Federally Facilitated Exchanges: The draft application for qualified health plans

In at least 23 states, governors are allowing a "Federal takeover" in the form of a federally facilitated exchange (FFE).  Now, CMS has published the first draft of the application that health plans need to complete to become a qualified health plan (QHP) in the CMS FFE.  To be sure, the exchange regulation allows individual exchanges flexibility in defining rules and operations, provided they meet the basic requirements.  This flexibility applies equally to how CMS interprets its role in operating exchanges in the FFE states.

Notwithstanding the publication of proposed rules around benefit packages, actuarial equivalents, risk adjustment and accreditation two weeks ago, the draft QHP application gives us only a glimpse at the sub-regulatory requirements an insurance provider must meet to qualify for a FFE contract.  It is normal that laws beget regulation that change into sub-regulatory requirements in the form of manuals, applications and memos.  The process is painstaking, long and aggravating as the government attempts to re-explain or respond to every question -- especially for new programs.  So early adaptors, beware.  There were approximately 100 promises of additional guidance in the final exchange regulation published in March.  This draft application puts only a small dent in that promised guidance.

More importantly, for health plans who were expecting to be approved by sending CMS a copy of their state license and a benefit package, the draft application provides real meaning to "Federal takeover".   The FFE application is effectively a new licensure process since each health plan is an unknown to CMS.  Familiarity with a state regulator has almost no meaning, and a new set of judgments and evaluations are applied.  CMS wants to see your state license first, but you will also need to explain that you are solvent and are in good standing with the state. For basics, CMS asks for extensive administrative data on the organization and its staffing.  If there are corrective actions in place, CMS will determine if they are sufficient.

The draft application notes that multiple areas will have additional information added over time.  One undefined, major area is a new section that will address parameters for network adequacy that may or may not agree with state licensure requirements.  Also, a separate listing is required for a new, undefined provider category for essential community providers.  No doubt, this section will undergo its own evolution.  Additionally, for the FFE, CMS adds new requirements.  For example, there is no exchange regulation for a compliance plan.  However, for operating in the FFE, it's required.

Similar to applications for Medicare Advantage and Part D, FFE health plan applications will be submitted electronically.  This includes the usual complexities given the nature of the systems used by CMS for validation and document uploads.  A series of attestations is used to ensure that plans have reviewed requirements.

In the Medicare Advantage and Part D world, manuals and memos provide sub-regulatory guidance that defines these requirements.  However, there is little or no sub-regulatory guidance for the FFE attestations.  So far, only regulations are cited and, as noted above, there are over 100 places in the exchange regulation where future guidance is promised.

Finally, requirements for benefit plans and risk adjustment are in their comment period and are destined to become a part of the application. At the same time, the application promises that it will change over the next few months before it is final in early Spring 2013.  However, the draft application clearly indicates to us that CMS will engage in a serious regulatory process.  Clues to their methods have been firmly established in processes used in Medicare Advantage and Part D.  Given the expected timeframes, health plans need to identify resources that can efficiently provide the right kind of responses during what promises to be a tumultuous startup to 2014.


Transition Readiness

As AEP comes to a close on December 7, we are well into the time that organizations need to make sure that new members receive all of their required materials, including their identification cards. Having the annual election stretch to December 31 in the past was certainly to an organization's advantage from a sales perspective, but it was an operational challenge when it came to ensuring those late applicants had access to services on day one.

In regards to access to services, there is no time like the present to make sure your Part D transition policies and procedures are in place, functional, and operational. (In fact, there's no time like the past to have done this already.) CMS identified in their September 10 memo  that transitioning new and existing members is a best practice, insomuch that it eases administration and all beneficiaries are treated as new in order to meet the transition requirements. However, plan sponsors tell me that this is not always feasible, and thus they implement the minimum requirements necessary.

So what is the requirement you ask? Plan sponsors must provide a temporary fill when the member requests a refill of a non-formulary drug (including Part D drugs that are on a plan‟s formulary but require prior authorization or step therapy under a plan‟s utilization management rules) within the first 90 days of coverage under a new plan. This 90 day time frame applies to retail, home infusion, long-term care and mail-order pharmacies. Failure to do so was a common finding in the 2012 program audits. CMS found that incorrect transition logic or edits had been applied, leaving some transition-eligible drugs to be rejected.

Think about what the obligations are as outlined in the Prescription Drug Benefit Manual Chapter 6 (as well as all subsequent guidance), and ask the right questions of your PBM to ensure this process is in place. Not only that, but to share the wise words of a former manager of mine, "Trust but verify."  Review your rejected claims on a daily basis and analyze if any rejections are inappropriate, and if so, do what's needed to ensure members get their drugs. Failure to do so, in my opinion, is one of the most serious reasons that CMS may find a plan in breach of their Federal contract. Your Medicare Compliance Officer will soon be attesting to seven questions specific to Part D transition via the 2013 Readiness Checklist. Give him or her the confidence to attest favorably by means of robust documentation, including test results that demonstrate functioning logic and appropriate edits, and a plan for focused daily rejected claims review.


The New Post-Reform Core Capability for Health Plans: Risk Adjustment

Medicare Advantage and Part D have for years been the world's largest experiments in paying insurers more for the care of sick members while paying less for healthier members, or risk adjustment.  Some two dozen states now risk-adjust Medicaid payments to health plans, and the hundreds of Accountable Care Organizations (ACOs) launching this year and next are risk-adjusted as well.  Now that the election has been decided, we know that health plans operating in the insurance exchanges launching in 2014 will also be risk-adjusted based on a similar methodology to that used in MA and Part D.  It's the new core capability for health insurers in the post-reform world, and it's examined closely by my two top experts, Bill MacBain and Dr. Jack McCallum, in this month's Managed Healthcare Executive magazine here.


Election Gives Health Reform the Kiss of Life

It's hard to argue this wasn't a decisive victory for the President and Democrats in the Senate.  What remains to be seen is whether intractable Congressional Republicans will come to the table to get stuff done.

While it was a distant #2 issue in exit polls, this election was a de facto referendum on health reform. The ACA will not be repealed and is now assured to be Obama's lasting legacy.  The "repeal and replace" campaign -- over three dozen repeal attempts in Obama's first term at taxpayer expense of more than $50 million -- is over.  The GOP fought the ACA fiercely but I expect it will be hugely popular by 2016.  Our hope is that Congressional Republicans will lay down their arms and help shape the ACA's implementation so they can share the credit when it's as successful as Medicare Part D has been.  House Speaker John Boehner made some welcome gestures this week, asserting that "ObamaCare is the law of the land" and that the repeal agenda is over.  We'll see.

Here are some thoughts on what happens in government health programs now that the election is over:

Sequestration and Fiscal Cliff: the 2% across-the-board sequester will not happen and the two parties will make a deal on the fiscal cliff that leaves everyone pissed — like compromise is supposed to.  The political dynamics strongly favor the President, as his ideal scenario — raising taxes on the wealthy to accompany budget cuts -- occurs without any legislative action, and nothing happening in Congress is always a safe bet these days.  Any deal reached will now involve both entitlement cuts and tax increases, we'd guess in the neighborhood of $2T or roughly half that recommended by the Simpson-Bowles Commission, and it will have bipartisan support.

"Doc Fix": The Sustainable Growth Rate (SGR) or the "doc cut" will be fixed, but it has to be paid for — and that's the obstacle both parties struggle with.  MA rates are profoundly impacted by this issue, and Congress's inclination to deal with it through annual increments rather than the 10-year price tag in CBO estimates means that MA plans must wait until the next year's rates are announced.  The discrepancy between how and when MA rates are set vs. FFS means that MA plans are never really made whole.  It's a tremendous challenge for our industry — and an enormous windfall for MA in 2014 and beyond if Congress solves the problem.

Exchanges: Many Red State governors held out hope the election would settle whether they must prepare for health reform.  The 11th hour means most have been caught flat-footed and the Federal Exchange will operate in over 30 states and will be the defining marketplace for health insurance starting in 2014. Far-right governors in Kansas and Virginia will eat the Federal fallback; Wisconsin Governor Scott Walker is now scrambling to get his own exchange together, and a handful of others may follow.  It's one of the supreme ironies of Obama's reelection: the governors who screamed loudest of a "government takeover of health care" are about to get just that for their inaction, when the Federal Exchange comes to town in 2014.

Medicaid: most, if not all, of the 7-8 Red States who opposed expansion following the Supreme Court ruling will fold and take the expansion funds in the next 90 days — it's just too good a deal to pass up.  Most of the 16 Million new Medicaid beneficiaries envisioned by the ACA — many childless uninsured adults -- will be assured of coverage in a second Obama term.

Dual Eligibles: The migration of dual eligibles to health plans will now move forward in more than two dozen of states in the next two years.  The state fiscal crisis will overwhelm concerns about the speed of the migration, and it will result in over $200 Billion in new annualized premiums for plans in the next 3 years.  The duals are now affirmed as the biggest opportunity for health insurers in a generation — bigger than the exchanges.  They're also the most vulnerable, complex and expensive patients in the entire US health system and will challenge health plans like never before.

Medicare Advantage and Part D will continue on the course set by the ACA, and we expect the consolidations within the industry to accelerate with the election's uncertainty resolved.  Look for a much tougher CMS in a second Obama term, with a continued increase in oversight, bolder regulations raising the bar, and a tougher compliance posture from CMS for Medicare Advantage and Part D plans.

  • The Stars program's current trends will continue:  Standards will change every year and underperforming plans will be hunted down and eliminated.  CMS may get moving on SNP-specific rating standards, as SNP plans will be in trouble soon without them.  Plans with 4+ Stars will continue to get bonuses and rebates under the ACA, but 2013 will usher in a new era of sub-3 Star plans being shut down by a much tougher CMS.
  • CMS will keep trying to find a better way to risk adjust.  We expect an attempt to recalibrate the HCC coefficients based on encounter data, which will change the dynamic: Plans will have to find missing codes to avoid being cut, rather than getting paid more.  How CMS adjusts for the FFS error rate will be crucial.
  • SNP and 1876 reauthorizations will both get paid for, but we need a vehicle to get the 1876 extension quickly, since it expires the end of December 2012.  SNPs expire at the end of 2013, and so have more time for reauthorization.

Medicare: We expect Medicare will serve as a piggy bank for deficit-reduction proposals, given its size and fiscal situation.

  • The Ryan/Wyden Medicare reform proposal will be debated as a gesture of "cross the aisle" goodwill from the President, but won't come close to enactment. But "premium support" will go mainstream in the debate and become more palatable over time — it reeks of inevitability and Democrats must come to the table to save the program we all hold so dear.  The discussion begun by Ryan and Wyden must have its day.
  • We expect the cuts that have been considered in prior budget proposals will be back on the table, including: fraud detection, reforming Medicare cost sharing rules, restricting first dollar coverage in Medigap, extending Medicaid drug rebates to duals and LIS, and more means testing.  Provider cuts will also be on the table, especially for hospitals.
  • An increase in the eligibility age to 67 is a possibility.  But unlike with Social Security, deferring the eligibility age merely cuts off the lowest-cost tail of the distribution.  The cost reduction would be disproportionately small compared to the number of people politicians would upset.

ACOs: with the ACA intact, the truly astounding surge in ACOs participating in Medicare, Medicaid and the commercial market will continue.  Over 100 ACOs are already operating in Medicare.  Over 500 applications were received by CMS for the September filing deadline for the Medicare Shared Savings Program, and over 300 ACOs are active in the commercial market and Medicaid reforms.  With the election ACOs are here to stay as the bedrock contracting vehicle for the evolution and enrichment of forward-looking providers.

While it ended up a "status quo election" it gave the Affordable Care Act an indelible kiss of life and ushers in one of the biggest changes in our domestic policy in a generation.  Now it's time to get down to the real work of implementing it.


#DenverDebate

Who saw last night's presidential debate in Denver? Certainly there is a great deal of water cooler discussion going on today. Something that irked me was the continual reference to the fact that Medicare would continue to be available for "seniors". Anyone working in the Medicare Advantage arena (whether it's in Medical Management, Sales, Customer Service, you name it) knows that Medicare is not just for seniors. The Marketing guidelines even prohibit targeted marketing in this regard, i.e. implying a plan is available only to seniors as opposed to all Medicare beneficiaries. In fact, the list of under-65 recipients who qualify is as long as the list of over-65 qualifications.

As of December 2011, there were over 8.3 million disabled men and women under the age of 65 enrolled in Medicare Part A. I urge all those who have the privilege (and challenge!) of holding or seeking elected office not to forget this important fact, and I urge all readers to go out and vote on November 6.

Hospital insurance (Part A) (From SSA Publication No. 05-10043, ICN 460000, July 2012)

Most people age 65 or older who are citizens or permanent residents of the United States are eligible for free Medicare hospital insurance (Part A). You are eligible at age 65 if:

  • You receive or are eligible to receive Social Security benefits; or
  • You receive or are eligible to receive railroad retirement benefits; or
  • Your spouse is eligible; or
  • You or your spouse (living or deceased, including divorced spouses) worked long enough in a government job where Medicare taxes were paid; or
  • You are the dependent parent of a fully insured deceased child.

Before age 65, you are eligible for free Medicare hospital insurance if:

  • You have been entitled to Social Security disability benefits for 24 months; or
  • You receive a disability pension from the railroad retirement board and meet certain conditions; or
  • If you receive Social Security disability benefits because you have Lou Gehrig's disease (amyotrophic lateral sclerosis); or
  • You worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program; or
  • You are the child or widow(er) age 50 or older, including a divorced widow(er), of someone who has worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program.
  • You have permanent kidney failure and you receive maintenance dialysis or a kidney transplant and:
    • You are eligible for or receive monthly benefits under Social Security or the railroad retirement system; or
    • You have worked long enough in a Medicare-covered government job; or
    • You are the child or spouse (including a divorced spouse) of a worker (living or deceased) who has worked long enough under Social Security or in a Medicare-covered government job.

Rolling the dice

According to the Department of Health and Human Services (HHS), Medicare Advantage (MA) enrollment is anticipated to grow 11 percent. Regardless of the politics behind the message, more beneficiaries than ever will be enrolled in MA products. Most organizations cannot keep up with all of CMS' requirements. As evidenced in their best practice reviews of 5-star plans, no plan is perfect. Common findings included improper formulary administration, denial of transition fills, and lack of an effective monitoring and auditing system. These findings have a high impact on MA enrollees.

I, like other consultants, am often asked what the financial penalty is for non-compliance. While we have a reach into many clients and colleagues, the answer is not simple and we anticipate it never will be.

Within the last twelve months, for example, we have seen CMS impose financial penalties on organizations who did not comply with marketing requirements. We also know that some organizations have been subject to Immediate Correction is Required (ICARs). These are situations where CMS deems ICARs are necessary while the audit occurs or soon after the exit conference. It is a challenge to put a dollar amount on a situation where a department needs to drop everything and fix something immediately, as the ICAR must be completed within 72 hours. It's one thing to update a work flow to ensure members are contacted about their Coverage Determinations; it is another thing entirely to re-vamp Part D claims payment logic.

Medicare Compliance Officers who attended CMS' Compliance Officer Training in April have the list of compliance actions that CMS can take, in order of severity. To evaluate how those steps translate into dollars is not easy, but it's just like many other things we interpret. Various suppressions and exclusions could be short or long term. A Corrective Action Plan could take weeks or months.

The moral of the story is: don't let non-compliance get to that point. If an organization has an effective system to detect, correct, and prevent, then chances of enforcement actions are reduced. If one of the pitfalls is a lack of an effective monitoring and auditing system (whether due to expertise, outdated technology, or something else), consider it a high risk. The cost of this can roughly be translated into lower quality scores, CMS compliance actions, and poor retention, with membership going to well-performing counterparts. Why gamble when the stakes are that high?


Sales Oversight & Thoughts on CMS Updated Agent Training Guidelines

As you likely noticed, CMS recently released its updated Guidelines for Agent Broker Training and Testing for CY 2013 on August 21. Our in-house compliance experts have cross-walked the new regulations with the old ones from last year and here's our take: for the most part, the updated guidelines should be business as usual.  However, it is interesting to take note of where CMS is going to greater lengths to provide additional clarity or requirements.

Here's our take on a few additions:

  • Under the Beneficiary Protections section, new requirements were added on the education of agents on Aggressive Marketing. More specifically, you'll see requisites on things like what the potential consequences will be for engaging in Aggressive Marketing activities, report requirements, plan disciplinary actions, termination rules, and compensation forfeiture guidelines.  Again, while this isn't new, it's now part of the training requirements and necessitates additional preparation, as plans now need to inform the agents about their specific disciplinary process up front.  Agents now need to be educated on scenarios that clearly define, "if agent does X, the penalty is X."  Plans should take the time to create an offense ranking matrix and a disciplinary scale that escalates based on number of infractions or severity, and educate their agents ahead of time.  Of course there will always be new situations that pop up, but this is not a process that should be created on the go.

 

  • There are quite a few updates focused on "do's and don'ts". We saw these added under Marketing for things such as scripts, health screenings, and contact information and again under a new section on Rewards and Incentives.  This is in place to educate agents on what the process should look like in order to help identify any plans that try to get a little too "creative" in some of these areas.

Both of these additions are all about starting to compare processes across some of the (historically) more challenging areas for sales & marketing and compliance departments to manage.  CMS fully encourages plans to forge their own respective path when it comes to agent oversight. They recognize it's not a one-size-fits-all solution, but with information like this now more accessible, it also allows them to start identifying more instances of what's working and what's not.

Stay tuned for the latest analysis on the updated training and testing guidelines.  As always, contact us with questions and be sure to check out the Point -- launching in October.


Sales Force Oversight Ain't Easy

Selling season is nearly upon us, so with that in mind, here are some thoughts to help plans prepare.  In this post, I'll detail some sales oversight and reporting best practices we've seen applied with success in a number of plans.

When creating an effective agent oversight program, keep in mind that agent oversight requires a program, not a process.  There is really no single indicator that can identify all outliers.  A successful agent oversight program requires a collection of metrics that - when combined  -  paint a clear and concise picture of an agent or group of agents' performance.

Some of the data we often see included in effective oversight programs includes:

  • OEV Calls
  • Secret Shopping
  • SOA Audits
  • Rapid Disenrollment
  • Ride-alongs
  • Sales Call Monitoring

One of the most challenging aspects of agent oversight is often that the data needed to execute powerful reports can originate from a number of different sources.  For larger plans, this task is even more challenging because of divisions between departments.  Therefore, don't try to reinvent the wheel when designing these reports; plans can create and track a number of different oversight metrics from data that is readily available from enrollment.

There are quite a few potent reports that can be developed to assess agent/broker risk, (at both the plan level and individual level).  These can be created using just a monthly enrollment report (TRR & MMR) combined with various data points from the activities listed above that your sales management should be tracking.  Keep in mind - whichever reports are developed — use them in unison: tracking by one data point must become a practice of the past.

Here are some simple best practice reports we suggest:

  • Percentage of Direct Oversight activities not met (combined pass/fail from secret shops, OEV calls, SOA audits, etc.)
  • Rapid Disenrollment Rate (set benchmarks)
  • Complaints vs. Agent Assisted Enrollments (create acceptable thresholds)

Finally, once the oversight program is in place and agents are in the field actively selling, make an effort to run two self-perpetuating oversight processes.  The first involves pulling a random selection of active oversight activities from the population to identify potential outliers.  Then, once outliers are identified from either the random sampling process, or through adverse behavior, plans can administer more focused activities.

I hope these strategies were helpful.  Stay tuned to the GHG blog for more tips for successful selling this season!

 


If Mandate Survives SCOTUS, Will GOP States Be Caught Flat-Footed on Exchanges?

I keynoted the Opal Events Medicare Executive Forum last week and stated there -- as I have here -- that I think there's slightly more than an even chance that SCOTUS will overturn the individual mandate in its ACA ruling later this month.  The presentation raised an interesting question: if the mandate survives the Court, will the 26 GOP governors who filed suit be caught flat-footed on exchanges, and have a Federal fallback exchange jammed down their throats in 2014 for their inaction?  Remember that the states must demonstrate to HHS this fall that they'll be ready to launch their exchanges by January 1, 2014, and that there are dozens of states waiting to see what the Court will decide before taking any action.  Politico held a policy briefing Friday with a couple influential state regulators that argued at least a few of those red states are moving forward on exchanges.

The most heartening news for ACA supporters were remarks by Bill Hazel, Virginia's secretary of health and human resources. Virginia is in the vanguard of states opposing the law but nonetheless has been busy getting ready to open an exchange if the court doesn't strike down the measure."We've done a lot of the planning," he said, adding that Virginia is in the "weird position" of being in relatively good shape to launch its exchange while opposing the law. "Virginia's done it and we don't want to," he said.

One of the most difficult things for states to pull together even if they are enthusiastic about exchanges is the information technology required. "We are one of the handful of states that could probably pull the IT piece off" if the Court upholds the law, Hazel said.  Hazel added that he thinks it's a mistake for states opposed to the law to sit idle and watch the federal government struggle to open exchanges to fill the gap.  Amen to that. "There is a group of individuals who believe that the states should just stop all work now, default into a federal plan, and assume that the feds can't get it
done," Hazel said. "That's not a bet that I would recommend yet that the Governor take because there's been a tremendous amount of work at the federal level."

Ron Pollack, executive director of Families USA, a pro-ACA consumer group, also called Virginia an "important lesson" and added that states opposed to the law may be doing more to get ready for exchanges than many realize. The narrative in press coverage is that only a few more than a dozen states will be ready to open exchanges by 2014, an assessment he said is based on the relatively small number of states that have passed laws to open the marketplaces.  But, he said, a more telling sign of readiness is the number of states that have gotten the first round of grants to set up exchanges: 34, according to Pollack.

"Behind the scenes there is work being done to set up exchanges," he said. Pollack added that it makes a significant difference that the federal government is willing to share in the work of opening state exchanges by entering into
partnership arrangements.  Both Pollack and Joshua Sharfstein, Maryland's secretary of Health and Mental Hygiene, struck an upbeat tone when talking about the health law in sharp contrast to the mostly gloomy talk of late about implementation struggles. Sharfstein downplayed the difficulty of opening an exchange.

It appears — initially at least — that the Maryland and Virginia exchanges would not be markedly different, assuming the health law survives and they both open. Left-leaning states are thought to be more likely to drive a hard bargain with insurers by excluding those that don't offer relatively low rates. But Sharfstein says that's not in the cards right now at least; Maryland officials first want to get their exchange up and running for a while before they think about becoming an "active purchaser."

One state out of 26 doesn't make a trend but the hope is that Pollack is right and that 34 planning grants will be enough to break through GOP gubernatorial intransigence on exchanges.  The clock is ticking, almost no matter what happens in the SCOTUS ruling this month.


Times Are A-Changin'...Get Your Team to the GHG Forum June 12-13

In response to client requests, GHG is holding its first-ever Client Forum June 12-13 in Washington.  With so much change in the air in government programs, the Forum is the perfect opportunity to get your team focused on the road ahead.

This isn't a disjointed lineup of vendors selling from the podium like at your usual industry conference: the presenters are all GHG's elite subject-matter experts, and the agenda is designed to be a silo-busting deep dive for government programs executive teams, with downtime built-in to allow you and your team to process and plan ahead.  If you want answers, this is your gathering.

Change is a constant in the government programs world, and most of the folks who call us for help are those who are too busy these days to do anything but react.  We have a motto at GHG: you can't react your way to excellence.  Take two days to join us, bring your team leaders, and learn about how to get ahead of what's coming.