Fee-for-service Medicare

As CMS takes multiple steps to steer managed care organizations and states toward advancing health equity across government programs, the agency’s Office of Minority Health recently put out its annual report illustrating persistent disparities in Medicare Advantage. Released for National Minority Health Month and produced in collaboration with The RAND Corp., the 2023 Disparities in Health Care in Medicare Advantage by Race, Ethnicity, and Sex report showed some modest improvements on clinical care measures for a few groups, but a substantial proportion of clinical care scores continued to fall below the national average for American Indian/Alaska Native (AI/AN), Black and Hispanic MA enrollees.

Compared with the traditional, fee-for-service Medicare program, the MA program serves a larger proportion of minority enrollees. The April report compared care for six groups across 44 measures: (1) seven patient experience measures based on responses to the 2022 Consumer Assessment of Healthcare Providers and Systems (CAHPS), which was conducted between March and May of last year and asked respondents about care received in the six months prior to the survey, and (2) 37 clinical care measures based on the Healthcare Effectiveness Data and Information Set (HEDIS) that is collected from medical records and administrative data and reflects care received in 2021.

A Senate Finance Committee “secret shopper” investigation of Medicare Advantage plan provider directories turned up inaccurate, nonworking phone numbers or unreturned calls in 33% of 120 provider listings. Staff reviewed directories of 12 different plans in a total of six states and called 10 systematically selected providers from each plan for a total of 120 calls, according to the May 3 report. Furthermore, more than 80% of the supposedly in-network mental health providers that were contacted by reviewers were unreachable, not accepting new patients or out of network. In remarks given at a May 3 hearing to discuss the issue, Committee Chairman Ron Wyden (D-Ore.) called these so-called ghost networks a “breach of contract” by health insurers and vowed to “use all resources” at his disposal to “get some real accountability.” When insurers host such ghost networks, “they are selling health coverage under false pretenses, because the mental health providers advertised in their plan directories aren’t picking up the phone or taking new patients,” he stated. “In any other business, if a product or service doesn’t meet expectations, consumers can ask for a refund.” He also pointed out that CMS performs regular audits of MA plans to ensure that they meet minimum standards but does not routinely audit MA provider directories. "[T]he results speak for themselves. It’s time for that to change," he added.

UnitedHealth Group on April 14 said revenue for the first quarter of 2023 rose 15% from the prior year to $92 billion, reflecting double-digit growth at both Optum and UnitedHealthcare. The insurance segment, which served about 1.2 million more people in the first three months of the year with broad-based growth across its commercial, Medicare and Medicaid lines of business, saw revenues climb 13% to $70.5 billion, according to the company’s earnings press release. And the insurer said it expects to “exceed the upper end” of its Medicare Advantage membership growth expectations for the year. The company stated in November that it anticipated adding between 800,000 and 900,000 new MA members in 2023. As of March 31, the company served more than 7.54 million MA enrollees, compared with 6.89 million a year ago. UnitedHealth recorded first-quarter adjusted earnings per share of $6.26, an increase of 14% from first quarter 2022, and raised its full-year adjusted EPS outlook to between $24.50 and $25.00. During an April 14 conference call to discuss first quarter earnings, CEO Andrew Witty commended CMS for deciding to phase in changes to the MA risk adjustment system. “The phase-in will allow for more time to minimize impacts on beneficiaries as we lean on the multiple levers available to us, including our ability to manage costs and our relentless focus on member and patient needs,” he stated, according to a transcript of the call from The Motley Fool.

In a final rule making policy and technical changes for contract year 2024, CMS on April 5 finalized multiple provisions aimed at ensuring continuity of care for Medicare Advantage members, improving health equity and easing behavioral health access. And while the rule finalized most of the Biden administration’s proposals around misleading marketing practices in MA, industry experts say CMS walked back and modified a few proposals as it waits to see how some of the new requirements play out in practice.

In a fact sheet on the final MA and Part D rule, CMS said it finalized 21 out of 22 marketing provisions that appeared in the proposed rule. But CMS left out one notable provision that would have potentially disrupted a plan’s ability to purchase leads from third parties and indicated it will consider it in future rulemaking.

After much delay, the City of New York appears to be moving forward with a plan to transition its retiree health care coverage to a group Medicare Advantage plan, having recently chosen CVS Health Corp.’s Aetna to administer a PPO plan starting Sept. 1. The contract is valued at $15 billion over the first five years and four months of the term agreement.

The city’s plan to transition some 250,000 retirees and their eligible dependents away from fee-for-service (FFS) Medicare coverage was initially supposed to begin on April 1, 2022, and be managed by Elevance Health, Inc. (in partnership with EmblemHealth). Retirees petitioned to block the move, and state Supreme Court Judge Lyle Frank in March 2022 ruled that the proposal violated city law by requiring retirees who opted out of the switch to pay $191 per month to maintain their FFS coverage. That July, Elevance backed out of the deal.

CMS on March 8 submitted its lengthy Medicare Advantage and Part D final rule making policy and technical changes for 2024 to the White House Office of Management and Budget (OMB), just 23 days after the comment period closed. “Not a good sign for those who submitted comments with the expectation that CMS would fully consider their concerns and suggested alternatives to some of the proposed regulatory changes,” remarked Epstein Becker & Green’s Helaine Fingold on LinkedIn. The proposed rule, published on Dec. 27, contained multiple marketing-related provisions and featured numerous health equity components, from the incorporation of a health equity index in the Star Ratings to new requirements around information provided to enrollees. The final rule at AIS Health press time was still pending OMB review.

Since CMS proposed a modest rate increase and substantial changes to the risk adjustment model used to pay Medicare Advantage plans, insurers and their allies have come out swinging with very public responses. Industry-aligned Better Medicare Alliance (BMA) has been particularly vocal about its opposition to the proposals, spending $4.4 million on an ad campaign urging seniors to call the White House in opposition to potential MA cuts and commissioning a study estimating the detrimental effect the proposed changes could have on premiums and benefits. And while a recent BMA press release highlighted the formal comments submitted by dozens of groups urging CMS to delay the proposed changes, industry experts including scholars, policy experts and former CMS administrators have come out in support of the proposals they say address only some of the problematic elements of MA.

Medicare Advantage organizations may not have gotten the outcome they were hoping for in CMS’s recently finalized Risk Adjustment Data Validation rule, but industry experts say they weren’t surprised by the position CMS ultimately took after years of pressure to close out RADV audits and recover identified overpayments. And while one aspect of the rule could expose it to litigation and further delay CMS’s attempts to collect overpayments from MAOs, experts say plans still would be wise to sharpen their risk adjustment practices in order to limit their audit exposure.

Issued on Jan. 30, the final rule (88 Fed. Reg. 6643, Feb. 1, 2023) pertains to contract-level audits that CMS began conducting more than a decade ago to verify the accuracy of payments made to MA organizations and recover improper payments. The agency in 2012 said it planned to adopt a “fee-for-service adjuster” to account for any impact from unaudited diagnosis codes in FFS data that are used to calibrate the MA risk adjustment model. But in a November 2018 proposed rule (83 Fed. Reg. 54982, Nov. 1, 2018), CMS said its plans to recoup improper payments would not involve an FFS adjuster and that it may apply an extrapolation methodology when finalizing audits dating back to payment year 2011. The RADV provisions of the 2018 proposed rule received pushback from insurers and were never finalized by the Trump administration.

New research conducted by Avalere on behalf of the Better Medicare Alliance (BMA) suggests Medicare Advantage plans aid in earlier detection of type 2 diabetes and that seniors diagnosed with type 2 diabetes generally fare better than similar patients in fee-for-service (FFS) Medicare. Specifically, lower medical spending and rates of inpatient hospitalizations/emergency department visits observed by researchers may be particularly compelling for policymakers as they consider the overall value of the MA program.

With MA serving more seniors than ever before — having just reached a milestone of enrolling more than 30 million Medicare-eligible beneficiaries — and one-third of seniors estimated to have a diagnosis of type 2 diabetes, it is important to look at how these patients’ care differs in MA vs. traditional Medicare, asserted Matt Kazan, managing director with Avalere, during a Jan. 12 webinar hosted by BMA. In many cases, there are “major differences,” he noted.

New research conducted by Avalere on behalf of the Better Medicare Alliance (BMA) suggests Medicare Advantage plans aid in earlier detection of type 2 diabetes and that seniors diagnosed with type 2 diabetes generally fare better than similar patients in fee-for-service (FFS) Medicare. Specifically, lower medical spending and rates of inpatient hospitalizations/emergency department visits observed by researchers may be particularly compelling for policymakers as they consider the overall value of the MA program.

With MA serving more seniors than ever before — having just reached a milestone of enrolling more than 30 million Medicare-eligible beneficiaries — and one-third of seniors estimated to have a diagnosis of type 2 diabetes, it is important to look at how these patients’ care differs in MA vs. traditional Medicare, asserted Matt Kazan, managing director with Avalere, during a Jan. 12 webinar hosted by BMA. In many cases, there are “major differences,” he noted.