Brain Food | GHG Advisors

Where is Healthcare Now? The Long March to Value-Based Care.

"Why won't the Centers for Medicare & Medicaid Services (CMS) let health plans gather some health information at the point of sale?

How is CMS going to use the data they are collecting?

What is CMS going to do when the first round of Accountable Care Organizations (ACOs) comes to an end?"

At the Gorman Health Group 2016 Forum in Fort Worth, these and other questions were on the minds of our clients. It can be challenging to guess what the agency will do going forward in an election year when the water is choppy. But that forecast is a critical factor in your planning.

In "The March to Value-Based Payment," I described something that is a long march indeed. The Republican-driven Medicare Modernization Act of 2003 ushered in the attenuation of payments to hospitals, first for quality reporting and soon after for quality results. Then, the Affordable Care Act driven by the Democratic Obama Administration doubled down on this "good government" approach. The program was extended to more provider types, outcomes and efficiency were added to the measures, and we began to see downside risk associated with less-than-average performance.

Under the provisions of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), physicians and other practitioners will face a Hobson's choice: live with a more aggressive risk-based adjustment to payments or join forces with an alternative delivery model, like an Accountable Care Organization (ACO), that is taking risk. The goal moving forward is to render unto Caesar what is Caesar's: the government is willing to bear the risk associated with each patient's demographic characteristics and health history. They will render unto providers the risks of inefficiency and poor performance. This could encourage more doctors to choose alternative payment models like ACOs or to affiliate with Medicare plans. Are you ready?

Resources

The Gorman Health Group 2016 Forum concluded last week with over 200 of our closest clients and partners. There was great news and rough news, so here are a few takeaways >>

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 >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

Takeaways from the Gorman Health Group 2016 Client Forum

The Gorman Health Group 2016 Forum concluded last week with over 200 of our closest clients and partners. There was great news and rough news, so here are a few takeaways:

The playing field of government programs continues to expand rapidly, with improving revenue outlook across the board:
We're sticking by our projections of over 29 million Medicare Advantage (MA) enrollees by 2023, driven by more positive rate trends and a plan-friendly baby boomer tsunami underway.
Six to eight more states expand Medicaid — once President Obama leaves office.
Significant enrollment gains for dual eligibles as home and community-based services (HCBS) waivers and managed long-term services and supports (MLTSS) initiatives become the new normal. We expect dual eligible special needs plan (D-SNP) enrollment to double and exceed 4 million by 2019.
Rising ObamaCare enrollment, albeit slowing and below projections, as more difficult-to-reach populations remain outside coverage.
During the Forum, United announced its departures from most ObamaCare Marketplaces. We characterized the news as a nothingburger in terms of enrollment or market impact but huge symbolically and politically. We expect another two to three messy years sorting out the pricing and finances of the Marketplace business, with membership reconciliation and cleanup of membership discrepancies front of mind for issuers.
Risk Adjustment Data Validation (RADV) audits will begin to be conducted in MA — 2016-2018 will be the first time we see plans prosecuted under the False Claims Act and hundreds of millions clawed back by the Centers for Medicare & Medicaid Services (CMS) for unsubstantiated codes submitted for higher payments.
Clinical and pharmacy data integration and strong provider partnerships around person-centered care were clear priorities in medical management, Star Ratings improvement, and Pharmacy Benefit Manager (PBM) oversight.
The Star Ratings system of performance-based payment drives the payer and provider markets. This year will be the first year where plans below 3 stars are terminated. It's also when another 180+ MA plans will be scored for the first time, diluting ratings for existing plans, especially those at 4+ stars and denying many their bonuses and rebates in what promises to be an ugly "October Surprise."
The turbulent Presidential elections will likely be won by Hillary Clinton, promising continued gridlock with a likely weakened and more polarized Congress. This means CMS will increasingly fight out policy changes "below the waterline" in subregulatory guidance and enforcement, where politicians are less likely to intervene. That means more surprises for plans not paying attention.
Appeals and grievances and pharmacy benefit management vendor performance remain the #1, 2, and 3 regulatory infractions in MA and integration of long-term care and supports and services the leading challenge facing Medicaid health plans.
CMS is on pace for its most aggressive enforcement year ever, with over a dozen actions taken against plans this year already.

As we've said since the passage of the Affordable Care Act, we are now in the Golden Age of government-sponsored health programs, and the opportunities and challenges that come with this shift have never been greater. Our clients went home with a clear grasp of both, and we are thrilled so many joined us this year.

Resources

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by GHG Advisors

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!

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by GHG Advisors

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

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by GHG Advisors

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 >>

by GHG Advisors

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.

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

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 catchâ€”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 sayingâ€”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 >>

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by GHG Advisors

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

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 >>

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by GHG Advisors

CMS Proposes New Part B Prescription Drug Payment Model

On March 8, 2016, the Centers for Medicare & Medicaid (CMS) released a proposed rule which aims to test a new alternative payment design to pay for drugs covered under Medicare Part B. Medicare Part B covers prescription drugs administered in a physician's office or hospital outpatient department. Currently, covered Part B drugs fall into three categories: drugs furnished incident to a physician's service, drugs administered via a covered item of durable medical equipment, and other drugs specified by statute.

CMS found Part B payments for separately-paid drugs in 2015 were $22 billion, amounting to an average annual increase of 8.6% since 2007. Additionally, a new report from ASPE found drug price increases and a shift to prescribing more expensive drugs account for 30% of prescription spending growth.

Currently, most Medicare Part B drugs are paid using the Average Sales Price (ASP) plus a statutorily mandated 6% add-on. This creates an incentive to prescribe more expensive drugs due to the higher payment amount. Under the new model, Medicare Part B would pay the ASP plus an add-on of 2.5% and a flat fee of $16 per drug per day. The lower add-on and inclusion of the flat fee would decrease the incentive to provide more expensive drugs as the revenue for the drugs would be more evenly distributed.

CMS is proposing to introduce the new reimbursement program in select geographic areas in the fall of 2016. CMS will then roll out the second part of the experiment in which they will test several other pricing methodologies currently utilized by commercial health plans and pharmacy benefit managers. Some of these tools are: discounting or eliminating cost-sharing, providing feedback on prescribing patterns and decision support tools, basing pricing on a drug's clinical effectiveness, and setting benchmarks for a group of therapeutically similar drug products.

The experiment will run for five years, with the Part 2 phase running the last three years. The evaluation will focus on whether the experiment reduces Part B drug spending, without limiting coverage or benefits, while maintaining or improving patient care.

Although all providers furnishing Part B drugs will be required to participate, some would be placed into control groups and will remain under the 6% add-on payment.

While CMS announced this new model would provide relief for certain providers, by relieving the pressure to provide higher cost drugs when they are not appropriate, the industry has already dealt out criticism for the new proposal, and CMS is bound to receive many comments on the new payment model. However, the private industry does already use "value-based pricing," and CMS is seeking to use a similar methodology to bring costs down while maintaining value. CMS is accepting comments on this proposal until May 9, 2016.

Resouruces

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by GHG Advisors

Four Easy Ways to Lose Revenue

Times are busy. We are all doing more with less these days. Sometimes we don't put processes in place to make sure functions continue when our focus is elsewhere. Here are four easy ways you could be losing revenue:

Member Experience and Claims Payment: Not storing all diagnostic codes for your provider and facility claims. Similar to working edits, if you have not reviewed your claims system to determine if it is accepting all diagnostic codes that come in on an electronic provider or facility claim, you don't know if you are capturing everything you need. If your system is dropping diagnostic codes, you could be dropping appropriate reimbursement for impacted members. John Gorman, Founder and Executive Chairman at Gorman Health Group (GHG), recently commented on the importance of the member experience in a new article stating, "Now more than ever, it's clear to us health plans and their stakeholders will thrive or die based on the member experience they provide."
Reconciliation: Not working Prescription Drug Events (PDEs), enrollment edits, or risk adjustment and encounter data claims and enrollment edits. Payments for Part C and Part D are based on information from the services members receive. If you don't have a good process in place to ensure all edits are resolved, you are more than likely leaving money on the table.
Hospice and Claims: Not having a tie between your claims system and hospice determinations. Hospice services are a carve-out for Medicare Advantage (MA). Typically, hospice providers don't bill for hospice-related services. Other providers may bill you for Medicare-covered non-hospice-related services. If your system is paying for those services, you are paying too much.
Medicare Secondary Payer (MSP): Not managing your MSP members. MSP impacts both premium received and the payment of claims. If you don't have processes in place to validate each MSP designated member, and either correct discrepancies with the Coordination of Benefits Contractor (COBC) or set up your system to pay secondary, that mismatch is costing your plan money.

In busy times, it can be difficult to monitor everything. Establishing procedures and controls in order to manage these processes without interruption is critical to the success of your organization. Our multi-disciplinary team of consultants knows how to set up the right controls to keep your department running in an efficient, productive, and compliant manner.

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.

Specifically, attendees can expect from my presentation practical strategies for combining productivity and compliance in your Operations Department while gaining real-world examples of the holistic management of compliant Operations departments.

The preferred room rate expires on Monday, March 28, 2016. Register now >>

Resources

If you haven't had the chance to review all of the sessions we have slotted for the Gorman Health Group 2016 Forum, download the conference brochure >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors