Medi­care Ad­van­tage plans score sev­eral wins in rates for 2018

Modern Healthcare - - NEWS - By Shelby Livingston

The CMS “ba­si­cally gave the plans ev­ery­thing they asked for.

JOHN GOR­MAN a for­mer CMS of­fi­cial who is now a con­sul­tant in Wash­ing­ton

Health in­sur­ance com­pa­nies re­ceived a gift from the fed­eral govern­ment last week. The 2018 Medi­care Ad­van­tage rate poli­cies in­cluded a bet­ter-thanex­pected pay bump and in­dus­tryfriendly poli­cies.

Pay­ment rates for in­sur­ers that sell Ad­van­tage plans will rise by 0.45% on av­er­age for 2018, the CMS an­nounced. That’s a slight bump from the 0.25% rate in­crease pro­posed in Fe­bru­ary. The av­er­age pay­ment rate will in­crease by 2.95% af­ter tak­ing into ac­count the way health plans code their mem­bers’ di­ag­noses, the CMS said.

The agency “ba­si­cally gave the plans ev­ery­thing they asked for,” said John Gor­man, a for­mer CMS of­fi­cial who is now a con­sul­tant in Wash­ing­ton.

The rate poli­cies for 2018 were a bit of good news for the in­sur­ance in­dus­try in the midst of chaos sur­round­ing re­peal of the Af­ford­able Care Act, ac­cord­ing to James Sung, an in­sur­ance an­a­lyst with rat­ings firm S&P Global. “In­sur­ers like pre­dictabil­ity, and Medi­care Ad­van­tage is prob­a­bly the most sta­ble (mar­ket) right now,” he said. Medi­care Ad­van­tage, the pri­vate man­aged-care ver­sion of the fed­eral health pro­gram for se­niors, cov­ers nearly 18.7 mil­lion peo­ple. The mar­ket could grow if Repub­li­can law­mak­ers suc­ceed in turn­ing Medi­care into a pre­mium-sup­port sys­tem that would push ben­e­fi­cia­ries to­ward pri­vate plans. But if the CMS had ap­proved low rates or un­fa­vor­able poli­cies, pri­vate in­sur­ers may have turned away from Medi­care Ad­van­tage or of­fered skin­nier prod­ucts with higher cost-shar­ing.

In its new rates, the CMS didn’t bend to ev­ery in­surer re­quest. Health plan and con­sumer ad­vo­cate groups crit­i­cized the agency for fail­ing to ad­dress an un­in­tended glitch in the health­care law known as the bench­mark cap, which short­changes some Ad­van­tage plans on the in­cen­tive pay­ments they earned for pro­vid­ing high-qual­ity health­care.

Ceci Con­nolly, pres­i­dent and CEO of the Al­liance of Com­mu­nity Health Plans, said in a state­ment that she was dis­ap­pointed as those pay­ments af­fect 2.5 mil­lion se­niors. Since 2012, Ad­van­tage plans have re­ceived bonuses for pro­vid­ing high-qual­ity health­care. But the bench­mark cap lim­its Ad­van­tage pay­ments to pre-ACA lev­els. The glitch has eaten away at health plans’ rev­enue. And the CMS has said it doesn’t have the ad­min­is­tra­tive au­thor­ity to fix the bench­mark cap.

In a big win for the in­dus­try, the agency did walk back plans to in­crease the use of en­counter data, or in­for­ma­tion about the care a ben­e­fi­ciary re­ceived from a health­care provider, to de­ter­mine risk scores.

Risk scores, which al­low health plans to get higher pay­ments for pa­tients with more chronic con­di­tions, are based on a mix of tra­di­tional fee-for-ser­vice data and pa­tient en­counter data. For 2017, the CMS pro­posed that 75% of Medi­care Ad­van­tage risk scores would be based on fee-for-ser­vice data, and 25% would be based on en­counter data. Af­ter in­tense lob­by­ing from in­sur­ers and providers, the agency said that for 2018 85% of a risk score will be deter­mined by fee-for-ser­vice data and 15% by en­counter data.

In­sur­ers say the use of en­counter data for risk scores leads to lower pay­ments. Two stud­ies by con­sul­tants Avalere and Mil­li­man back up those claims. And a Jan­uary report by the Govern­ment Ac­count­abil­ity Of­fice called into ques­tion the depth and ac­cu­racy of en­counter data col­lected by the CMS.

As a whole, the 2018 Medi­care Ad­van­tage rates should help in­sur­ers. Medi­care Ad­van­tage com­pa­nies op­er­ate on a 2% to 3% mar­gin, Gor­man said, and so “any lit­tle bit helps.” The raise means plans’ mar­gins will im­prove, and they can of­fer more gen­er­ous ben­e­fits with less cost-shar­ing for ben­e­fi­cia­ries, he said.

Still, not ev­ery plan will see the rates as a “win,” be­cause the pay varies widely by county, said JoAnn Bo­golin, an as­so­ciate with the So­ci­ety of Ac­tu­ar­ies.

The CMS shied away from mak­ing big changes to the Medi­care Ad­van­tage pro­gram, but those may come later if the Trump ad­min­is­tra­tion de­cides to over­haul Medi­care. Some Repub­li­can law­mak­ers, in­clud­ing House Speaker Paul Ryan, fa­vor turn­ing Medi­care into a pre­mium-sup­port sys­tem. Ben­e­fi­cia­ries would re­ceive vouch­ers to pur­chase a pri­vate plan or tra­di­tional Medi­care cov­er­age. Ad­van­tage en­roll­ment would likely soar, ex­perts say.

Ana Gupte, an an­a­lyst at Leerink Part­ners, es­ti­mates that the Medi­care Ad­van­tage growth rate will ac­cel­er­ate “to low dou­ble-dig­its and teens” for the lead­ing plans in the next three years, ac­cord­ing to a re­search note. Unit­edHealth Group, Hu­mana, Kaiser Per­ma­nente and Aetna en­roll the most Medi­care Ad­van­tage plan mem­bers.

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