Issues to Watch in Government Health Programs in the Next Few Months
Last week was an exciting time for the policy world with the release of the Final Medicare Advantage (MA) Payment Rate and Call Letter. Here are some other notable stories we are watching develop in the next few weeks:
Part B Payment Model: On March 8, 2016, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule which aims to test a new alternative payment design to pay for drugs covered under Medicare Part B. While we will not see a final rule until end of May or June, CMS did already note they are considering certain exemptions to the model, such as practices already participating in the Oncology Model Demo. This proposal has already received a lot of criticism, with stakeholders arguing the model would decrease patient access to treatment while focusing too heavily on the financial picture.
MACRA: The proposed Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) Rule, a provision of the Medicare Access and CHIP Reauthorization Act (MACRA), is now at the Office of Management and Budget (OMB). MACRA repealed the Sustainable Growth Rate (SGR) formula and directed the Department of Health and Human Services (HHS) to create MIPS to replace existing physician quality programs such as the Physician Quality Reporting System (PQRS) and the Value-Based Modifier (VBM) beginning January 1, 2019. The rule will also lay out the definition of the types of APMs that will be considered bonus eligible. We should expect this regulation late April or May.
Covered California: California recently released major changes to its regulations by imposing new quality and cost standards in their contracts with insurers. The new plan will adopt a payment system for hospitals, similar to the one used by CMS, which will put 6% of reimbursement at risk or subject to a bonus payment based on quality over the next several years. Plans will also be required to identify providers and hospitals who are outliers in regards to cost or quality with these plans up for termination from the networks as early as 2019. While California is the first to issue this type of regulation, as John Gorman noted, "As goes California, so goes the world," and we can easily see similar efforts implemented across the nation.
UnitedHealthcare: In other Affordable Care Act (ACA) news, UnitedHealthcare is seemingly making good on its threat to exit the Marketplace by pulling out of markets in Arkansas and Georgia. As we previously noted, this move should not really come as a surprise and is not an effective measure of the health of the ACA program, as UnitedHealthcare is not a strong market participant in the ACA business and only cautiously dipped its toes in the water for the first time in 2014.
Mergers: The Anthem-CIGNA merger is currently undergoing some serious scrutiny in California. The California Department of Insurance (CDI) grilled the insurers last month, and there is potential for the merger to fail to receive approval from the state. If it is to pass, we will likely see significant divestment requirements and additional scrutiny from the Federal Trade Commission and Department of Justice in Quarter 3 or Quarter 4 of 2016.
Medicaid: The final Medicaid regulation is still under review at OMB, and we should expect to see its release any day now. Touted as "the mega-rule," this regulation will alter every part of the current Medicaid program. Most of the proposed changes by CMS align the Medicaid program with other programs such as MA and Qualified Health Plans (QHPs).
Resources
We are proud to announce a new session at the Gorman Health Group 2016 Forum featuring David Sayen, a former Centers for Medicare & Medicaid Services (CMS) Regional Administrator, who will provide a CMS update on "The March to Value-Based Payment." Register now to reserve your seat for next week!
Our distinguished team of experts collaborated to provide our interpretation of this announcement and the key features that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Download our full Summary & Analysis of the Final Rate Announcement & Final Call Letter >>
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What's Good for Obamacare Is Good for Medicare Advantage, and Vice Versa
I'm really excited to join Gorman Health Group (GHG) after more than 30 years at the Centers for Medicare & Medicaid Services (CMS), and I'm especially excited about the GHG Forum next week in Fort Worth. If you are sitting on the fence, now is a great time to jump in. Make no mistake — we are at the tipping point where public finance at the federal level is quickly becoming the dominant driver of change in the whole system. In 1966, Medicare was erected on the 30-year-old chassis that was the Blue Cross model. Now the tables are turned: Obamacare is determining the shape of new market entrants, often in a push-pull with Medicare Advantage (MA), and nowhere is that more evident than in my adopted homeland of the People's Republic of California.
Covered California is making the call about which hospitals health plans should work with. In the CMS world, the drive toward value-based purchasing and quality reporting is going precisely in the same direction across the spectrum of care. It used to be acceptable to have a provider who was within 30 miles or 30 minutes away. That's your father's MA model. The insistent drumbeat toward quality reporting and performance across the spectrum of services is only going to become more strident. You need to deliver consistent value across the whole supply chain that touches your member or attributed beneficiary.
What is a health plan or Accountable Care Organization (ACO) to do? The path is clear to me. Years ago I took the Deming seminar and drank the Kool Aid about developing long-term relationships with a small group of high-quality suppliers that could integrate and commit to your production model. Jumping up to 2017, I believe that is what MA plans and ACOs must do: orchestrate the players in their ecosphere to get great outcomes and kudos from patients and caregivers. When the stars are in alignment, we can all party like it's 1999.
Looking forward to working with our clients to achieve great things, and it starts in Fort Worth, so come on down!
Resources
We are proud to announce a new session at the Gorman Health Group 2016 Forum featuring David Sayen, a former Centers for Medicare & Medicaid Services (CMS) Regional Administrator, who will provide a CMS update on "The March to Value-Based Payment." Register now to reserve your seat for next week!
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
Reconciliation just got more complicated
The time has arrived when health plans will start receiving a monthly automated Health Insurance Exchange (HIX) 820. For most health plans, this will occur in April 2016; others, who aren't fully ready yet, will transition in June 2016.
So all of the Finance departments throughout the U.S. should be rejoicing they do not have to populate an Excel spreadsheet on a monthly basis in order to receive payments from the Marketplace, right? Well, don't count your chickens before they hatch, because the reconciliation processes just got even more complicated than before.
For the health plans that were part of the Marketplace from the beginning, take a step back in time with me and reflect on the exorbitant amount of issues you experienced receiving accurate membership information via the 834. Now, introduce the HIX 820 into the mix. Granted, the membership issues have slowed down a bit, however, they are still quite evident and require constant attention and documentation to ensure they don't slip through the cracks. The HIX 820 impacts health plans that are part of the Federally-Facilitated Marketplace (FFM) and the State-Based Marketplace (SBM) since the HIX 820 handles payments for the Advance Premium Tax Credit (APTC), Cost Share Reduction (CSR), Risk Adjustment, Reinsurance, and Risk Corridor. Financial stability of organizations now relies on the accuracy of the reconciliations for the HIX 820 to make the member's payment whole.
What health plans should be prepared to handle:
- Technology issues when translating the file to a usable format.
- Health plans that are a part of the FFM will need to conduct reconciliation between the 834, HIX 820, and the member.
- Health plans that are a part of an SBM will need to conduct reconciliation between the state enrollment information, HIX 820, and the member.
With changes in the front-end systems and operational processes, it's important not to lose sight of the impact this data has on downstream processes. It is imperative all adjustments, updates, discrepancies, and relative information are easily tracked and accessible for the reconciliation and reporting of APTC, CSR, medical loss ratio (MLR), and risk adjustment. Membership and their corresponding payments are the backbone of a health plan. You want to ensure accurate information is reflected to prevent erroneous materials from being sent to members or to the Centers for Medicare & Medicaid Services (CMS).
How can Gorman Health Group help?
- With a best practice approach, the Gorman Health Group Reconciliation team can supplement your current staffing model with a focus on reducing your discrepancy volume enabling timely and accurate policy-based payment from the FFM and other positive, downstream impacts.
- Review and build efficiencies with your current reconciliation process
- Identify key gaps with enrollment processing and assess opportunities to reduce the volume of discrepancies (both enrollment and payment)
- Bring transparency into key measurements Issuers must pay attention to.
Valencia™
Our premier reconciliation tool, Valencia™ is the tool of choice with approximately 11M lives under management. Specific to the Marketplace, Valencia™ reconciles 4M or 31% of the 12.7M members enrolled in the FFM and SBM marketplace.
The Gorman Health Group Reconciliation team utilizes the Valencia™ application to better understand a client's reconciliation health. The team will load the required files for comparison and summarize the discrepancy landscape. Valencia™ allows the team to work, resolve and measure productivity thereby reducing the volume of errors.
Resources
New Webinar! Join us TODAY from 1-2 pm ET for a hard-hitting analysis of the final rulings in the 2017 MA rate announcement and final Call Letter. We will outline the critical areas that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Register Now >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
CMS Largely Holds Firm on Most Proposed MA Payment & Policy Changes for 2017
On April 4th, the Centers for Medicare & Medicaid Services (CMS) issued the Final Notice of Methodological Changes for Calendar Year (CY) 2017 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies, and 2017 Call Letter. This is the final notice of changes in rates of payment and overall policy.
CMS finalized most of its proposals from the Advance Notice and Call Letter, however did make some notable changes:
- Rates and Trend: The final trend is 3.12% inclusive of underlying trend and prior period adjustments. The underlying trend was slightly higher than estimated while the correction to the prior period was lower than expected (0.14%), so in the end, the trend nets out close to the original estimate. CMS estimates a 0.85% increase of all-in rates.
- Normalization Factor: CMS notes a technical error which affected the proposed normalization factors in the Draft Call Letter. The normalization factor was updated from 0.993 to 0.998.
- Encounter Data: CMS will increase the use of encounter data-based risk scores to 25% in 2017, instead of 50% as proposed in the Draft Call Letter.
- Employer Group Waiver Plans (EGWP): CMS is finalizing its new policy for calculating EGWP county payment rates, with two modifications. First, CMS will blend individual market plan bids and EGWP bids from 2016 for 2017, in order to allow for a two year transition period. Second, CMS will use prior payment year information to calculate base payment amounts in order to release the final EGWP payment rates in the Rate Announcement instead of August as previously expected. It is also important to note that while the methodology waives the bidding requirements, MA EGWPs must still submit plan benefit package and formulary in accordance to the 2017 Final Call Letter.
- Star Reduction Policy: As noted in a March HPMS memo, CMS is suspending the reduction of the overall and summary Star Ratings of contracts that are under sanction, while CMS re-evaluates the impact of sanctions, audits, and CMPs on the Star Ratings. CMS plans to describe the new proposals in Fall 2016.
- Low rated plans to be terminated: Although CMS will continue with termination of plans falling below 3 stars, CMS announced it may ‘stay' a termination, including notification of beneficiaries, if the organization holding the poorly-rated contract is prepared to consolidate that contract into a higher rated contract during the bid cycle for the upcoming plan year.
The following major proposals were finalized as proposed:
- Risk Model for Dual Eligibles: Although the proposed methodology will be implemented, data will be updated, so the original estimated rate impact by category may change. Despite the new rate impact, organizations should still expect increase in payments for non-institutional full-duals and reduced payments for all other categories. CMS estimates a net impact on rates of -0.6%.
- Stars dual Interim Adjustment: CMS is moving forward with its proposal to apply the Categorical Adjustment Index factor to overall, Part C Summary and Part D Summary Ratings as an interim solution to account for the Star Ratings impact of dual-eligible and disabled beneficiaries.
- Opioid Overutilization: CMS is finalizing its proposal to combat opioid overutilization by implementing new edits to prevent overutilization at the Point of Sale (POS). CMS expects sponsors to implement either a soft edit or hard edit, or use both as originally proposed in the draft Call Letter, and work toward at minimum a hard edit in 2018.
Compliance Updates:
- CMS again reminds Part D sponsors that it is stepping up enforcement actions on coverage disputes and complaints, the leading noncompliance issue for plans.
- Plans failing financial audits conducted on one-third audits will now also be subject to sanctions and civil money penalties
- CMS is ramping up audits and enforcement actions in network adequacy, provider directory accuracy, and medication therapy management programs.
These are just the major highlights of from CMS' Final Notice and Call Letter. Stay tuned for Gorman Health Group's (GHG's) industry experts summary and analysis of the final changes for 2017, coming out shortly. questions about the summary? Contact us to start a dialogue.
Resources
New Webinar! Join us TODAY from 1-2 pm ET for a hard-hitting analysis of the final rulings in the 2017 MA rate announcement and final Call Letter. We will outline the critical areas that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Register Now >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
To Everything There Is a Season: Marketing Materials
There is a season for every activity within your organization: one for bids, one for applications, one for data validation. We are soon to come upon marketing material season, when a flurry of activity usually gets underway in Marketing Communications and Compliance Departments nationwide. Here are three reasons to ramp up:
- Now more than ever, we have seen a growing trend towards high-quality service and retention. How does this affect marketing materials? In our estimation, submitting the bare minimum, core materials is no longer good enough if an organization wants to be leader of the pack. Sponsors are getting creative with benefits, maintaining robust networks, doing their best to keep premiums low — and while those factors are key in member retention, so is service. If an organization wants to work on maintaining relationships (through retention) rather than establishing only (through the sale), we expect to see additional, more personalized materials coming through Compliance Departments. While each piece may not require CMS submission, all member- and beneficiary-facing materials must be reviewed by Compliance.
- CMS clarified in their draft guidance that while designations of "approved" or "accepted" do not have an expiration date, the status remains valid so long as the material is still compliant with the most current version of the marketing material guidelines. Therefore, if this was not occurring in the past, organizations should be reconciling their past approved and accepted materials to ensure they are still compliant. We anticipate a flurry of questions to roll into Compliance Departments about whether or not an update needs to be submitted (because, remember, some changes do not require resubmission!)
- The reach of the Duals Demonstration continues to stretch across the nation, and with that comes a significant amount of required coordination. This also includes the review of materials. Timing is everything, and unless one agency (CMS or the state) chooses to defer to the other for the review and approval of materials, an additional party is added to the process. This should certainly light a fire under every business owner responsible for updating their materials. The sooner the process begins, the better it will be for the review, printing, and distribution processes.
Compliance might feel the pinch this year of business owners asking for more assistance and guidance in the wake of sub-regulatory changes. Consider that beneficiaries, too, are asking health plans to be something more than a claims processor. We find in all aspects of a successful organization, the bare minimum is not enough. Therefore, instead waiting until someone starts asking for more, think about proactive ways you can deliver more before they even ask.
Resources
Let's face it: the marketing staff is at a disadvantage with the shortened period between bid submission and the start of the annual enrollment period. We can develop or review your sales collateral and creative by product type to help ensure your high-impact messaging is both targeted and compliant. Visit our website to learn more >>
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Engaging Providers in Quality
According to a recent study by researchers from Weill Cornell Medical College, and as recently reported in Health Affairs, medical practices in four common specialties (cardiology, orthopedics, primary care, and multi specialty practices) spend an average of 785 hours per physician and $15.4 billion annually reporting quality measures to Medicare, Medicaid, and private payers.
As the transition to value-based care, alternative payment models, and quality-related financial incentives continues, the number of quality measures and complexity of both measures and payment methodologies will also continue to expand in the coming years. To best preserve and strengthen the provider partnerships we've worked hard to create within Medicare Advantage (MA), we must consider the effectiveness of our provider engagement and support strategies in our pursuit of success within quality measurement programs such as Star Ratings within MA and the Quality Ratings System (QRS) within the Health Insurance Marketplace.
Although many providers have established robust quality programs with expert resources to build workflows, streamline care pathways, and coordinate care across their patients' clinical and social realms, many more are still adapting to this new reality of quality measurement, and some are struggling to develop workflows that meet the wide array of their various payers' requests. In order to successfully impact the Triple Aim, payers and providers will have to continue actively collaborating and coordinating care across differing specialties, differing clinical settings, and with their patients' pharmacies and pharmacists. Similar to a Customer Experience strategy, which a health plan may develop to support members' needs, a health plan should similarly develop a Provider Engagement strategy to support providers' needs during this evolutionary period. While such strategies are often built around a foundation of quality-related financial incentives, many plans are finding success using other incentives that more closely align with a practice's needs, such as staff support, member engagement and outreach support, and enhanced care coordination efforts.
Despite growing efforts to align measures and measure criteria across federal programs, measure developers will likely continue adding measurements associated with more complex clinical conditions. For example, the Centers for Medicare & Medicaid Services (CMS) is considering the addition of measurements of Medication Reconciliation Post Discharge and Hospitalizations for Potentially Preventable Conditions to the 2018 Star Ratings program and Statin Therapy (both in Part C and Part D), Asthma medication management (Part C), and Depression (Part C) to the 2019 Star Ratings program. Because more than 25% of the 2018 Star Ratings Healthcare Effectiveness Data and Information Set (HEDIS®) measurement year has now passed, many plans are already opening a new dialog with providers to broaden quality improvement efforts into more intensive, higher return on investment, member-centric engagements that will address these important clinical areas.
As many plans begin delivering their initial 2016 Gaps in Care reports to providers, this may be an ideal time to evaluate your provider engagement strategy. Following are some important elements to be considered in an effective provider engagement strategy:
- How closely is your provider profiling aligned and prioritized with the full scope of Star Ratings and/or QRS quality measurement needs? Have you evaluated your providers' historical performance across the entire spectrum of cost, quality, risk, and utilization to help manage current year expectations and risks?
- How effectively are field personnel (Provider Relations, Quality, Contracting, etc.) identifying the "ask" for each provider among all quality measures (including HEDIS®, Consumer Assessment of Healthcare Providers and Systems (CAHPS®), Health Outcomes Survey (HOS), and Prescription Drug Event (PDE) measures) and communicating the right "call to action" to your high-need providers based on your contract's highest priority measure gaps?
- How effectively are various field teams (including those across product lines, including MA, Medicaid, and commercial plans) collaborating and partnering to deliver seamless, unified service to your providers? How effectively are field personnel identifying each provider's barriers to success and sharing examples of proven industry best practices that have proven to be successful within similar practices?
- Are your provider compensation programs strategically designed in ways that minimize risk and optimize provider engagement and performance?
- Has your provider engagement strategy been designed to evolve naturally and contextually throughout the year? Do all field personnel understand which clinical areas, quality measures, and resources to focus on each month? How effectively have CAHPS® needs been woven into the strategy?
- Do you know which providers need your support and expertise and are open to your help? Do you know which providers need improvement but are not open to help?
- Are your reports and data comprehensive and actionable for providers? Can providers easily access and use your data-related tools and resources?
- Do your providers understand how to support their patients' social and lifestyle needs after a clinical visit? Do they have adequate resources to meet such needs in a way that accomplishes your goals?
- How effectively are plan-driven activities, such as case and disease management, health and wellness coaching, etc., coordinated with providers?
We often assume our providers will rapidly move with us to a more proactive, more coordinated model of care. The reality is, many providers are still struggling to adapt their practices to meet day-to-day operational demands while trying their best to meet as many payer needs as possible. Because the quality bonus payments to MA plans for strong Star Ratings performance expedited the pace of learning and adaption within MA plans, MA personnel now have a unique opportunity to participate in the industry evolution by educating and supporting their providers.
The industry's transition to proactive care coordination is just the beginning. This is an ideal time to truly expand our provider partnerships with high-value, mutually-beneficial resources, support, and tools to help our providers redirect some of their valuable resources from quality measurement reporting to caring for our members.
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Whether your organization is developing a provider engagement strategy, honing provider engagement tools and tactics, or looking for targeted improvement opportunities, we can help. For additional questions and inquiries about how Gorman Health Group can support your organization's provider engagement efforts, please contact me directly at msmith@ghgadvisors.com.
Resources
We are proud to announce a new session at the Gorman Health Group 2016 Forum featuring David Sayen, a former Centers for Medicare & Medicaid Services (CMS) Regional Administrator, who will provide a CMS update on "The March to Value-Based Payment." The hotel room block was extended to April 4 so register now to reserve your seat!
We have partnered with EvisitMyDr.com (EVMD), an asynchronous virtual platform that will transform how physicians and care teams deliver and coordinate care across the continuum in a digital world. We're really excited about what EVMD can do for our clients in offering members a convenient alternative to a regular office visit while increasing practice productivity and revenue streams. Read our full press release.
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
Risk Adjustment Methodology: Reviewing Proposed and Current Model Improvements
On Thursday, March 24, 2016, the Centers for Medicare & Medicaid Services (CMS) released a white paper regarding the risk adjustment methodology. There has been a lot of criticism and discussion about the U.S. Department of Health & Human Services (HHS) risk adjustment program working appropriately. As indicated in the 2017 Notice of Benefit and Payment Parameters (NBPP), the white paper addresses the comments HHS has received regarding the risk adjustment methodology and serves as the basis for discussion for the Thursday, March 31, 2016, meeting. This document provides the story of the evolution of the HHS risk adjustment program, including a summary of historical information on how the HHS risk adjustment program was developed, changes made to the model thus far, and further discussions and considerations for enhancements in the future.
The risk adjustment model is intended to work with the fair rating rules under the Affordable Care Act (ACA). These rules are in place to reimburse issuers that have riskier, costlier enrollees by issuers that carry lower risk, regardless of any other factors, such as being a new issuer or narrow network plan. To enhance the existing stabilization program, modifications have been applied to recalibrate the model for the 2017 benefit year. The white paper just released highlights the areas needing further refinement, such as methodology for inclusion of prescription drugs, partial year enrollments, and future year recalibrations.
History: When the HHS risk adjustment program was being developed, the primary goal in mind was to "compensate health insurance plans for differences in enrollee health mix." The intent was to allow differences in premium for plan design and benefits but not allow premium differences for any health conditions the prospective member may currently have. When developing how this goal would be accomplished, three specific areas were addressed:
- New Population — During development, data was not available to analyze since this was uncharted territory. The risk adjustment program needed to include members enrolled into a plan that adhered to the ACA regulations, regardless of whether the member purchased the plan through the Marketplace or directly from the issuer. In lieu of not having specific data to utilize, HHS used a commercial dataset consisting of 2010 Truven MarketScan® Commercial Claims and Encounter data.
- Market Factors — This introduced the different plan actuarial values in comparison to a standard benefit level. This is an extremely complex portion of the risk adjustment methodology. HHS encountered challenges defining "how to preserve premium differences that reflect differences in generosity of plan coverage."
- Balanced Transfers — Since issuers were no longer allowed to adjust premiums for enrollees based on health status, the risk adjustment transfer payment is the part of the risk adjustment program that will make the issuer whole from a financial perspective.
There are apparent similarities between the CMS and HHS risk adjustment programs. One of the outstanding questions during development was considering which disease classification grouping would be utilized for the commercial market. It was decided to use the CMS-Hierarchical Condition Category (HCC) grouping utilized for Medicare risk adjustment as the basis to develop a diagnosis clinical classification for commercial. The CMS-HCC grouping consists of 201 HCCs compared to the HHS-HCC grouping that has 264 HCCs. Only a subset of the 264 HCCs is utilized for risk adjustment. These HHCs are classified as "payment HHS-HCCs" since these are the categories that carry a factor weight to be part of the plan liability risk average score (PLRS) calculation. Many HCCs that are part of the Medicare model were split in the commercial model to better predict costs within disease groups, such as those in the metabolic, blood, psychiatric, andDepartment o injury hierarchies.
Model Improvements: There have been improvements to the risk adjustment payment model since the 2014 HHS risk adjustment process was finalized. Each year the commercial risk adjustment program has been enacted has brought enhancements, subtle at most, to improve the accuracy of the program.
- Payment Year 2015 — Primary goal was to maintain stability. Utilized the same factors for cost-sharing reductions (CSR) plan variation in the corresponding Medicaid alternative plan variations.
- Payment Year 2016 — First year the risk adjustment model was recalibrated. In order to maintain stability and avoid using a small sample size, an approach was utilized to average coefficients using separately solved models of 2011, 2012, and 2013 MarketScan® data for 2016 benefit year risk adjustment. This was also the year in which HHS addressed two issues surrounding the classification and reporting for infants. The first issue surrounded infants, classified as age 0 who did not have any birth codes, an issue primarily driven by bundled mother/baby claims. The second issue addressed was for six transplant status HCC coefficients utilized in the child risk adjustment model.
- Payment Year 2017 — Second year the risk adjustment model was recalibrated. A similar blended approach was utilized in the same manor that it was for the 2016 Payment Year. The dataset was updated to include the three most recent years of MarketScan® data; 2012, 2013, and 2014. For this year, preventive services are included in the simulation process of calculating the plan liability. The 2017 NBPP requested comments regarding further discussion topics that will be addressed at the Thursday, March 31, 2016, CMS meeting.
Proposed Model Improvements: CMS is hearing the concerns coming from the health plans and is actively engaging them for comments in regards to issues. This interaction allows for an avenue of different perspectives to enhance the risk adjustment program with solutions that will further advance the model. There is no specific avenue HHS is taking in regards to the below improvements at this time. Rather, they are gathering all of the feedback they have received thus far and opening it up for discussion to determine the next best step to take.
- Partial Year Enrollment — Health plans are concerned about the adverse effect partial year enrollments is having on their risk adjustment payment transfer outcome. The industry is seeing enrollees with 6 months or less enrollment with high Medical Loss Ratio (MLR). This type of membership "flip flop" has been a concern of health plans since the onset of the ACA. This is where an individual elects an ACA plan on a temporary basis to only handle a current condition and not to maintain health insurance coverage long-term. In turn, health plans experience high claims cost, minimal revenue, and subpar balance to the risk they are carrying for these individuals. With the commercial demographic, the majority of conditions are considered acute as opposed to chronic conditions. This statement is the exact opposite of what you would see in the Medicare space.
- Proposed Drug Modeling — The use of pharmacy claims is an important analytical element used to validate a member's diagnosis and to proactively research for potential undocumented chronic conditions. HHS is talking about introducing a hybrid risk adjustment model that would use prescription drug utilization as risk indicators for the HHS-HCC model. The framework and operational impact to maintain a model like this is up for discussion but certainly is a step in the right direction.
- Use of a Concurrent Model — There is discussion around if utilizing a prospective model, rather than a concurrent model, will be more beneficial for the HHS risk adjustment program. A concurrent model predicts costs within the current year. This type of model tends to address more acute costs, whereas a prospective model allows greater time to review prior encounters to better predict the future costs. This allows a greater time lag for encounters to be analyzed and submitted, allowing time to capture more advanced acute and chronic conditions.
CMS clarifies the program is functioning as it was intended to, with which I would agree. The operational complexities, concurrent model, and mediocre data management practices established by health plans is leading to incomplete data submissions and, therefore, inaccurately reflecting the risk of the organization. The established model and demographic understanding will evolve over time by utilizing more accurate data to stabilize the factors used in the calculation when it becomes available. Until then, it is important for health plans to work on what they can directly impact by refining the risk adjustment processes they have in place, establish analytics and reporting practices, and ensure a thorough extraction process is conducted for the EDGE server submission inclusive of controls, pre-validation checks, and error resolution processes.
Resources
GHG can help you streamline the execution of your risk adjustment approach, and build a roadmap to ensure you're keeping pace with CMS and/or HHS expectations in both compliance and health care outcomes. Contact us today to learn more >>
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas. During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth. The hotel room block expires on April 4 so register now to reserve your seat!
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
2017 ACA Applicants and Network Transparency
The National Association of Insurance Commissioners (NAIC) completed their review of provider network rules and published a draft of a new Model Rule. This is the first update of network rules in over 20 years. NAIC convened a committee of regulators, health plans, and consumers to provide input to the development of the draft document. The drive to develop the new rules came from the realization narrow networks used in Marketplace plans were the basis of increases in consumer complaints. Throughout the draft, NAIC recognizes the differences that exist between regulations in various states and the proposed changes, so any state can choose to follow the draft or construct its own rules. It has a three-year timeline.
At the same time in December, the Centers for Medicare & Medicaid Services (CMS) proposed network regulations for Qualified Health Plans (QHPs). The final regulation published in February, however, recognized the three-year NAIC timeline, sort of.
First, the draft NAIC rule takes on some of the changes prompted by the Affordable Care Act (ACA) in several ways. NAIC revises definitions for emergency services and conditions, emergency service stabilization, primary care and specialty providers, telehealth, as well as tiered networks. With new definitions throughout the document, the impact of the changes becomes more evident. Draft NAIC rules incorporate final ACA rules that specify in greater detail what health plans must do when they fail to have a provider for a covered benefit. These include payment, notice to persons who need the benefit, and a process for requesting services from a non-participating provider.
Second, the most significant section discusses network adequacy. This section adds many of the ACA requirements related to underserved individuals, children, tiered networks, as well as access. Alternatively, it also recognizes some states use time, distance, and waiting standards. To avoid potential state/federal conflicts, CMS proposed new network rules that would have required CMS to approve state network rules. If CMS did not approve the state method, a federal default based on time and distance would have applied. CMS decided not to finalize this rule, stating they would monitor the states' adoption of the NAIC standard over a three-year period before making any new federal regulation. But, in the end, CMS said they would still apply time and distance standards anyway. It's likely this will be the case for the foreseeable future — not just 2017.
So, what will be the effect of this new model rule? First, nothing defines "without unreasonable delay." Notably, over the past three years, CMS has cited this same regulatory language as frustrated applicants sought to fix networks CMS rejected. The CMS approach to unreasonable delay appeared to be "we'll know it when we see it."
In an attempt at transparency, CMS has finally provided a set of time and distance metrics. Notably, for many years in Medicare, CMS has used software based on time and distance standards and, no doubt, has been using it for QHPs. The magic of the software is it provides a view of what CMS may see in an applicant's network. Using software quickly provides targets and assists in developing justifications needed to address gaps. GHG conducts network access reviews using this same software to ensure QHPs meet access rules before submission to CMS. So, with increasing pressure to build narrow networks, QHPs can have access to solid support tools on what meets access without unreasonable delay.
Resources
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas. During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth. The hotel room block expires on March 28 so register now to reserve your seat!
The application process for Medicare Advantage and Part D, the Health Insurance Marketplace, and ACOs is an arduous one. Completing the application requires the cooperation from your entire organization.Don't let the application process get in the way of your day-to-day operations. Contact us today to ensure a smooth, compliant process.
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Is the Honeymoon Over? Issuers Begin Receiving Direct Payment from the FFM System of Record
Although the financial hit may have been delayed a few months, it is still inevitable. Issuers will be moving from the driver's seat when it comes to being paid for their members within the Federally-Facilitated Marketplace (FFM). Beginning in April 2016, FFM Issuers will feel the financial impact of being out of synch with the Marketplace for the first time.
Since the launch of the Marketplace, Issuers have been invoicing the FFM directly at a plan level versus a policy level (subscriber) in order to be paid Advanced Premium Tax Credits (APTCs), Cost Sharing Reductions (CSRs), and User Fee (UF) charges. Now, the Centers for Medicare & Medicaid Services (CMS) will make monthly payments directly to Issuers based on effectuated enrollees within the federal system, not the Issuer system. By shifting the direction of Issuer payment and the data source that derives the payment calculation, Issuers are in store for a turbulent and unpredictable ride if not prepared.
As planned in 2016, CMS sent payment files directly to Issuers representing the FFM-calculated payment. While on the surface it appeared the implementation moved into motion, there was a catch—all FFM Issuers, whether or not they were deemed "ready" to receive payment files (in the form of a Preliminary Payment Report (PPR) and HIX 820) directly from CMS, were still being paid from the Issuer's system of record for the first three months of the year. This delay was established as a transitional step for Issuers to become comfortable with the new payment files and allowed more time for all Issuers to be certified. As we approach the April payment month, CMS has offered another temporary adjustment for three additional months in cases where the FFM calculation and the Issuer's calculation is greater than a 25% variance. In these cases, CMS will cap the difference between the FFM and the Issuer by applying a manual adjustment to bring the variance to the 25% mark. After June, all temporary transitions cease, and Issuers will be paid based on the FFM system of record.
With CMS building transitions and seeing variances with Issuer data at 10%, 25%, or greater, this should be an indication there is a looming payment issue at hand. To oversimplify, if an Issuer is out of synch with the FFM for the month of January, and a January adjustment doesn't occur in subsequent payment months and compounds as discrepancies age and member updates occur month over month, the payment dilemma is exponentially hitting the bottom line of your organization in real dollars. Your organization's operational health impacts payment. The sooner you prepare for this reality, the better.
Top Strategies for Preparing for the Future:
- Move back to the driver's seat and understand your discrepancy rate. This includes:
- Subscribers not found on the FFM's system but on Issuer's system per month
- Subscribers not found on the Issuer's system but on the FFM's system per month
- APTC differences per month
- CSR differences per month
- Total Premium differences per month to aid UF calculation errors
- Measuring a discrepancy rate should summarize not only discrepant subscribers but also discrepant member months. For example, the Issuer and FFM may be in synch the first three coverage months but not equal the remaining nine months of the coverage year such as FFM 1/1/2016 - 12/31/2016 versus Issuer 1/1/2016 - 3/31/2016. This logic applies to all discrepancies whether related to a coverage period discrepancy or the data elements within a coverage period, such as an APTC overpayment. All scenarios are financially impacting to the Issuer.
- Based on the above, calculate the financial impact of those very discrepancies. In other words, if resolved, the prospective HIX 820 will pay $A and adjust $B retrospectively.
- Understand passive reconciliation may have carried you this far but is futile for the future. Only you can influence the predictability of your monthly payment. Being reactive to the HIX 820 will be a major disadvantage for your organization. Would you allow another party to dip into your checking account and wait until your monthly statement to view deposits and debits? Understand transactional data can be predictive.
Issuers Must Focus on Key Operational Processes:
- Process all incoming 834 transactions (in all forms) and resolve all errors.
- Submit timely IC834s and resolve/resubmit all errors.
- Submit timely and accurate membership snapshots to CMS each month for reconciling purposes.
- Update your enrollment system, as needed.
- Audit the FFM RCNO file to ensure the FFM is taking action on their updates as well.
- Most importantly, calculate an Expected Total Payment each month and continue to submit your Issuer plan-level calculation to CMS for as long as they will accept it.
There has been an abundant amount of discussion surrounding the source of truth regarding Marketplace enrollment data. Building processes around enrollment transactions with essential checks and balances continues to be an important part of this landscape. Roadmap initiatives are underway with more emphasis on Marketplace compliance audits. It goes without saying—you never want CMS to identify you are being paid for non-members or not being paid for members consuming the benefit. With all the aches and pains that come with launching a government business, your organization must control the processes it can and have an audit trail for FFM defects impacting your payment as well. Documentation, substantiation, and a paper trail are all key components for audit readiness.
Resources
To learn more about the Gorman Health Group reconciliation solution, Valencia™, and how it supports Enrollment and Payment Reconciliation for Issuers, please contact ghg@ghgadvisors.com or Diane Fischer at dfischer@ghgadvisors.com.
Gorman Health Grouop's Valencia™ creates the workflows organizations like yours need for critical operational functions. With Valencia™, you'll always know where your membership and premium-related data is out of sync, thus eliminating missed revenue and inappropriate claims payments. Contact us today to set up a demo >>
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas. During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth. The hotel room block expires on March 28 so register now to reserve your seat!
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
2016 Annual Election Period (AEP) Medicare Advantage (MA) Enrollment Growth Slows Compared to 2015
The number and share of Medicare beneficiaries enrolling in MA plans continue to increase, but the pace of growth is beginning to decline. Currently, there are nearly 18 million Medicare beneficiaries enrolled in MA health plans across the country. This includes all individual and group plan enrollment.
Approximately 32% of Medicare beneficiaries are now in MA plans, but we are starting to see the MA penetration begin to flatten out (Figure 1).
Figure 1 — Total Medicare Private Health Plan Enrollment, 2012-Feb 2016
The following chart shows the dramatic growth of Medicare beneficiaries enrolled in MA plans as of February 2016 (Figure 2), but the percentage growth of enrollment is declining. Since 2012, MA enrollment has grown 32% to nearly 18 million.
Figure 2 Total Medicare Private Health Plan Enrollment, 2012-Feb 2016
Note: Includes Medicare Medical Savings Account (MSA) plans, Cost plans, demonstration plans, and Special Needs Plans (SNPs), as well as other MA plans (individual and group).
Gorman Health Group (GHG) analyzed the 2016 AEP and saw the following when analyzing national and state-level enrollment trends:
- MA enrollment has continued to grow and increase in virtually all states in the 2016 AEP.
- MA enrollment is highly concentrated among large organizations.
- Most enrollees continue to be in Health Maintenance Organizations (HMOs). (Enrollees in HMOs typically pay lower premiums and have lower limits on out-of-pocket expenses.)
But we also saw a real decrease in the MA percentage of growth from the 2015 AEP to the 2016 AEP. The following tables show the total enrollment from December to February of each year.*
2015 AEP VS. 2016 AEP
While the 2015 AEP saw an overall growth of nearly 650,000 beneficiaries enrolled in MA health plans, the 2016 AEP saw an overall growth of 445,245 beneficiaries enrolled in MA health plans — this is nearly a 31% decrease in enrollment from 2015 AEP to 2016 AEP. This is attributable to the lack of growth in the Medicare-Medicaid Plan (MMP) product, which had an almost 160,000 increase in growth last AEP but only increased approximately 15,000 in the 2016 AEP. In addition there were losses in enrollment in the HMO-SNP enrollment as well as in Preferred Provider Organization (PPO) plans. The enrollment in HMOs continues to see growth, although the growth was not enough to compensate for the other losses or decreased gains from last year.
*AEP is measured by looking at February MA enrollment since the total AEP enrollment is not captured in January enrollment numbers.
For more information on enrollment trends or other Sales, Marketing, and Strategy consulting services through GHG, email ghg@ghgadvisors.com or contact me directly at dhollie@ghgadvisors.com.
Also, read about "MA Plans' Must-Fix: The Member Experience" in a blog by John Gorman.
Resources
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas. During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth. The hotel room block expires on March 28 so register now to reserve your seat!
The Medicare Advantage marketplace is evolving — are you prepared? Gorman Health Group's marketing experts have developed strategic plans for hundreds of Medicare Advantage Plans, Prescription Drug Plans, Special Needs Plans and Exchange participants. We will work with you to understand your market, mining demographic data for opportunity and finding the gaps in the competitive field into which your plan can fit. Visit our website to learn more >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>