Tuesday Night's Primary Elections Were Huge. Here's What They Mean for Our Industry.
House Majority Leader, Eric Cantor (R-VA) is toast. Trounced in his Richmond district by a nobody Tea Bagger Tuesday night. Cantor gave up his leadership position yesterday. Depending on where you sit politically, either the unthinkable or the inevitable happened. In fact, a Majority Leader hasn't lost incumbency since the office was created in 1899. "The defeat of the second-ranking Republican in the House by an ill-funded, little-known tea party-backed candidate ranks as the biggest congressional upset in modern memory and will immediately generate a series of political and policy-related shock waves in Washington," wrote Chris Cilizza of WaPo.
What it means for our industry is that legislatively speaking, President Obama's second term is already over. The House will seize up like a bag of concrete in a toilet. The most unproductive Congress in history is about to continue and worsen that record as an epic Republican leadership battle ensues.
That means Obama is left chasing his agenda through administrative action, Executive Orders, regulations and enforcement. With brand-new and surprisingly popular HHS Secretary Sylvia Mathews Burwell on the job, expect her department to flex its muscles in ways we haven't seen, especially given the number of oversight hearings she's about to be subjected to:
- There will be tough new rules for all government-sponsored health programs: Medicare, Medicaid and implementation of the Affordable Care Act. The contentious new Part D rules are just the beginning.
- There will be increasing activism in network adequacy and rate reviews of insurers in Medicare Advantage, Part D and the exchanges;
- CMS will take a hard line on Medicare plans lagging in Star ratings and/or compliance records. The second term of a Democratic administration is always when scores are settled; the renewed Congressional scrutiny on our favorite agency will make the paper tiger grow some claws;
- CMS and the HHS Inspector General (IG) will finally put the pedal down on dreaded RADV audits with the promise of hundreds of millions in recoveries.
- With wingnuts like House Oversight Chairman Darryl Issa (R-CA) salivating for domestic Benghazis, the HHS IG will likely deliver a few surprises of its own.
Every time there's a major electoral event in Washington like this, elected and appointed officials alike will usually settle back on the motherhood and apple pie of health care politics: kicking the crap out of the insurance industry and other monied interests like pharmaceutical manufacturers and PBMs. If you're not wearing them already, it's time to pull on the kevlar boxers and the asbestos Spanx.
Aetna Offers a Playbook for Evolution in the Golden Age of Government Programs
Ralph Giacobbe of Credit Suisse got another terrific "get" hosting Aetna's management team for an insightful discussion last week. I found the takeaways offer a playbook for how to adapt and evolve in the new Golden Age of government-sponsored health programs:
Watch Your Wallet: Aetna assumed an accelerating cost trend in 2014 of 6-7%. The company noted that underlying cost trends remain generally muted and that overall drug spend is within expected ranges. The company's informatics and medical economics function tracks a wide range of data indicators for early warning of cost acceleration, and had nothing unusual to report.
Put the Pedal Down on the Government Platform: Aetna acquired Coventry for the purpose of having a seasoned platform for government business, so integrating the company remains a top priority for Aetna in 2014. You may recall Aetna called Fran Soistman, a legendary founder of Coventry and a battle-hardened veteran of Medicare Advantage and Part D, out of retirement to run its government business unit. He's been making huge progress in leveraging the company he built within Aetna. For instance, Aetna ranked #1 in price in 6 of 7 ObamaCare exchange regions in Florida, largely because of Coventry's footprint there. Aetna continues to expect $200M in synergies and $0.50 of accumulated accretion in 2014, and $400M in synergies and $0.90 of total accretion in 2015 from the Coventry acquisition.
Invest in Medicare Advantage Stars: Aetna invested heavily in Star ratings improvement the last two years, and now averages 4+ Stars. As a result, the bonus payment and favorable rebates it gets allowed the company to maintain competitive premiums and benefit designs for 2015 in the face of a 3-3.5% revenue headwind. The company remains positive on its competitive position, and expects to grow membership next year.
ObamaCare Exchanges in 2014-2015: This year Aetna is participating in 17 states and has 570,000 paid public exchange members, with management expecting to have 450,000 exchange lives by year end due to churn. The company booked some reinsurance in 1Q and now believes it may get the data to begin to factor in risk adjustment. Risk corridor remains more difficult to estimate and will evolve as experience matures. Aetna's exposure in the exchange market is limited to 5% of projected 2014 revenues and its guidance incorporates a modest drag on earnings. The company doesn't expect to expand its footprint in the ObamaCare exchanges in 2015 until it has a clearer picture on costs and the competitive landscape. Management suggested it would seek average high-single digit pricing increases for 2015 on the exchange -- and there's some comfort there as an early indicator that trends so far in the exchanges are not as crazy as the rate hikes of 15%-20% seen from other plans.
Aetna's perspectives, when considered against the backdrop of United's outlook for the next couple years, paints a picture of a rapidly-expanding government book of business that is gaining on its longtime commercial market dominance. It's a portrait of evolution in the Golden Age of publicly-sponsored health care.
Resources
Listen as John Gorman, Executive Chairman at Gorman Health Group and Josh Raskin, Managing Director at Barclays, discuss the recently released Stars data, and the seismic impact of the 8.5 billion quality demonstration. Access the podcast here >>
In this recorded webinar, John Gorman explores what "member centricity" means in today's government health care industry, at a time when consumerism is defining our relationships with members more than ever, and with CMS elevating quality improvement to game-changing levels. Download the webinar >>
The Status of Medicaid Expansion, and Why It Will Keep Getting Better
Medicaid is already the largest insurer on the planet, and the Affordable Care Act (ACA) is driving enrollment faster than anyone imagined. But there are headwinds in covering more Americans through Medicaid, some political, some operational. Here's why it will continue to improve and drive expanded coverage for the uninsured -- and why all insurers need to participate to remain relevant to the new American healthcare landscape.
Twenty-six states have expanded eligibility under the ACA to everyone with incomes under 138% of the federal poverty level, or about $16,100 for an individual. April's Medicaid enrollment report from CMS showed a year-over-year increase of over 6 million, a 10.3% increase. Much of this is due to the "woodwork effect" -- folks heard about ObamaCare, applied through the exchanges, and found they were Medicaid eligible. It doesn't count nearly a million Americans who gained coverage under the ACA's "early option" or a waiver.
Predictably, enrollment has grown much faster in Medicaid expansion states (mostly Blue) than in states that have not expanded Medicaid (all Red): 15.3% in expansion states, but only 3.3% in non-expansion states.
Nine out of 24 states that had Medicaid expansions in effect in April experienced an enrollment increase of 25%. Ironically, many states with the largest Medicaid enrollment growth also had the most dysfunctional exchanges: Oregon at 49.4%; Nevada at 41.1%, and Maryland, at 29.7% growth.
The problem has been that between exchange dysfunction, weak infrastructure, and a culture in many state Medicaid agencies of creating barriers to enrollment rather than the ACA's policy of "no wrong door", more than 1.7 million are still waiting for their applications to be processed — with some stuck in limbo for as long as eight months. The scope of the issue varies widely: California accounts for 900,000 applications pending as of early June; Illinois has 283,000 cases pending, while New York has no backlog at all. All three states have implemented the ACA's expansion of Medicaid. Even some big Red states that chose not to expand have enrollment pileups, including North Carolina (170,000 applications pending), Georgia (100,000), and South Carolina (62,000).
Matt Salo, executive director of the National Association of Medicaid Directors, thinks the worst is over. He said the computerized handoffs from the federal exchange are occurring more quickly and states are getting more data to approve or deny applicants. "I don't want to say it's been solved," he said, "but it's definitely getting a lot better." One measure: Publicly-traded health plan Medicaid revenue grew 19% in the first quarter of 2014, demonstrating the enormous economic opportunity from the expansion and the woodwork effect.
So if the backlog is largely resolved by the next open enrollment period this fall, the next big question is what about the 24 holdout Red states, the ones whose governors like Rick Perry (TX) and Bobby Jindal (LA) seem hell-bent on throwing a middle finger at the White House while thousands of their constituents literally die because of inaction. Speculation is that a growing number of Red states will fold and take the Medicaid expansion money -- but not until after the midterm elections. Here's why:
- Funding: the Feds are funding 100% of Medicaid expansion through 2016, scaling down to 90% in 2020+. While the initial ACA backlash may have provided cover for states not to expand, it will be increasingly difficult to continue to defend not taking the federal money to insure a significant population group. Remember, Red states have the highest rates of uninsurance per capita, largely due to their historically stingy Medicaid programs.
- Access: most states that choose not to expand created a significant coverage gap. This happens because subsidies on the exchange are available from 100%-400% of the Federal poverty limit, but not below that, leaving a low-income population paying significantly more for healthcare coverage.
- "You're Still Paying for It": The ACA funds Medicaid expansion largely from tax revenue. States like Texas and Florida are among the highest contributors to general tax revenue and have the highest number of uninsured population. They are helping to fund Medicaid expansion for other states via higher income taxes, yet not receiving any of the benefits for their own population. Medicaid accounted for about two-thirds of all federal funding to states in 2014, up from 43 percent two years ago.
- Hospitals: hospitals traded in insufficient DSH funding and bad debt for Medicaid or exchange coverage in the ACA. Hospitals in Red states that didn't expand Medicaid are now reporting they can't even issue bonds for capital projects, and are dying on the vine as the DSH funds are taken away without a substitute. Considering hospitals are often the largest employers in their communities, and especially in rural Red states, their lobbying might is expected to break anti-ObamaCare partisanship after the elections are over.
I'm not as optimistic as some on Wall Street that all RedGovs will fold in the face of these arguments, but suspect that several more will as we head into 2015. And given the central and growing role Medicaid plays in healthcare financing, health insurers are awakening to the fact that if they're not in it, they won't be around long.
Resources
Medicaid health plans must be able to navigate through State and Federal regulations and work well with State agencies. GHG can help, find out how >>
Obama Administration Puts Executive Focus on -- Surprise! -- Execution
In Washington we say that where a President puts his prize staffers is the best indicator of his priorities. That being the case, two of POTUS' recent staffing moves paint a picture: Obama's #1 domestic priority is smoothing out ObamaCare before the next enrollment period this fall and solidifying the experience of the millions who gained coverage this year.
In the surprise of the year so far, it appears that Sylvia Mathews Burwell will cruise to confirmation as Secretary of Health and Human Services as early as this week. Burwell is a longtime Obama confidant from the White House Office of Management and Budget and known as a strong manager of minutiae. Like Mark McClellan did as CMS Administrator in the Bush Administration for the launch of Medicare Part D, she is a skilled bureaucrat with a mind for process, and with her budget background, certainly knows which cushions to find coins under. As a veteran administrator, her job is high cover and finding the money her department needs to see the ObamaCare launch through as appropriations play out on the Hill.
Over the weekend, the White House elevated longtime aide Kristie Canegallo to the new position of deputy chief of staff for policy implementation, a role that will include keeping tabs on the ACA. The move, which coincides with the expected departure of healthcare adviser Phil Schiliro (a legislative wizard but not an operator), highlights the administration's intent to maintain focus on ObamaCare implementation after last fall's goat rodeo of a launch. Her task will be hovering over Burwell and CMS Administrator Marilyn Tavenner and whipping the process along.
We know the biggest vulnerabilities that remain for ObamaCare are fixing the back end of CMS' systems that interact with insurers on their membership coming through the health insurance exchanges -- this will be Canegallo's focus -- and securing funding for the "3 R's" -- risk adjustment, reinsurance, and risk corridors, which will be Burwell's job. Due to a drafting error in the ACA, nobody identified funding for exchange risk corridors; on Friday in the final exchange rule, HHS clarified that if risk corridor funds are insufficient the government will be required to step in and make issuers whole, and would find that money elsewhere in HHS if needed. Nobody better for that than the former budget chief.
The challenge for these two exceptional women -- and even for Tavenner, a former hospital administrator -- is that none are particularly well-known or regarded in the insurance industry -- their partners in this next phase of implementation and wrinkle-smoothing. They will need to build that trust in a charged environment of preparing for the next open enrollment and possibly a Republican takeover of the Senate. Expect to see this triumvirate doing some serious outreach in the weeks and months ahead, and many White House meetings for AHIP's Karen Ignani and other industry reps.
Resources
Exchange enrollment is a multi-pronged strategy with member outreach and connection embedded within. Driving clinical and quality outcomes is contingent on financial alignment and market segment management. Visit our website to learn how GHG can help you develop your strategy.
GHG's Part D services are designed with your staff in mind, ensuring that with a mix of counsel and DIY tools your staff will have access to actionable information — faster. Contact us to learn more >>
What's Gained and Lost with an HHS Secretary Burwell
My old Clinton Administration colleague Sylvia Mathews Burwell sailed through a confirmation hearing last week. What was expected to result in serious anti-ObamaCare fireworks and soundbite fodder for midterm campaigns ended with a whimper. Her second confirmation hearing was yesterday, and it's a "Washington dog isn't barking" story. It's now looking like she'll cruise through and we'll have an unexpectedly rapid successor to the embattled Kathleen Sebelius.
Mathews is unquestionably qualified for the job, but there are both positives and negatives of her succeeding the former Governor and Insurance Commissioner of Kansas as Secretary of Health and Human Services at the most critical juncture since Medicare and Medicaid were launched in the 60's.
Here's what's gained: bipartisan support. Sebelius had become the face of last fall's ObamaCare meltdown and needed her own parking spot on the Hill for all the oversight hearings she had to endure. The GOP majority in the House had especially come to revile her, but Mathews is known on the Hill as a skilled technocrat with none of Sebelius' baggage, quiet, non-ideological, and effective. It also helps that with the 7 million enrollee target easily met in the first ObamaCare open enrollment period and at a lower cost than expected, Republicans are turning away from their "repeal and replace" mantra of the last 4 years.
Mathews' proven management skills are also critically important as ObamaCare sails into Year 2. The initative's turnaround this winter was nothing short of incredible, but there's still ample opportunity for health insurers to cause a crackup with the less-visible "back end" problems that persist. Details matter now more than ever. Remember Mark McClellan's impact on Medicare Part D. A massive implementation of government-sponsored insurance needs an operator to see it through.
But here's what's lost: Burwell, locked in the bowels of the Office of Management and Budget for much of her career, enjoys none of the relationships with governors, state Medicaid directors, insurance commissioners or insurance executives Sebelius does, especially those in hostile red states where coverage expansion is needed most. And that could hurt post-midterm chances of getting RedGovs to roll over on the Affordable Care Act's Medicaid expansion and hostile insurance commissioners like Georgia's to back off. She will need to build trust as the face of ObamaCare with politicians in the deep south and west. She will also need a "meet-and-greet" tour of insurance executives, and must demonstrate her ability to hear their concerns and implement fixes quickly in CMS in the runup to open enrollment Round Two.
This isn't to say Burwell will completely avoid controversy and that the Health Secretary's impossible job got much easier. She should continue to pull on her asbestos Spanx every time she sets foot outside her new office in this political environment. But it will give her some breathing room to hit the job hard, get some wins early, and build the trust that's necessary to see ObamaCare through from partisan lightning-rod to established and popular entitlement program.
Follow the Leader: United Health Group's Outlook on Government Health Programs
Ralph Giacobbe at Credit Suisse is a leading health industry analyst and is doing the best work of his career. Today he produced a fantastic recap of his discussion with United Health Group CEO Steve Hemsley and several of his top executives. It included some fascinating insights into the market leader's strategy for government health programs:
â– 2015 Earnings Growth: Management reiterated its focus on growing operating earnings in 2015. While Medicare rate pressures remain (-3 to -3.5%), the company is optimistic of better MA enrollment in 2015 as it does not expect the same level of market disruptions with more limited network reconfigurations...Medicaid is expected to remain a positive contributor. Additionally, UNH has $90B in medical costs and $20B in administrative costs from which to drive savings, which was stressed by management during the meetings...cost creep has backfilled previous administrative cost savings. Management is now "acutely focused" on applying more rigorous standards to general reinvestments in the organization.
â– Medicare Star Ratings and Renewed Focus on Performance: While the management team noted that performance as a whole has been "good", there was clearly a sentiment that performance needs to improve. Hemsley noted that too many of UnitedHealthcare's recent issues have been "self-inflicted," especially Medicare Stars. As a result, UNH is in the process of narrowing its networks to steer patients to high performing providers in an effort to improve quality. Additionally, a greater focus will be placed on leveraging data to stratify members in order to quickly identify and place high acuity members in appropriate care management programs. As the largest player in the market, UNH has several metrics under its control and is expected to perform at high levels. According to management, it took UHC too long to figure out that STAR ratings place significant emphasis on serving both the healthcare and social needs of members. While corrective steps are encouraging the improvement in STAR rating won't be evident until 2017 at the earliest given the lag time in measuring criteria.
â– Network Reconfigurations Continue: As a result of MA rate pressures, UNH significantly adjusted its networks during the 2014 annual enrollment period for which it received scrutiny. Management reiterated that network reconfigurations will continue, but will be guided by insights gained during 2014. Last year UNH narrowed its Medicare networks by 10-15% and management expects some continuation into 2015, although changes will be made more on a continuous basis vs. occurring all at once and therefore should be less disruptive. Overall, network configuration remains a significant component of managing trend and should not be underestimated as narrowing networks to higher performing facilities/providers can save on medical costs. MA rate pressures for 2015 were evident when management reiterated that the final rate came in below their expectation of flat. UNH sizes the impact in the range of -3% to -3.5%. We would expect network reconfigurations to be an ongoing process, as management believes it is only in the 2nd or 3rd inning, but again, don't expect big disruption like 2014.
â– Reform Update: While UNH's exchange participation in 2014 was limited, it is inclined to increase its involvement in 2015. UNH is currently in the process of evaluating markets, products, regulations, and first year pricing. While it continues to appear that the company is likely to increase its exchange exposure in 2015, it has until September to finalize its decisions.
â– Medicaid: Expansion also appears to be tracking well, as management now expects Medicaid growth to exceed the high end of guidance (+350-450K lives). While the dust has yet to settle, expectations were to see 65% of expansion enrollment 1Q, followed by more moderate enrollment in the middle of the year and a reacceleration around year end. It is still early, but at this point UNH has not seen anything alarming in terms of utilization and feels comfortable about its ability to effectively manage new Medicaid members. Additionally, UNH is getting paid appropriately higher rates for Medicaid expansion members.
â– Optum: Management's new goals are "8 by '16" (8% operating margins, 10 new large relationships, double digit top and bottom line growth, and doubling 2013 op earnings of $2.3B). With a backlog of $7.2B, Optum has an abundance of opportunities at its fingertips...Optum's role as a system integrator for HealthCare.gov was an important building block in establishing its reputation. Management also conveyed a new level of confidence that scrutiny around Optum's association with UNH has subsided, as payors and healthcare systems appear to have gained comfort that the appropriate firewalls are in place for Optum to maintain its independence from UNH.
Resources
On May 7, Gorman Health Group Executive Vice President and former regulator Steve Balcerzak joined Vice President of Provider Network Management Craig Lyon for a deep dive into CMS expectations. Attendees got their their take on what to expect and how to prepare. Access the webinar recording here >>
From ACO-type incentives to bundled payments and contract capitation, to full professional and global capitation — where the potential is promising, we can help design and implement these arrangements. Contact us for more information >>
Pass through payment cuts to providers?
The Medicare Physician Quality Reporting System (PQRS) has teeth. Says CMS: "Eligible professionals who do not satisfactorily report data on quality measures for covered professional services will be subject to a payment adjustment under PQRS beginning in 2015...Accordingly, eligible professionals receiving a payment adjustment in 2015 will be paid 1.5% less than the MPFS [Medicare Professional Fee Schedule] amount for that service. For 2016 and subsequent years, the payment adjustment is 2.0%."
The question for health plans is how to react to this? Do their provider contracts allow them to pass along this cut to physicians? Or do they becomes a sanctuary from the PQRS penalty? WE can expect that the benchmarks will eventually reflect the impact of this penalty, so it's reasonable for plans to determine how they want to react.
A related question is whether plans want to work with participating professionals to help them comply with PQRS and avoid the penalty. This might make particularly good sense if a plan is also passing through the payment reduction.
And, since PQRS also has reward payments, do plans want to include these in payments to physicians who qualify?
As with sequestration, this cut applies only to the Medicare part of the physician's payment. The patient will still pay cost sharing based on Medicare allowable amounts, gross of the PQRS reduction. So docs will still get $20 from patients for a $100 service. But the $80 form Medicare will be cut by 1.5%, or 2%. This comes on top of the 2% sequestration. Payments from Medicare plans that seek to mirror CMS, will need to limit their cuts to the Medicare portion of their payment (the $80 amount in my example).
This raises the larger question of how should plans word their provider contracts. Should they pay a percent of "Medicare allowable," or a percent of what Medicare would pay. In other words, should provider contracts be worded to clearly allow plans to pass cuts like sequestration and the PQRS penalty along to providers?
Resources
From ACO-type incentives to bundled payments and contract capitation, to full professional and global capitation — where the potential is promising, we can help design and implement these arrangements. Let's get started. Contact us today >>
POTUS Spikes the Football, but the ObamaCare War-Game Isn't Over
Last week as health insurance exchange open enrollment ended, President Obama spiked the football, announcing that 8 million people had signed up, and that the Obamacare debate is "over." He put an exclamation point on it: that millions more had gained coverage through Medicaid expansion and new mandates on employers. Now, any further discussion of repealing ObamaCare was about taking coverage away from those millions of Americans.
Republicans, sickened by a blinding case of ObamaCare Derangement Syndrome (ODS -- it's in DSM-4, check it out ;)), predictably wailed. "The Debate Will Be Over When the American People Say It's Over," The Weekly Standard‘s Jeffery A. Anderson blogged the next morning.
POTUS is right. This train has left the station. ObamaCare, like Medicare Part D in 2006, is now a part of the firmament of the American health system, and can't be dismantled without a Republican in the White House. And as far as the American public goes, they're done with this repeal nonsense too. Last month, the Kaiser Family Foundation released its monthly polling and found approval of the law rising, especially among the uninsured. 53% of Americans are "tired of hearing about the debate over the ACA and want the country to focus more on other issues." Can we get an amen? Look, it ain't popular -- yet, remember it took the Medicare drug benefit 2 years before opinion turned -- but it's not going away.
But that doesn't mean the repeal fight ends. Oh no. Two things guarantee that: the tax on the wealthy that funds a big piece of ObamaCare, and the Citizens United and McCutcheon cases in the Supreme Court. The New York Times‘ explains: Under the Affordable Care Act, the Medicare payroll tax increased by 0.9% in 2013, but only for couples earning $250,000+ and unmarried taxpayers earning $200,000+. That tax hits just 2% of taxpayers, but helps to explain the spread of ODS among Republicans.
Combine that with virtually unlimited funding for campaign-style ads and events under the Citizens United and McCutcheon decisions, which enable a small number of families to donate more in one election cycle than most Americans will earn in their whole life, and we're looking at a virtually endless ObamaCare war of dead-ender fundraising, attack ads, and futile repeal attempts.
What's more, it seems increasingly likely that Republicans will regain control of the US Senate in the 2014 midterms, putting Congress entirely under GOP control. I wouldn't be surprised to see articles of impeachment filed early in 2015 as ObamaCare Derangement Syndrome sweeps over Capitol Hill. It will be an ugly conclusion to the Obama Administration, but it won't end in repeal, that much is certain. Republicans will just pretend like it could.
Resources
Exchange enrollment is a multi-pronged strategy with member outreach and connection embedded within. Find out more about how GHG can help you with your strategy >>
Spring Cleaning: Have you thoroughly examined your MSP records yet?
Spring cleaning normally consists of taking a look around our homes and conducting a deep clean. It's a time when we can no longer ignore those often neglected, out of sight jobs that we know we must do in order to maintain a clutter-free, and healthy home.
In the government health care space, there is also room for a fresh start. Spring is the time CMS sends each Part D plan a full replacement COB file that includes records that would normally be included in the daily COB notification files and the full replacement COB data for all enrollees with other coverage. CMS released a recent HPMS memo on March 25th, which stated the COB file would be sent to plan sponsors during the week of April 7Th.
What does this mean for Plans? It creates an opportunity to thoroughly go through your MSP records, clean them up, and get them up to date. It means NOW is the BEST time to take a long look at your MSP data and perform an MSP spring cleaning! Yes, it's a big job, but well worth the effort as GHG MSP Analysts just recovered over $20M dollars for one of our clients (their expected A/R, plus millions more).
GHG has experienced MSP analysts and consultants that can do the work for you. Think of us as the "Merry Maids of MSP."
Find our Spring cleaning checklist below. (You can choose to perform one or all of the following.)
- Perform validation and clean-up of prior or current MSP and COB data with GHI and within internal systems.
- Analytics on current state process effectiveness, creating Business Process Redesign plans, and Project Management of a Robust MSP process.
- Training of Finance, Operations and Claim teams on processing and applying MSP and COB data.
- Working with GHI and CMS Central Office on rejections or appeals for payment beyond 36 months.
- Validation of P&L between validated CMS data and internal claim systems.
- Analysis and business process redesign of commercial Section 111 reporting process that may be negatively impacting MSP.
Think how good it feels when your home is sparkling clean.That's how good it will feel when you know your MSP data is clean and accurate, but better yet when you recover unexpected A/R!
A small investment can realize a huge recovery. Contact us today.
Resources
Join Gorman Health Group May 1 — 2 at the Red Rock Casino and Resort in Las Vegas for the 2014 GHG Forum where GHG experts will dive into the MSP validation process. This two-day event builds on the success of past GHG Forums and is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population. Register now >>
The Final Rate Announcement webinar hosted by Gorman Health Group Founder and Executive Chairman John Gorman, financial expert and former health plan CFO, Bill MacBain, and former regulator and industry-renowned policy expert Jean LeMasurier is now on the GHG website. View the webinar now>>
The 2015 Medicare Advantage Final Call Letter = Unicorn Rainbow Farts
The Center for Medicare and Medicaid Services' (CMS) release of the final 2015 Call Letter for Medicare Advantage (MA) Monday after the close was a "unicorns farting rainbows" moment. Unicorn rainbow farts bring happiness and joy to all those that observe them, and then dissipate quickly. After a beating at the hands of the ever-more powerful insurance lobby for another draconian draft released in February, CMS reversed itself yet again and proclaimed a 0.4% increase in MA benchmarks. Lobbyists and Wall Street analysts rejoiced...only to find after a closer look that there are some nasty hooks in the pie CMS put on the windowsill.
We've tried for days to replicate CMS' math to get to a 0.4% increase, and can't, because it's vapor, magical horse methane. The truth is, we're looking at an average cut of at least 3% for MA next year, and our logic follows below:
Others agree: DeutscheBank says -3.5%; Morgan Stanley projects -3.1%, Bank of America says -3.3%. And that ushers in a two-year march in the desert for Medicare plans following the 6% hit they took in 2014. There will be wide variation among plans, with lesser negative impact for plans which can continue to bid below the benchmarks.
The trends by themselves cut the benchmarks a lot, to the tune of almost 8%. And there's a ripple effect there, on Star ratings of all things: the -4% trend on the old benchmarks lowers the ceiling, and the effect is to truncate Stars bonuses in almost half of US counties. Ironically, high-performing plans take a hit, especially in double bonus counties, in this final rate announcement.
CMS's second consecutive reversal of its proposed ban on diagnostic codes for risk adjustment from home visits was a huge win for the industry, and as we see it, the one ray of light in the final call letter. CMS delayed the change until 2016, and that delay makes up for most of the impact of the negative trends in the benchmarks. But this isn't an equal across the board fix. Given that the FFS normalization factor places a 4% multiple on every point of a plan's risk adjustment factor (RAF) score, plans have an even greater incentive to identify and document every diagnosis that maps to an HCC.
This is further amplified by the decision to roll back the phase in of the new HCCs. On average, the new HCC scores would cut about 2.6% out of MA plans' payments. In 2014, CMS is blending new and old HCCs, with new scores given a 0.75 weight. For 2015, they are rolling that back to a 0.33 weight. That's worth 109 basis points by our calculation. So, compared to 2014, one RAF point is worth 1.05 points in 2015. Given the deferral of the home risk assessment rule for at least another year, plans should be doing home visits intensively this year, and working to evolve their programs to be more clinically meaningful, e.g., a care plan for every diagnostic code submitted from a home visit, and making the house call into more of a "mobile medical home" including mobile labs, imaging and drug therapy counseling.
CMS also makes clear in the final call letter that Medicare Advantage plans ranked 3 Stars or less for 3 consecutive years will be nonrenewed. This means termination notices could be going out as early as August given plans have to execute 2015 contracts with the agency in September, before the Annual Enrollment Period. Many plans will choose to nonrenew rather than be publicly shut down by CMS for poor quality. Dozens of plans are now dead men walking, including several of the publicly-traded Medicaid plans and several Blue Cross/Blue Shield organizations. So in a matter of weeks, a Hunger Games-style "reaping" will occur that will change the face of this industry.
So the long walk in the desert for Medicare Advantage begins. Forward-looking plans will prepare by ramping up their risk adjustment operations, ensuring their Stars programs have the resources they need to keep scores moving up, revisiting their service models, and working daily on closer collaboration with their provider networks.
Resources
On April 11 GHG Comments on the Final Rate Announcement in a webinar hosted by Gorman Health Group Founder and Executive Chairman John Gorman, financial expert and former health plan CFO, Bill MacBain, and former regulator and industry-renowned policy expert Jean LeMasurier. Register for the webinar >>
Listen in as John Gorman shares his reactions to the 2015 Final Call Letter from CMS. He covers the implications of the final rates, as well as what the pull back on risk adjustment means to MA plans this year, and beyond. Click here to download the podcast >>
Join Gorman Health Group May 1 — 2 at the Red Rock Casino and Resort in Las Vegas for the 2014 GHG Forum. This two-day event builds on the success of past GHG Forums and is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population. Register now >>