CMS Pioneer ACO Demonstration Program: Update
The CMS Pioneer Demonstration program is in stage two of the application process -- meaning that certain applicants have been invited by CMS to proceed to the next level, which is to defend/expand their submitted application in front of a CMS interview panel.
Those interviews are currently in process and it is satisfying to know that all of our client/applicants were invited by CMS to proceed to the interview stage. We of course contiue to support our clients, as well as other oranizations by preparing them for the interview process and the anticipated implementation phase.
Although CMS has not released a specific time frame for the follow up steps to the CMS interviews, we anticpate that by mid-October CMS will issue a communication announcing:
a) those organizations successful in passing the interview process;
b) announcing the much anticipated alternative payment methodologies for the Pioneer ACO initiative; and
c) announcing the time frame for negotiating the contract between CMS and those organizations that are invited to implement a Pioneer ACO franchise.
Look for further updates on the Pioneer program in future blogs as information becomes available.
Repairing Medicare
Last week the President outlined his proposal for salvaging Medicare. He suggested cutting $248 billion in expenditures over the next ten years. Significantly, that is only 4% of the $6.3 trillion estimated to be spent on the program in that decade. The money is to come from two places: The majority (90%) is from decreased reimbursement to providers and drug companies. The rest ($24 billion) is to come from charging beneficiaries more. What struck me was the deafening silence about spending smarter.
The Kaisers and the Mayo Clinics of this world have repeatedly demonstrated that good care is cheaper than bad care. It is worth thinking for a minute about the economics of good and not so good medicine. The plans are being urged—well, forced—to consider quality, but mostly from the point of view of HEDIS indicators that are heavily weighted toward preventive care and maintenance care in chronic illness. There is no question that those measures can improve quality of life, but the evidence that they will save money in an aging population is less compelling. There is, however, some evidence that good case management can save money, especially measures that decrease repeat and unnecessary hospitalizations and that cut down on complications of medical care.
One area that gets less attention, but one that I think would have the greatest financial impact, is to quit paying for care that has not been shown to be of benefit. Examples include very expensive chemotherapeutic agents that have not been proven to prolong life significantly, stents for completed MI's and strokes, or complex back surgeries for elderly patients with degenerative disease of the spine. The list is much longer than that, but I would venture to guess that just those three would produce more savings than the President's plan.
Become a Star: What MA-PD Plans can learn from Mickey Mouse
The Five Star Quality Rating System for Medicare Advantage Plans is run by CMS, and was put in place as part of an effort to help educate consumers on quality, and to make quality data more transparent.
Universal assets of a successful business are the links in Disney's "Chain of Excellence":
- Leadership excellence,
- people management,
- quality service,
- brand loyalty and
- inspiring creativity
are lessons which have been carefully developed by the Disney organization in its never-ending pursuit of excellence.
For 2012, the Stars consist of 50 measures hailing from 5 different rating systems: HEDIS, CAHPS, CMS, HOS, and IRE. Data to support these Star ratings come from surveys, empirical observation, administrative (claims) data, and medical records. CMS Star ratings are published annually and are available for viewing by all Medicare members prior to Open Enrollment and MAS-PD plan reimbursement are substantially tied to Star Rating scores.
Health plans have become adept at harvesting the "low-hanging fruit" consisting of clinical metrics as seen with HEDIS-like measures; however, attested by only three 5-Star plans for 2011, most MA-PD plans struggle with managing the CAHPS and HOS related measures. These are direct measures of customer satisfaction based on member surveys.
The struggle for MA-PD plans is how to move the needle for customer satisfaction. Health Plans are uniquely positioned to take many Disney concepts and adapt for inclusion. A couple of examples: healthcare has a strong, obvious common purpose that can be leveraged to align employees around improving the patient experience.
At Disney, the chain of excellence starts with leadership, moves into how you take care of your people, how your people then take care of your customers. And the loyalty and the financial results, for us, is not the goal, but rather it's the reward for doing something else really well, and that's that guest experience.
Corporate culture needs to be deliberate, by design, not by accident. Measureable goals then align to that. For example, crucial to Disney's strategy was the atmosphere, and Walt wasn't above picking up trash on Main Street since it was important to him. For Disney, "wow" experiences aren't the big things, but instead are all the little things. These are low cost additions that are sustainable. Paying attention to every detail of the delivery, and repeating it successfully, all add up to "wow!"
Companies can be proactive or reactive. To achieve excellence in customer satisfaction, Medicare Advantage plans must evaluate what within the existing business model works and what is missing the mark.
Satisfied members are loyal. Loyalty is really the reward for continually delivering on the brand's promise: a promise of magical experiences, experiences that exceed expectations. At the Gorman Health Group, we help our clients' laser focus on creating, nurturing and reinforcing life-long relationships at every touch point.
Insourcing: So you are thinking about internalizing risk adjustment . . .
We talk to health plans everyday that want to internalize risk adjustment. Bottom line: It is a good idea.
Taking control and building an expert, internal risk adjustment team is one of the best tactics a health plan can take. Here, we share an initial checklist of those areas needed for "in-sourcing":
 Claims based HCC filtering
 RAPS filtering and submission
 EDPS compilation and submission
 Medical record suspect generation
 Medical record retrieval
 Medical record coding
 Chart warehouse
 Hospital outreach for electronic encounter compilation
 Member evaluation suspect generation
 Evaluation development
 Member evaluation provider network
 Member evaluation findings integration
 Tracking & closing gaps in care with member outreach
 Member care report cards
 Primary care physician medical home
 Metrics, benchmarks, ROI, reports, and performance monitoring
Much of this you can internalize cost effectively, but you still need to be diligent. We've helped several health plans analyze their programs and vendors to determine what to pull in-house. Strategy, discipline, compliance and an engaged multi-disciplinary team willing to make decisions and push forward are critical elements for success.
Obama Kicks the Hornet's Nest on Medicare
The President laid out his recommendations on Medicare and Medicaid to the Congressional Super-Committee on Tuesday: about $320 Billion's worth, mostly retreads of long-standing recommendations from other budget-cutting panels like Bowles-Simpson. Kaiser Health News has the details in their Wednesday story. The White House fact sheet on the President's proposal can be found here.
Obama really kicked the hornet's nest on this one -- and may have forfeited the political gift of House Budget Committee Chairman Paul Ryan's broadside to Medicare just a few months ago. Obama's taking lumps, as you'd expect, from Congressional Republicans, who in their outright refusal to look at revenue raisers, are setting up for Debt Ceiling Battle Royale Redux. But now AARP, AMA and the hospital lobby, just to name a few, are piling on.
The President gave a long-overdue impassioned plea in the Rose Garden yesterday, with the exclamation point of a veto threat for Republicans if they try to close the budget gap purely with cuts. The problem is, he's giving Democrats very little raw meat to line up for, only pain. Sure, Obama backed off the idea of raising the eligibility age for Medicare to 67, explicitly tied entitlement and tax reform, and didn't cut as much from Medicaid. That may placate his base. But not much.
I suspect he's going to have a hell of a time getting his own caucus to line up for him in the coming weeks. And my money's on an epic fail by the Super-Committee, resulting in sequestration in December -- and that's a more favorable outcome for Medicare Advantage and Part D.
P.S. I'll be talking more about this and other issues on the national stage at the Opal Medicare Advantage Strategic Business Symposium, September 26-27. Click here for more details about that event.
Marketplace snapshot: Integrating quality and risk adjustment
Just a short note about a Webinar we did last week, hosted by MCOL, and focused on the integration of quality and risk adjustment.
While discussing the relationship between risk adjustment and quality for health plans, we asked three questions during that drew some interesting answers:
First, we asked about the Star ratings of the participants. As it turned out almost all the attendees were from 4 Star or better plans. The message I took from that is the plans that are already doing well on quality measures are determined to do better.
The second insight was that 2/3 of the attendees had already integrated their Stars/HEDIS with their risk adjustment departments. The good ones have figured out that risk adjustment and quality are inseparable.
Finally, ¾ of the attendees had not yet incorporated data collection for HEDIS and Stars into their prospective member evaluations. That strikes me as a missed opportunity, but these are good plans and I suspect that will change.
So the rich get richer and work smarter. I guess that should not be too much of a surprise.
Last week at AHIP: How are you sleeping lately?
We heard a lot about STARS and compliance, about integration and collaboration. But what should be keeping you up at night? EDPS and RADV extrapolation.
Sean Creighton said that EDPS compliance and accuracy may affect your STARS rating and Jonathan Blum shared that the RADV extrapolation equation is under review but will be released soon. EDPS compliance will be extremely important but won't be a single source of information until 2013, due to the dual submission in 2012. RADV extrapolation is extremely impactful now today.
Are you confident about your program?
• Confident in your <20% HCCs submitted due to medical review chart?
• Confident in your <10% HCCs submitted due to member evaluations?
• Confident in your >70% HCCS submitted due to claims based HCC?
It is not just about revenue or suspect lists. You have to have:
• compliance plan for risk adjustment
• chart and assessment warehouse
• an annual mock-RADV audit (for charts & member evaluations)
• reconciliation step for RAPS and EDPS
• claims submission scrub
Sleep well.
Medicare Advantage Premiums Down, Enrollment Way Up in 2012
We've long said on these pages that all the predictions of the demise of Medicare Advantage following passage of the ACA and its steep cuts to the program were premature. Finally, confirmation from CMS: MA premiums will fall another 4% in 2012, and enrollment will grow by a brisk 10%.
The news was delivered Friday by Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services. Blum said health plans are also lowering co-payments and deductibles. He attributed the premium drop to the agency's strong negotiations with plans as well as the plans' continuing desire to serve the market.
Some color commentary on Blum's announcement:
- Government programs (Medicare and Medicaid in particular) are the only segments of the insured that are growing. MA, for instance, will grow over 7% this year, topping 12.5 million beneficiaries. Part D is approaching 20 million enrollees;
- Publicly-traded companies like MA leaders Humana and United are now dependent on Medicare, deriving twice their earnings from the program than they did a decade ago (average publicly-traded health plan earnings from Medicare in 1999: 13%; today, 26%, with some like HealthSpring and Universal American over 70%. Bottom line: the big boys ain't going anywhere.);
- Over 40% of beneficiaries aging into Medicare have enrolled in MA plans the last two years, indicating the Boomers are a much more plan-friendly population than the World War II generation given managed care trends in the commercial market (HMOs, PPOs and POS plans represent more than 90% of all insured Americans).;
- Market-leading plans are adapting to the challenges of the ACA by offsetting its payment cuts with intense focus on Star Ratings quality bonuses and mastering the new state of the art in risk adjustment: the prospective home advanced evaluation. It's working, enabling plans to hold the line on benefits and premiums, and maintaining the attractiveness of these products vs. Medigap or traditional Medicare.
As long as the Congressional deficit Super-Committee doesn't fire another broadside at MA plan payment rates this fall, 2012 is shaping up to be a VERY good year.
Obama Submits (Medicare) Proposal to Super-Committee Today
The Congressional deficit "Super-Committee" formally began its work last week, and President Obama is expected to release his deficit reduction proposal today at 10am EDT. The President's plan is expected to seek as much as $3 Trillion in savings -- including, most notably, the new "Buffett Rule" establishing a new tax bracket for millionaires. The plan also includes $320 Billion in health savings over the next decade including $248 Billion in Medicare (would add 3 years to the trust fund) and $72 Billion in Medicaid cuts. The plan calls for exempting existing enrollees from some changes.
Proposed changes to Medicare are not expected to take place until 2017, and would only kick in if Republicans agree on certain revenue raisers. The President's proposal is no longer expected to include an increase in the eligibility age. Medicare cuts would mainly come from providers (reduce bad debt and graduate medical education payments, align rural providers payments with the cost of care, encourage efficient post-acute care) and by increasing Part B and D payments for higher-income beneficiaries, and discouraging certain Medigap plans. Details to come following the announcement.
We remain convinced that the best-case scenario for Medicare Advantage and Part D plans is that the Super-Committee fails to vote out a proposal (7/12 margin required), or that Congress fails to pass the plan by at least a majority vote. This would trigger sequestration, an across-the-board 2% cut to Medicare payments to providers and plans. Those cuts would hit 2013-2017, and are likely less severe than any proposal voted out of the Super-Committee.
And what about the "doc fix" -- reform of the Sustainable Growth Rate? It remains the biggest indirect threat to MA rates. Docs are facing a 29.5% cut in their fee-for-service Medicare payments starting January 1 unless Congress intervenes. Failure to address it could mean MA rates take a 7-8% hit beginning in 2013. The Medicare Payment Advisory Commission (MedPAC) plans to make recommendations for payment cuts to the health care sector that would help offset the cost of a long-term Medicare physician payment reform plan. At its meeting in Washington last week MedPAC outlined the plan, which included a freeze in reimbursements for primary care physicians and reimbursement reductions for specialists.
Stay tuned and watch this closely as the Super-Committee reconvenes on September 22nd. While MA plans "gave at the office" in health reform with around $130 Billion in cuts, we're not out of the woods yet for a second round of payment reductions.
My Talk at AHIP's Medicare Conference
I had the pleasure of addressing a standing-room-only crowd at the AHIP Medicare conference yesterday, sponsored by our friends at TMG Health, our 4th year together there. That speech always keeps me on my toes, especially this year -- a tough, smart audience that demands a tough, smart message on how to survive in the new Age of American Austerity. Here are the main points of what I said:
- Volatility and Accountability will define the sext several years in Medicare. Volatility: rates, the Medicaid dual eligible explosion, the Congressional "Super-Committee", industry consolidation, and the 2012 elections. Accountability: it's already here. Star Ratings bonuses, minimum MLR regulations, compliance, rate reviews, RADV audits, and Accountable Care Organizations.
- The State of the Union in Medicare Advantage (MA) and Part D is strong. All predictions of the demise of the program following health reform were wildly premature. MA will grow about 7% this year, and over 40% of beneficiaries aging into Medicare have chosen MA in the last two years. Local PPOs with the drug benefit integrated remain the product of the future in MA, as do Special Needs Plans given the tsunami of dual eligibles -- a $300 Billion market alone. We think MA will pass 15 million members by the end of 2015.
- Medicaid managed care is risky (BIG) business. We've already seen major awards this year in TX, LA and KY. CA is prepping the biggest RFP in US history: 150,000 duals in plans by end of 2012; all duals in plans by end of 2015: a $21 Billion opportunity. WA, FL, NH, NE, MI and HI are all preparing to move duals into plans.
- Volatility: many of us thought we "gave at the office" in health reform when the ACA whacked over $120 Billion from MA rates over a 7-year period. There's more austerity to come from the Congressional "Super-Committee" on the debt. Best case scenario? The Super-Committee fails, sequestration occurs, and we get hit with a 2% cut in 2013, 2014 and 2015, compounded. And what about the "doc fix"? If they don't fix the SGR and docs take a 29.5% cut in Medicare reimbursement in 2012, MA gets hit by about 7% in 2013, and the beneficiaries take it in the shorts. Bar the exits! Consolidation is intensifying in both payer-payer transactions, and payer-provider deals like United/Monarch (CA). And then there's the elections. My money as of today is that Obama gets re-elected by the narrowest of margins, Democrats lose the Senate, and we have another 4 years of economic doldrums with the HUGE exception of the ACA's implementation in 2014.
- Accountability: it's already here, a cornerstone of the ACA. It's embodied throughout, in Star Ratings bonuses, Accountable Care Organizations, with growing incentives for chronic care improvement, member satisfaction, and compliance. The cornerstone is transparent data reporting. Berwick's legacy will be his embedding the "Triple Aim" in the DNA of CMS. And CMS says it will terminate MA plans with less than 3 stars for 3 years running. A "good" star rating is not a hedge against the rate cut: it is an existential issue -- and a management revolution.
- What to Do?
- Aggressive revenue management in the near term. Master risk adjustment and audit-proof the function by embedding it where it belongs in Medical Management, move from claims extracts and chart reviews to Prospective in-home Evaluations, and be a Star Czar.
- Care coordination and chronic care management over the mid-term (3 years). It will take years to see results, but this is what it's all about in the mid-to-long-term. High-touch with the frequent flyers.
- Commit to a Culture of Compliance. The regulator is the purchaser, and you keep this account happy by following their rules. To. The. Letter.
- Revisit the service model and move from reactive to proactive. Health care is still a service business and Boomers are tough customers.
- Establish and Invest in Medical Homes, Accountable Care Organizations, and Exclusive Provider Organizations. In the end, it's all about the docs.
Questions? You can always reach our team at ghg@ghgadvisors.com.
PS Join me for another talk September 25-26 in Arlington at the Opal Events MA Strategic Business Symposium. Complimentary passes are still available today.