Let the Games Begin on Medicare Reform
Just days after President Obama's full-throated support of defending Medicare from structural reforms in his Inaugural Address, Senator Orrin Hatch (R-UT) yesterday threw down the gauntlet and maintained that reforms are needed in both Medicare and Medicaid in order to reduce the national debt. Hatch, the ranking Republican on the Senate Finance Committee, laid out five proposals that have enjoyed bipartisan support in the past and should be included in deficit reduction talks. They include raising the Medicare eligibility age, changing Medigap coverage, streamlining Medicare cost-sharing under Parts A and B and adding a catastrophic cap, competitive bidding in Medicare, and Medicaid per capita caps.
Let the Games begin.
Resources
Learn how Gorman Health Group can support your Medicare goals.
Visit our website to learn how Gorman Health Group can help you develop and/or execute on a unique model of care for Medicaid plans.
FFE — Notice of Intent to Apply
Things should be starting up in the next few weeks for health plans interested in offering products in the FFE. Given the lack of specificity in the final exchange regulation and CMS' pursuit of state help, potential applicants will be in a constant scramble to see who's on first between the states and CMS. So, there is a need for tactical observation and quick analysis to determine their ability to meet each new twist as it is announced. It is a moving target of regulation that does not lead to a sense of certainty for any health plan that they can or will apply.
Preliminary CMS timelines call for submission of a notice of intent (NOI) to apply sometime in February. CMS relies on the NOI to begin to set up their automated systems for actual applications that will be received beginning in April. While CMS does not use the NOI to determine their need for resources, a large response could do just that. Also, the NOI is not binding, starting with a fairly incomplete set of requirements means that applicants can only estimate their willingness to follow through with an application and merely send one in to check the startup box in the process.
CMS has also let it be known that there is no timeline for states to decide if they want to be a regulator in the FFE. Some state legislators in FFE states are being pressed for more state regulatory action by their constituent health plans. So, it is likely that some health plans will not know which regulations will be applied as they make a decision to complete the application.
No doubt, CMS is looking for the lowest common denominator that will relieve their worry over resources as well as the concerns of potential applicants. However, potential applicants need to know ASAP if the FFE requires building new structures and operations or not when state rules are determined sufficient. While submitting an NOI is a no-brainer, the expense of actually making the application under these uncertain circumstances has real budgetary meaning for some health plans and may staunch some of the willingness to complete the application.
The preliminary FFE timeline looks like this.
February — March
- Health Plans submit Notice of Intent to apply
- FFE Health Plan Application released
April — May -
- CMS begins review of applications
- CMS releases benefit module
- CMS tests consumer application
June — July — CMS Call Center goes live
- CMS conducts all application reviews
- CMS reviews all benefit proposals
August — September
- CMS completes all health plan FFE agreements
- CMS readies each FFE for enrollment operations
October
- Open Enrollment begins
November - December
- Open Enrollment continues
January 2014
- Open Enrollment continues
- QHPs begin coverage period for enrollees
March 2014
- Open Enrollment Ends
Resources
Gorman Health Group Senior Vice President of Public Policy Jean LeMasurier offers a summary of the latest guidance on the state partnership exchange, released on January 3, 2013 from HHS.
Download Jean LeMasurier's whitepaper on Insurance Exchanges in the ACA.
Listen to a discussion focused on the lessons learned from MA and Part D when it comes to product strategy in the Exchanges.
Read Gorman Health Group Chairman, John Gorman's, blog titled "Exchange Activity Kicks into High Gear".
Obama's Inaugural Hard Line on Medicare/Medicaid
Inauguration Day in Washington is a blessedly nonpartisan event celebrating our messy yet peaceful democracy with great pomp. But President Obama, with renewed certainty, drew a hard line in his inaugural address against entitlement cuts that could fundamentally change Medicare and Medicaid. And in doing so he doubled down with Republicans in the next rounds of the deficit reduction cagematch.
"We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future," the President said. With a slap at Mitt Romney's "47%" comments, Obama asserted that our entitlement programs "strengthen us" and "do not make us a nation of takers; they free us to take the risks that make this country great."
Obama has said he's willing to make "modest" changes to Medicare to keep it solvent in the long term, but he wants to do so by "bending the curve" on costs, not by major structural reforms. In repeating these lines he's acknowledging what he owes to core constituencies in his own party, and flushing the ideas of an eligibility age increase or a serious look at premium support. Republicans want big structural changes to Medicare, and point out that their ideas did better with voters in the election than a lot of Democrats thought they would. But that doesn't mean they'll get what they want from a President who has clearly concluded that these folks on the Hill won't be any help. Like, ever.
Obama reminded the inaugural audience that the Affordable Care Act was intended to be a crown jewel of the America's safety net. "Together, we resolved that a great nation must care for the vulnerable, and protect its people from life's worst hazards and misfortune," Obama said. Red meat for the left -- and a warning to the GOP. The President's got his swaggah back.
Resources:
Learn how Gorman Health Group can support your Medicare goals.
Visit our website to learn how Gorman Health Group can help you develop and/or execute on a unique model of care for Medicaid plans.
Exchange Activity Kicks Into High Gear
With all the activity underway across the states, you'd think we were less than 10 months away from when health plans in the Exchanges begin enrolling or something. Oh wait...HOLY CRAP we're less than a year from launch! The game is on, friends:
- Minnesota is taking steps to put its health insurance exchange into law, which has been operating under an executive order for over a year.
- Florida's special Senate committee will meet for the second time to discuss potential implementation of the healthcare law.
- California's budget, released last week, endorsed selling Medicaid bridge plans (low or zero premium plans for people earning between 138% to 200% of the FPL) on the state's exchange.
- Mississippi may receive a decision this week or next from HHS on whether the state's exchange has received conditional certification.
- Connecticut reported that five insurers and four dental plans applied to participate on its exchange.
- Oregon announced 16 insurers applied to sell on its exchange.
- Washington DC is in the process of engaging stakeholders and has created work groups on essential health benefits and established advisory boards for plan management and consumer assistance.
- Illinois's Health Care Reform Implementation Council is meeting today and exchanges may be a topic of conversation.
It's time to get real, folks: this is happening. Starting in October.
Resources:
Listen to a discussion focused on the lessons learned from MA and Part D when it comes to product strategy in the Exchanges.
Hear Gorman Health Group experts discuss the Federal Facilitated Exchange (FFE) and implications for health plans.
The Violence Done to Health Reform by Congress and SCOTUS
As President Obama's second (!) Inauguration approaches on Monday, I was thinking on his signature domestic accomplishment and the violence done to it by 2 years of relentless opposition in Congress and some surgical cuts in the Supreme Court (SCOTUS). John McDonough, the excellent resident health policy geek at Boston.com, beat me to it with a fantastic Affordable Care Act (ACA) damage assessment, where he concludes the law is battered but standing tall on the verge of implementation.
McDonough points out there have been eight significant changes to the ACA since the law passed in March 2010. Seven of the eight changes were done by the hands of furious Republican opposition in Congress, and one in the Supreme Court:
- Medicaid expansion is voluntary for states
- The Class Act is repealed
- $5B cut from the Prevention and Public Health Fund
- Funding for Community Health Centers is cut
- An IRS information reporting requirement on payments to corporations was repealed
- Congress imposes new penalties on Insurance Exchange subsidy recipients whose incomes increase during a coverage year
- Unspent funding for Health Insurance Co-Ops is rescinded, and
- Employee free choice vouchers are eliminated
After some three dozen repeal attempts in the last two years at taxpayer expense in excess of $50 Million, it's impressive the damage wasn't greater. And there's more fighting to come -- again just yesterday US Representative Paul Ryan (R-WI), the GOP Vice Presidential candidate and Chairman of the House Budget Committee, said that he still would like to repeal and replace the Affordable Care Act. It ain't over yet.
Resources:
Leverage Gorman Health Group's experience with Medicaid health plans to develop a unique model that works for you.
Listen to a discussion focused on the lessons learned from MA and Part D when it comes to product strategy in the Exchanges.
What Happens to Medicare/Medicaid If There's a Government Shutdown?
I hate to have to say it, but the "fiscal cliff" debate/debacle last month is going to feel like a speed bump compared to what's coming here in DC on the debt ceiling next month. At the height of its dysfunction right now, the relationship between the President and the Congress points to a near-inevitable government shutdown in the next 60-90 days. Which raises the question of what happens to Medicare and Medicaid when DC closes its doors. The answer? It depends on how long the shutdown lasts, but it ain't pretty no matter what. If it goes longer than 30 days, it's going to hurt, bad.
As the battle lines develop, that's looking increasingly possible. More than half of House GOP members, including some party leaders, are prepared to shut down the government to make their point on cutting spending as part of any debt ceiling deal. House Speaker John Boehner "may need a shutdown...so they have an endgame and can show their constituents they're fighting," said a House leadership advisor. The government will shut down if the House GOP were to refuse to extend the law funding government operations on March 27.
A full-blown extended government shutdown hasn't happened since the winter of 1995-1996 -- my last year as a Clinton appointee at HCFA, now CMS. The shutdown was a 2-part ordeal, lasting 5 days in November 1995 and another 21 in December 1995 and January 1996. Medicare continued to pay physicians and hospitals during the shutdown, and the ability to reimburse providers and plans was never in question, because claims are paid out of Medicare trust funds that are separate from Congressional appropriations.
However, payments to CMS's Medicare vendors for claims processing comes from the CMS operating budget, which — unlike the trust funds — is vulnerable to Congress turning off the spigot. Therefore, in 1995 and 1996, CMS's claims vendors processed and paid claims on a credit basis, with the expectation of being made whole later. An HHS official warned during a Congressional hearing on the 1995-1996 shutdown that Medicare claims vendors "would have to cease Medicare payments if their cash ran out due to a longer hiatus." So if the shutdown were to last for many months, Medicare fee-for-service benefits and payments to providers would stop. Health plans are paid on the 1st of the month, so as long as a shutdown doesn't exceed 30 days, there should be minimal disruption to cash flow.
Most in Washington expect Medicaid's core functions to continue unimpeded during a shutdown -- as long as it's fairly short. "According to the House Committee on Energy and Commerce, because Medicaid allotments are paid to states in advance on a quarterly basis, it is likely states will not see an immediate impact from a temporary government shutdown," Rep. James Renacci (R-OH) says in a shutdown bulletin on his website. That means physicians and other health-care providers should continue to be paid as usual as they serve the Medicaid and SCHIP (State Children's Health Insurance Program) populations. If Congress runs up to the midnight deadline with no plan to fund the government, federal agencies including CMS must designate which workers are performing essential work. Those people would be asked to stay on the job, while nonessential workers would be furloughed. It's unclear if furloughs might have ripple effects for some Medicaid services, such as enrolling new beneficiaries for coverage.
So, short answer: both entitlements are likely to continue to operate and administer benefits and payments during a government shutdown -- but only if it's brief. If a political impasse occurs and a shutdown stretches into weeks or even months, it's anybody's guess what happens to Medicare and Medicaid. And if there's disruption to payments, for even a few weeks, the economic and health care consequences will be severe.
Welcome to the "new normal" in the age of austerity here in DC.
Resources:
Learn more about how Gorman Health Group can help support your Medicare goals.
Visit our website to learn how Gorman Health Group can help you develop and/or execute on a unique model of care for Medicaid plans.
2013 Will be a Very Busy Regulatory Year
CMS is planning to issue a lot of regulations in 2013 that will impact Medicare Advantage (MA) and Prescription Drug Plans (PDPs) as well as plans that will be offered in the individual and small group market Exchanges.
The Medicare Advantage and Part D Advance Notice of Payment Rates and Call Letter will be issued in mid-February and the Final Rate Notice and Call Letter will be released the first week in April 2013. These documents provide critical rate and policy information for MA and PDP plan designs, benefits and cost structures as well as for overall compliance for plan year 2014.
CMS will issue a proposed rule on how they will implement the Medicare Advantage Medical Loss Ratio (MLR) Requirements which takes effect in 2014. The ACA requires MA plans to meet a minimum loss ratio of 85 percent or remit the difference to CMS.
CMS is also planning to issue a proposed rule in September 2013 on "Policy and Technical Changes to the MA and PDP Programs for Contract Year 2015".
CMS also plans to finalize a number of regulations that implement provisions in the Affordable Care Act (ACA). These include:
• Insurance Market Rate Review
• Essential Health Benefits, Actuarial Value, and Accreditation
• Eligibility, Appeals and Other Provisions under the ACA
• Certain Preventive Services under the ACA
• Wellness Programs
• Notice of Benefit and Payment Parameters
• Minimum Essential Coverage Exemptions
• Nondiscrimination
Resources:
To learn more about how Gorman Health Group can help with Medicare Advantage Regulations visit our website.
To learn more about how Gorman Health Group can help with Part D Regulations visit our website.
To learn more about how Gorman Health Group can help with Compliance, visit out website.
Download Jean LeMasurier's summary on three new proposed regulations implementing provisions in the Affordable Care Act.
The Claws Will Come Out at CMS in 2013
Health plans and other stakeholders in Medicare Advantage and Part D can be assured of one thing by President Obama's reelection: that the claws will come out at the Centers for Medicare and Medicaid Services (CMS) in his second term.
Having worked a number of years at the agency I can tell you there is a natural tendency among career regulators to be emboldened in a President's second term. With legacy in mind they know that a Democratic White House won't push back much on a more aggressive posture with the private sector. And frankly many of those regulators have scores to settle with some of the companies in their portfolio that go back even pre-Obama. Now's their chance.
But CMS on the warpath in the next four years is driven by many more factors this time around, like the fact that the agency would like to be in business with many fewer than the almost 2,000 plan options available in Medicare Advantage. The career staff feels there's an embarrassment of riches in MA/Part D, to the point that it confuses beneficiaries. Therefore, a priority in the second term will be to simplify the program by systematically hunting down and eliminating inferior species.
Second, CMS made it very clear that it would begin targeting Medicare Advantage and Part D plans with lower than 3-Star ratings for three or more years in 2013. Low-Stars plans also get the "Scarlet Letter" of a low-quality indicator on Medicare.gov, and this past AEP marked the first time CMS actually sent letters to enrollees of sub-3 Star plans encouraging them to take a look at higher-ranked plans in their market. If you've been below 3 Stars the last several years you now have a target on your back.
Third, budget pressures and cuts to CMS's administrative funding in the last couple years meant that CMS shifted more of its traditional oversight functions to the plans themselves. This year, through routine site visits and remote data monitoring, CMS will find that many of those functions have been neglected and the agency will make some examples. This is particularly true of the renewed focus by CMS on delegation oversight -- how a plan monitors its vendors like its pharmacy benefit manager and affiliated provider groups. They'll also pay much more attention to "compliance effectiveness" -- whether the plan's internal compliance program is actually a living, breathing function that roots out issues before they become problems for beneficiaries.
Fourth, there were a number of new audit protocols for 2013 announced by CMS in last year's call letter, such as expanded use of private contractors overseeing program integrity in Medicare Advantage and Part D, renewed emphasis on remote monitoring of sales and enrollment "red flags", and intense focus on Complaint Tracking Module cases where beneficiaries are howling about poor performance.
Finally, 2013 will be the year that the long-dreaded Risk Adjustment Data Validation (RADV) audits will begin in earnest. CMS, its program integrity vendors, and the law enforcement branch of HHS, the Office of Inspector General (OIG), will undertake dozens of audits of health plans' diagnostic data submitted for risk adjustment in the coming two years. Yesterday OIG said the $124 billion MA program is the focus of very few investigations from fraud-hunters—a conclusion that comes on the heels of several RADV audits alleging hundreds of millions of dollars of questionable payments in the program. Last year HHS officials published the results of years-long investigations into four MA plans, and concluded that the plans had received nearly $600 million more than they should have in 2007 by inflating diagnostic data. All four companies denied the allegations, but OIG is continuing with probes of several other of the 175 plans participating in MA.
This is also about setting the tone with health plans before the launch of the Affordable Care Act's health insurance exchanges this fall. CMS knows most of the plans that participate in Medicare Advantage and Part D will also jump into the exchange, and bloodying some noses in 2013 lets them all know who's calling the shots as we sail into what promises to be a chaotic launch of health reform. Remember the messy launch of the Medicare drug benefit in 2006? The launch of the exchanges and the complexity of the subsidies will make Part D pale in comparison...and CMS wants its private sector partners to be walking on eggshells.
Smart executive teams will commit themselves to a doctrine of "lean and clean" and a culture of compliance in the President's second term.
Resources:
For more infomration on how Gorman Health Group can help with Part D requirements, visit our website.
For information on how Gorman Health Group can help support your goals with Medicare Advantage, visit our website.
To find out how Gorman Health Group can help you develop a Star Ratings action plan, visit our website.
Federally Facilitated Exchanges — Getting States to Help Out
The fog has cleared. CMS sees the size of the FFE Mountain and is beginning to put its plans in place to get health plans certified to participate in the FFE by August 2013. While the partnership states have clearly indicated their intention to play a role in reviewing federal requirements for FFE applicants, other states' governors have cited a myriad of reasons for not having an exchange. At this point, CMS has a few issues to sort through before they can give directions to applicants.
Each state must communicate to CMS their level of cooperation in conducting reviews of applications and oversight of health plans in the FFE. All of this activity must be accomplished at warp speed to make sure that everyone is on the same page in terms of their roles and responsibilities in getting plans on the FFE.
For the seven partnership states, the decision is clear. Each state has provided information in their blueprint application about areas they will oversee. While this is a major step, CMS and each partnership state will need to mutually agree how state requirements comport with FFE requirements. Where they do not, states must understand federal criteria and conduct reviews accordingly in the application process. An MOU will certify the process in each state.
Currently, twenty-four other states that have chosen not to partner with CMS will follow different routes as the FFE becomes operational. CMS extended the timeline to February 15 to encourage more of these states to become a partnership state. To give them an idea of what partnership means, CMS published descriptions of the roles the states can play in a partnership.
At the same time, CMS has made numerous entreaties to these states about roles that they can play in the FFE oversight process (see pp14-16). Consequently, CMS must plumb each non-partner state to determine their interest. This means that leadership in the state regulatory agencies must determine the degree to which they should become a cog in the federal regulatory system.
For some, providing no support is fundamental political theater that demonstrates state independence and requires the federal government to incur full costs along with responsibility for failure. Notably, any of these passive states can still receive payments to provide licensure and solvency as well as any other information that will assist the FFE.
For FFE states willing to coordinate, the CMS task is to evaluate state requirements to determine equivalency to FFE requirements and agree on methods for oversight with each state in whatever limited number of areas equivalency can be established, as well as how information can be continuously shared to support FFE oversight activities.
The dance steps needed for mating state regulatory structures with the federal government in each of the 24 non-partner states are substantial. Getting state/federal agreement to mutually oversee health plans in any limited area requires bureaucratic grease, especially in a compacted timeline. To work with states and make the path as clear and uncomplicated as possible, CMS is making a framework to do this with added definitions and analytic tools. The goal: to be ready in three months for the first applicants.
Notwithstanding resolving equivalency of requirements in states that wish to hold off federal takeover in even a small way, the mating process will also bog down in negotiations around added resources, costs incurred and payment for state services. CMS needs to ensure that these issues do not become obstacles that upend the August 2013 timeline. CMS will need to re-consider using any state's regulatory structure when it becomes clear this engagement process has overwhelmed the goal in that state.
Resources:
Download Jean LeMasurier's whitepaper on Insurance Exchanges in the ACA.
Read Steve Balcerzak's previous blog post on the FFE draft application for qualified health plans.
American Taxpayer Relief Act of 2012
The January 1 legislation to fix the fiscal cliff postpones the scheduled 27 percent Medicare physician fee schedule cut under the Sustainable Growth Rate formula for one year. In order to pay for the doc fix, there are a number of payment reductions to Medicare fee for service providers, especially reductions in hospital and ESRD payments, and an extension of the DME competitive bidding program to diabetes test strips purchased at retail pharmacies. The Medicare Advantage (MA) program also takes a hit. The legislation saves $2.5 billion over ten years by adjusting the MA risk adjustment methodology to increase the coding intensity adjustment factor for 2014 from 1.3 percentage points to 1.5 percentage points and to increase the adjustment factor for 2019 and subsequent years from 5.7 percent to 5.9 percent. The coding intensity adjustment is intended to reflect different coding patterns between Medicare Advantage plans and FFS providers.
The legislation postpones the sequester for two months. MA plans are subject to a 2 percent cut beginning in March if the sequester is not repealed or amended.
The legislation extends the special needs program through December 2014 and the Medicare managed care cost program through December 2013.
The legislation extends the authority and funding ($7.5 million in FY 2013) for SHIPs (State Health Insurance Programs) and Area Agencies on Aging to conduct outreach and assistance for low income subsidy programs.
The legislation extends the Qualifying Individual (QI) program and the Transitional Medical Assistance program through December 2013.
The legislation amends two provisions in the ACA. The legislation precludes spending for any new Consumer Operated and Oriented Plans (CO-OPs). The legislation also repeals the CLASS long term care program and establishes a Commission on Long Term Care to make recommendations on long term services and supports.
Resources
For more information on how Gorman Healh Group can help with Medicare Advantage Risk Adjustment visit our website.
View a 90-minute recording on "Risk Adjustment in the Exchanges - Lessons Learned from MA and Part D".
Listen in to what Jean LeMasurier thinks will happen next regarding the outcome of the fiscal cliff.