to FFS Medicare. That coding intensity adjustment generated much discussion in comment letters on the Advance Notice.

Anthem, Inc.’s pending contract to serve retired New York City workers and their dependents — which would have nearly doubled the insurer’s Medicare Advantage Employer Group Waiver Plan (EGWP) enrollment — is in peril. Just days before its planned start, the city’s comptroller refused to register the proposed contract and turned it back to Mayor Eric Adams (D) for a revised cost estimate, putting the already delayed transition to a retiree MA plan on hold.

“Due to the legal and budgetary uncertainties that remain while litigation over the City’s contract with Anthem Insurance Companies continues, the Comptroller’s office does not have sufficient information to register the proposed Medicare Advantage Plan contract at this time,” New York City Comptroller Brad Lander explained in a March 30 statement posted to the comptroller’s website. Subsequently, the city’s Office of Labor Relations posted that the transition to the NYC Medicare Advantage Plus Plan would not be implemented as of April 1 as planned and that all retirees “will remain in their current plans until further notice.”

Although Medicare Advantage is outpacing other payer types in the move from volume to value, there are still ways the program could hasten the shift to value-based care, experts agreed during a recent panel of the AHIP 2022 National Conference on Health Policy and Government Programs. These range from the increased use of Z-codes to document social determinants of health to the adoption of a Star Ratings measure that would influence more risk sharing between MA organizations and their providers.

According to the Health Care Payment & Learning Action Network survey, which is conducted in partnership with AHIP and the Blue Cross Blue Shield Association, 58% of MA payments to providers in 2020 were through an Alternative Payment Model (APM) such as the Shared Savings Program or an episodic/bundled care payment model, and 29.3% of such payments were for a risk-bearing arrangement. That’s compared with nearly 43% of payments through APMs in Traditional Medicare and roughly 35% in both commercial and Medicaid plans.