CMS gears up for major quality performance program overhaul for ACA program
The Centers for Medicare & Medicaid Services' (CMS') recent issuance of the 2017 Letter to Issuers in the Federally-facilitated Marketplaces and Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 Final Rule affirms the agency's plans to elevate the importance and transparency of quality performance by Qualified Health Plans (QHPs). Despite the continued absence of financial incentives for high-quality QHP performance, CMS' approach to quality oversight for QHPs is looking much like the early years of the Star Ratings program within Medicare Advantage (MA).
Similar to the MA Star Ratings program, CMS will use a 5-star scale to assign a Quality Rating System (QRS) rating to each QHP based on validated clinical measurements and enrollee survey responses. This year marks the first year QHPs must display these quality ratings prominently to consumers on their websites during the open enrollment period. Public reporting of these clinical measurements and enrollee survey responses will not only offer both consumers and providers new insight into a QHP's clinical quality performance but will also spotlight the consumer's perception of the QHP's operations.
The Affordable Care Act requires QHPs to submit a Quality Improvement Strategy (QIS) for the 2017 plan year if they offered coverage through the Marketplace in 2014 and 2015 and meet certain additional criteria. CMS requirements for the QIS, which must be submitted during 2016 and implemented no later than January 2017, include implementation of:
- A payment structure that provides increased reimbursement or other incentives to providers or enrollees to improve quality and reduce costs by incentivizing high-value rather than volume-driven care, and
- At least one of the following:
- Activities for improving health outcomes;
- Activities to prevent hospital readmissions;
- Activities to improve patient safety and reduce medical errors;
- Wellness and health promotion activities; and/or
- Activities to reduce health and healthcare disparities.
Because strong quality performance is necessary for long-term viability, QHP leaders will likely set new quality-related performance goals and evaluate whether current operations may need to be adjusted to meet those goals. Achieving such goals amidst the ongoing industry evolution, within the competitive environment, and within budgetary constraints will require innovation and creativity. Fortunately, many QHPs can lean into their own organization's Star Ratings experiences, expertise, and successes to help with these efforts.
An increased focus on quality, enrollee experience, and outcomes within a QHP will likely require new, short-term resource investments. Investments may be needed in areas such as population health management tools and analytics; member outreach, support, and education; and provider education, support, and engagement. By collaborating with their MA colleagues, QHP leaders may be able to leverage and expand MA tools, tactics, and expertise to simultaneously avoid the "learning curve," minimize provider abrasion, and optimize outcomes through such investments. With careful planning and strategic deployment of resources, a QHP can leverage its short-term investments for long-term return on investment.
Whether your organization is developing a QIS for your QHP, seeking insight to help align your QIS with successful Star Ratings strategies and tactics, or needs help interpreting the quality data recently provided by CMS, we can help. For additional questions and inquiries about how Gorman Health Group can support your QHP quality programs, please contact me directly at msmith@ghgadvisors.com.
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Final Rule: The Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017
The anticipation is finally over — the "Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 Final Rule" has arrived. This annual document provides health plan issuers the rules and requirements to develop plans and operational processes for the upcoming year. Since the Affordable Care Act (ACA) was enacted, health plans have been feeling the pressure regarding the premiums allocated to the Marketplace plans, coupled with staggering losses for this line of business with the elimination of the underwriting process, health plans have been receiving negative feedback from all angles. Now to layer onto that pressure, for 2017, two of the three stabilization programs — reinsurance and risk corridor — will no longer be included to provide health plans financial relief since the applicable timing for these programs has expired. To enhance the existing stabilization program, the risk adjustment model will be recalibrated using more recent data to reflect more closely with the commercial market risks experienced.
Some of the high-level changes reflected in the Final Rule are the following:
- Open Enrollment Period for 2017 and 2018 will continue to have the same dates as 2016, which is November 1 through January 31 of the following year. Starting in 2019, the open enrollment period will be shortened to start on November 1 and end on December 15 of the same year.
- Standardized plans have been introduced as an option for 2017. Issuers are not required at this point to utilize these standardized plans and are allowed to offer non-standardized plans if they choose, however, it is encouraged that issuers offer the standardized silver plans. Standardized plans are preferred by the Centers for Medicare & Medicaid Services (CMS) to allow the enrollee to have a better shopping experience on the Marketplace. It allows for a more apples-to-apples comparison of the plans offered. Therefore, because of the ease to enrollees, the Marketplace will arrange the plans to be found more easily. There are 6 standardized plans available to choose from. One for each metal level with the exclusion of platinum. The standard or "base" silver plan also has benefits aligned for each of the actuarial value (AV) plans that are utilized for the members that are eligible for the cost sharing subsidy. In total the silver plan ends up with 4 standardized plans and then 1 plan each for gold and bronze.
Each plan has a fixed deductible, fixed annual limitation on cost-sharing, and fixed copayment or coinsurance for the Essential Health Benefits (EHBs) that are a part of the actuarial value (AV) calculator, with the addition of urgent care. These benefits represent a large percentage of the total allowable costs for an average enrollee.
- Cost-sharing maximum out-of-pocket limit has increased from $6,500 to $7,150 for an individual and from $13,000 to $14,300 for a family.
- Network Adequacy proposed requirements were partially accepted in the final rule. Probably the biggest requirement that was not accepted was the time and distance standard.
- "Surprise Bills" are a concern of members, which has been addressed in this notice.
- Federally-Facilitated Marketplace (FFM) user fees will stay at 3.5% for issuers utilizing the (FFM). Issuers who are part of a State-Based Marketplace (SBM) that utilized the FFM platform will see some relief with a reduction in their user fee for 2017, from 3% to 1.5% of premium.
- Medical Loss Ratio (MLR) will not be allowed to include fraud prevention expenses as part of the numerator as proposed in the Notice of Proposed Rulemaking (NPRM).
A detailed analysis of the Final Rule including health plan impacts, will be provided in the coming week.
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What to Watch: The Fiscal Year 2017 budget
President Obama released the Fiscal Year 2017 budget last Tuesday, which contains many significant proposals to government healthcare programs. Although both the Senate and House's budget committees already rejected hearings from the President's budget chief and unsurprisingly declared the bill "dead on arrival," the proposals do contain many bipartisan provisions with significant cost savings. One such proposal organizations should watch carefully, for example, is using competitive bidding in Medicare Advantage plans.
Most of the Medicare and Medicaid proposals are estimated to provide savings. The Congressional Budget Office's (CBO's) review of the budget in March will further shine light on which proposals will make it through the budget process. In a new memo, The GHG Policy team provides an overview of proposals to watch in a new memo, including:
ACA Updates
- Medicaid Expansion Incentive
- Uniform billing and out of network charges
- Marketplace eligibility determinations
- Cadillac Tax updates
Medicaid Budget Updates:
- Medical Loss Ratio (MLR)
- CHIP Funding
- Health Coverage Expansion Proposals
- Long-Term Services and Supports (LTSS)
Medicare Advantage (MA):
- Competitive Bidding Proposal
- Higher payments to high-quality MA plans
- Telehealth expansion
Part D:
- State-federal Medicaid negotiating tool
- Part D plan sponsor incentives to better manage high prescription drug costs.
- Increase of manufacturer rebates
- Mandate to provide rebates consistent with Medicaid rebate levels for drugs provided to low-income Part D beneficiaries.
Alternative Payment Models (APMs):
- Bundled Medicare payments for post-acute providers such as nursing homes and home health agencies.
- New bonus payment for hospitals that collaborate with certain APMs.
- Quality bonus program for the highest rated Part D plans
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Network Adequacy Top of Mind for CMS
The Centers for Medicare & Medicaid Services (CMS) continues to reinforce its focus on health plan provider networks with several recent announcements.
The release of the new Network Management Module (NMM) within the Health Plan Management System (HPMS) is the tool CMS will utilize for monitoring network adequacy. The NMM functionality allows both CMS and organizations to evaluate health services delivery (HSD) provider and facility networks separate from the annual application process. The NMM employs the same evaluation criteria and calculations currently used by the automated network review portion of the Medicare Advantage (MA) initial and Service Area Expansion (SAE) application process. Please note organizations can access the NMM functionality to submit their network tables for an "organization-initiated" automated review. Results generated for an "organization-initiated" review will only be available to your organization and not be viewable by CMS. Our subject matter experts at GHG are able to assist plans in utilizing this new functionality as part of an overall network audit and maintenance policy plans should adopt to continually assess how their network, as its largest asset, meets the goals of the organization.
Additionally, CMS released the Draft 2017 Letter to Issuers in the Federally-facilitated Marketplace (FFM) on December 23, 2015, and is proposing new policies on network adequacy and monitoring to provide more transparency and detail to be Qualified Health Plans (QHPs) in an FFM to fulfill the requirements to provide reasonable provider access to their members. Plans have the ability to review the draft letter and provide comments back to CMS by January 17, 2016. We have provided a link to the full draft letter, and, as with MA plans, Gorman Health Group (GHG) has the ability to manage your network adequacy reports and audit for all QHPs.
Lastly, on January 13, 2016, CMS provided training on the summary of changes to the 2017 MA applications. One of the key points addressed is the SAE application will require HSD Tables for the entire Medicare Advantage Organization (MAO) network at the contract level, not just the counties the application is proposing to expand into with the SAE request. The change comes as CMS has indicated plans should have tighter control on their existing provider networks to ensure adequacy is met over the life of the contract.
At GHG, we have experts who have worked directly with managing provider networks and adequacy for over 20 years, including detailed analytics such as specialty code mapping and software which is critical in building the infrastructure needed to fully support the quality and financial goals the network brings to your health plan. Please reach out if we can provide guidance regarding the rules and regulations for all government-sponsored health plan networks.
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Issues That Will Define Government Health Programs in 2016
The new year brings a slew of issues that will define government-sponsored health programs. Here's what we're watching closely, not necessarily in this order. Opportunities have never been greater in Medicare, Medicaid, and ObamaCare, but execution risk is rising fast. If this was an easy business, we'd be out of business.
Drug Pricing: Prospects for a legal fix in Congress is questionable, and this will be a leading issue in the Presidential campaign. Expect administrative action, demonstration project solicitations from the Centers for Medicare & Medicaid Services (CMS), "comparative effectiveness research" by federal agencies on specialty drugs, and "collaborative pricing" initiatives between pharma manufacturers and payers on high-profile therapeutic classes. Health plan CEOs expect higher specialty drug cost trends to be the biggest driver of medical cost trend in 2016.
Medication Therapy Management (MTM): 2016 is the year MTM gets real. CMS will begin conducting widespread audits of Medicare Advantage (MA) and Part D plan medication reviews, and there is tremendous emphasis on MTM in the Star Ratings system. Making MTM real for your members will require extensive vendor contracting and Pharmacy Benefit Manager (PBM) coordination, so turn your plan's attention to this fast.
Antitrust/Mergers: Sometime in Q3 or Q4 of 2016, the Federal Trade Commission and the Department of Justice Antitrust Division will rule on proposed mergers for Aetna/Humana, Anthem/CIGNA, Walgreens/Rite-Aid, and Pfizer/Allergan. We expect all four deals to be approved but with strings attached; e.g., we expect Aetna/Humana will have to divest 250,000-450,000 lives to get a green light.
Star Ratings: Must be a central focus of all payers and providers in government programs. Star Ratings has transcended MA and Part D. Star Ratings data is already being collected by ObamaCare plans, and over a dozen state Medicaid programs are using CAHPS® and Star Ratings data in contracting with plans for dual-eligible and managed long-term care (LTC) initiatives. And while there aren't major changes to Star Ratings measures in 2016, scoring is the game-changer: 50% more plans will be scored for the first time this year, guaranteeing a shift right in the ratings bell curve and that many of 2015's 4-Star plans will go off the cliff. To maintain progress, plans must run Star Ratings as a program with dedicated leadership and execution spelled out at the workflow level.
Risk Adjustment: 2016 will usher in increased efforts to ensure payment accuracy through more stringent and expansive Risk Adjustment Data Validation (RADV) reviews, and so providers delegated for risk and sharing in a percent of premium will be in the spotlight. CMS is seeking to contract with third-party auditors on RADV, and risk adjustment is a top concern in the Department of Health and Human Services (HHS) Office of Inspector General (OIG) work plan.
Providers and Care Delivery: 2016 will be a transformative year with contracted providers in government programs. Narrow/preferred networks and value-based risk contracting will go mainstream this year, whether providers are ready or not. Huge penalties start this month on network adequacy and accuracy of provider directories, and NAIC's model guidance on provider networks will be a central document governing the issue. Star Ratings measures on access to care and the member experience put new heft and revenue behind network requirements. Provider-sponsored entities will provide a mini-surge of dozens of new plans into MA and Medicaid in 2016 and 2017, especially among Medicare Accountable Care Organizations (ACOs), so keep your friends close and your enemies closer. Home- and community-based services and alternatives to nursing homes will go mainstream in 2016. Retail pharmacies will become the second-most-important provider type for health plans. With crushing burdens of ICD-10 and meaningful use, small and mid-size practices will become overwhelmed and will underperform. Plans will need aggressive oversight, quality improvement, and directory management activities to stay ahead.
Exchange Payment: For the first time in two years, CMS is going to begin paying plans HIX 820s at the member level, which will shine a spotlight on enrollment reconciliation issues that have been lingering. The plans' readiness transition period is from January to March, then it gets real in April.
Medicaid and Dual Eligibles: Unexpected states like LA, SD, and IA are now considering Medicaid expansion. CMS is focusing on new Medicaid quality measures and will be depending heavily on NCQA quality measures to gauge health plans. This will impact payment and future membership for some lower-rated plans. Beneficiary opt-outs in excess of 75% are plaguing early dual-eligible demos, but many states remain in fiscal crisis and need to move ahead to balance budgets.
Compliance: 2015 was a near-record year in CMS enforcement actions, and scores always get settled with insurers in the second term of a Democratic administration. There will be a slew of rules coming from CMS this year as well as expanded audits from OIG. Both agencies' approaches indicate how critical documentation remains: CMS added a number of items to documentation requests for Compliance Program Effectiveness; Medicaid, dual-eligible, and LTC demos are still very documentation-heavy, and CMS found that approximately two-thirds of CMS-reviewed FFM issuer plan policies and procedures (P&Ps) were incomplete or had operational findings with their vendor contracts. So even though there is focus on data monitoring and passed/failed samples, P&Ps and documents are still the cornerstone.
There is no question that 2016 will be a banner year in government programs enrollment, and the long walk in the desert on payment rates in MA and Medicaid appears to be over. But execution risk and the enforcement environment have never been tougher. This year will be a "Darwinian moment:" it's not about being the biggest or even the smartest but being the most adaptable.
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Health Insurance Marketplace — What's Contributing to the 2016 Enrollment Growth?
On December 22, 2015, the Centers for Medicare & Medicaid Services (CMS) released a snapshot report of the Health Insurance Marketplace Open Enrollment, capturing Marketplace enrollment from the beginning of Open Enrollment (November 1) through December 19 (Week 7 of Open Enrollment) for consumers who signed up for health coverage through the Healthcare.gov platform. Not accounting for the millions more selecting plans through State-based Marketplaces (SBMs):
- More than 8.2 million consumers signed up for healthcare coverage — 28% more than enrollment a year prior.
- Approximately 29% (about 2.4 million) are new consumers, while 71% are consumers renewing coverage.
- New consumers are over one-third higher than the number of new consumers who signed up by the deadline for January 1 coverage last year.
- More than 4 million people made plan selections between December 13 and December 19, which represents almost 50% of the cumulative Open Enrollment plan selections through December 19, 2015.
So what is contributing to the positive enrollment growth in the 2016 Health Insurance Marketplace?
While it is normal to see higher consumer demands during the weeks leading up to the January 1 effective coverage deadline, there are some other factors which may be contributing to the enrollment trends.
- Automatic renewal process — As part of the Federally-facilitated Marketplace (FFM) auto-enrollment process, generally, if consumers do nothing, they will be auto-enrolled in the same plan with the same premium tax credit and other financial assistance, if applicable, as the prior plan year. This provides consumers with a simple, familiar process to renew their coverage.
- Broker guidance and training— CMS is providing more guidance and instructional tips to brokers on how to engage consumers and simplify the consumer enrollment experience. This can been seen in:
- the numerous broker training sessions CMS hosted going into Open Enrollment,
- CMS provided enrollment tools such as the "Marketplace Application Checklist" brokers can use to help consumers prepare to complete their applications on Healthcare.gov,
- a new "For Agents and Brokers" link has been added at Healthcare.gov, making it easier for agents and brokers to get to the Agents and Brokers Resources webpage (http://go.cms.gov/CCIIOAB),
- and consumer research shared with brokers showing what drives consumers to take action.
- Customer awareness — The first Health Insurance Marketplace Open Enrollment period was longer than in future years in order to give consumers a chance to understand their options and make a selection (in addition to allowing further opportunity to beneficiaries impacted by hiccups in FFM enrollment functionality to complete enrollment). As we enter the 2016 plan year, enrollment processes and functionality are not only tighter, renewing beneficiaries are now more familiar with how to research coverage options and avenues in which they can enroll.
With Open Enrollment coming closer to the end, extremely high traffic is anticipated on Healthcare.gov specifically on the January 15 cut-off date.
CMS will continue to release snapshot reports for the Healthcare.gov platform throughout Open Enrollment. It is anticipated more detailed reports which look at plan selections across the FFM and SBM will be released by the Department of Health and Human Services (HHS) later in the Open Enrollment period.
For more Open Enrollment Trends:
https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-12-22.html
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United Healthcare Potential Exit
Last month, United Healthcare (UHC) made an announcement that shocked the industry — it may leave the Health Insurance Marketplace if it can't become profitable by 2017. The company stated it expects to lose $490 million next year due to its participation in the Affordable Care Act (ACA) market. Standing by its comments, UHC pointed to "structural" problems with the ACA as the factor behind its unprofitability. Adding to the deterrent of the Marketplace business, the company stated it will stop paying broker commissions for Marketplace policies as well as individual plans not sold on the Marketplace. UHC's announcement is troubling, especially with recent news of the failing co-ops — 12 of the 23 co-ops have already closed their doors, and even the most profitable, such as Maine's Community Health Options who announced profits in 2014, have lost money this year.
So what are the structural problems, and should plans and consumers on the Marketplace be worried?
One major issue is, of course, the risk adjustment and risk corridor programs under the ACA. With Congress unwilling to increase funds for the program, health plans faced a huge hit in 2015, recouping only 13% of requested funds through the risk corridor program. Congress remains firm on its decision not to further fund this part of the ACA, which means the Centers for Medicare & Medicaid Services (CMS) will have to find alternate means if it wishes to assist plans with their losses next year.
Another big change the ACA brought is the inability to initially properly price for the incoming consumers. Insurers set rates without any risk factors or data on the incoming policyholders and did not anticipate the sicker populations who would flood the market. This issue will likely linger — with 12 of the co-ops folding, the big question in 2016 is, where will these consumers who made the companies unprofitable sign up? At the same time, there is still a large population of healthy, young individuals unwilling to sign up for the health plans despite the mandate. It remains to be seen whether the tax penalty of 2016 will be enough to steer individuals during the next open enrollment period.
The lack of flexibility in benefit design is also a consideration of health plans. Many see the current rules as a pill too large to swallow all at once — the sudden requirement for plans to accept all consumers with pre-existing conditions, remove lifetime maximums, and pay no less than 60% of medical costs may have been more than plans could handle in altering their benefit designs. Another issue is the grandfathering of plans not compliant with the ACA due to the famous line, "If you like your plan, you can keep it." California chose not to comply with this grandfathering requirement, leading to a higher number of healthy and risk-averse people already covered on catastrophic plans to sign up under the ACA. Other states, on the other hand, gained only the people who could now sign up because there was a prohibition of pre-existing conditions, leaving people with catastrophic plans and their squeaky-clean claims history to the individual market.
At the same time, the flexible open enrollment periods also created a disincentive for healthy people to sign up, while allowing individuals who are suddenly faced with medical claims to quickly jump onto a plan through loopholes in the rules. CMS is dialing back on one of these enrollment period loopholes this year by announcing there will not be an open enrollment period extension during tax season for those who learn of the steep penalty when filing.
Do these problems and UHC's warning mean the demise of ACA?
It is important to remember the Marketplace, as well as the individual market, is simply not the primary business of UHC. While several months ago UHC announced it may expand its Marketplace presence in more states, this announcement they may do the opposite and pull out of the Marketplace could mean the exit of co-ops and the imminent mergers have made UHC re-focus on its main bread and butter business instead — the group market. Most of UHC's profits come from group sales of employer-sponsored health plans. UHC started out its participation in the ACA in only a handful of states, with conservative premium offerings, and only cautiously increased their market last year. This approach means UHC has a small risk pool, and dipping their toes in the Marketplace water could have hurt them in the long run. At the same time, despite the cautious entrance into the Marketplace, start-up costs to create these new plan offerings were no doubt substantial, and the small population who did choose UHC likely did so for the brand recognition — in other words, consumers who knew they would incur more claims and needed better plans. At the same time, with the mergers going through next year, the Marketplace is not going to be UHC's game―their focus will be group plans, while Humana and Aetna will likely dominate the Medicare Advantage space; Cigna and Anthem and the blues, the individual market.
At the same time, CIGNA and Aetna, while acknowledging they also did not profit from the Marketplace, stated it's way too early to call for an exit from the Marketplace. And the program was not without its winners in 2014. Looking at companies who had to share their profits in the risk corridor program in 2014, for example, plans in California were big winners — namely Blue Shield of CA, Kaiser, and Anthem Blue Cross. This could be due in part to the number of young individuals in urban areas who did sign up for coverage in California, marking the success of the Covered California campaign, as well as not setting premiums as aggressively as possible in the past year.
What we do know is, this open enrollment period is crucial for CMS. While CMS already announced they anticipate low enrollment numbers, it is vital to the success of the ACA that these numbers include the healthier and younger individuals who have yet to sign up for a plan and are not deterred by the tax penalty.
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Senate passes bill repealing major provisions of Affordable Care Act
Last week, the Senate passed an Affordable Care Act (ACA) repeal bill, with a vote of 52-47. Although largely symbolic, this marks the first time the Senate has been able to pass such a bill.
The Senate voted on a bill previously passed by the House, however, because of the large number of amendments made by the Senate, the legislation now goes back to the House, where it is all but certain to pass. The White House already stated the President will veto any ACA repeal legislation, and because the Republicans do not have enough votes to override such a veto, this will be the end of the movement. Nonetheless, the Republicans will see this as a major step in their attempt to repeal the ACA, as it is the first time Congress will be able to get such a bill to the President's desk.
What's more interesting is the parts of the bill which gained some bipartisan support. For example, the "Cadillac tax" repeal amendment was overwhelmingly approved with a vote of 90-10. Although this amendment will not become law this time around, its repeal is already scheduled in talks in tax packages expected to be voted on before the end of the year. It is also unclear how the anticipated funding expected from the Cadillac tax would be replaced. It is estimated such a repeal would remove about $90 billion from the ACA over 10 years, however, the Senate's tax repeal would not go into effect until 2015.
The passage of the bill also gives a glimpse into the Republican's ACA repeal agenda should they win the White House bid next year. Some of the major provisions include:
- Defunding of Planned Parenthood
- Repeal of the Medicaid expansion
- Elimination of reinsurance, risk corridors, and risk adjustment programs set up under ACA
- Repeal of Cadillac tax
- End premium subsidies for insurance purchased through the Marketplace and small business tax credits
- Repeal of individual and employer mandates by lowering the penalties for non-compliance to $0
- End of healthcare.gov
Despite the Republican Party's fulfillment of the promise to get an ACA repeal to the White House, conservatives have yet to offer a replacement plan. The vote on the Medicaid repeal could also create some problems for senators up for re-election in states that have expanded Medicaid, such as Pennsylvania, Illinois, and Wisconsin. At the same time, Medicaid expansion continues to gain more interest from the remaining states yet to expand. Louisiana's new governor vowed to expand Medicaid on his first day in office. Virginia Hospital and Healthcare Association recently announced their change in position to support a bed tax, which would allow the state to expand Medicaid under ACA without any additional state funding. Utah and Wyoming continue talks to come up with a plan to expand Medicaid in the next year. And although Idaho remains opposed to expanding, the legislature is discussing a plan for the state to cover basic primary care for those who do not qualify for Medicaid but earn too little for subsidies under healthcare.gov, at a cost of $32 per month.
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Is This Payment Real? CMS Launches Policy-based FFM payments Through the HIX 820 in 2016
If you think your organization has been working from a fire hose these past few years since the launch of the Health Insurance Marketplace, wait until the Centers for Medicare & Medicaid Services (CMS) rolls out policy-based payments to Federally-facilitated Marketplace (FFM) Issuers beginning in 2016. It's not as if the accuracy of member data wasn't significant before, but now with a direct payment from CMS to the Issuer, your enrollment discrepancy rate will be transparent in real dollars.
For the first time, Issuers will be able to quantify the financial impact of enrollment discrepancies simply because CMS will be making payments directly to Plans through Advanced Premium Tax Credits (APTCs), Cost Sharing Reductions (CSRs), and User Fee (UF) charges based on effectuated subscribers within the federal system, not the Issuer system. This ups the ante for synchronization of data between the Issuer and the Marketplace.
In January 2016, CMS will begin paying Issuers at a policy-based level through a transaction called the HIX 820 complimented by the Preliminary Payment Report, or PPR. Aside from the typical challenges and workarounds Issuers are confronted with during open enrollment season, the timing of policy-based payments creates somewhat of a twist or a renewed focus on the financial impact of enrollment data being out of synch with the government.
Issuers are anticipating more work ahead in 2016 with a long list of inherited issues and newfound challenges such as 2016 renewals, ongoing Health Insurance Case System (HICS) activity, continued FFM lags with system updates, and continued interim processes. Yet, one can view the implementation of the HIX 820 as a new opportunity to review and build upon your operations and reconciliation practices simply based on your Chief Financial Officer's (CFO's) perspective.
If your CFO hasn't asked you before, he/she will.
- If we have an expected payment of $100 million based on effectuated members on our books, why is our payment $120 million this month?
- Is this a real payment or an overpayment based on lags with the FFM applying member updates such as cancels and terminations?
- Aside from timing and adjustment activity, what should the prospective payment for next month be? Let's review and find out why your estimate differs once the HIX 820 arrives.
- What does this high volume of adjustment activity in May 2016 applied to January and February 2016 coverage months represent? How do we build an expected adjustment each payment cycle so there are no surprises?
- How many monthly cycles will it take to be paid accurately for January 2016?
With the goal of measuring the overall financial impact of your enrollment and payment discrepancies, you will be able to build a strategy around successful reconciliation. Some key drivers are fundamental and important to highlight. Your organization can simply calculate your expected payment to your actual payment by comparing your PPR/820 monthly payment files to your plan data (RCNI) as a first step. At the end of the day, your CFO will not be interested in a partial picture — he/she will want to understand if the payment is real and whether it will change retroactively. Understanding the complete financial impact of all discrepancies should be your first step. The operations surrounding the resolution of discrepancies should be secondary, albeit a huge undertaking. So, how do you get there?
Recommendations for Issuer's HIX 820 Strategy:
- Be audit ready.
- Understanding CMS will pay you based on the FFM system signifies your daily enrollment processing oversight and the audit of those processes in the form of reconciliation practices go hand in hand. In an audit, you never want CMS to identify you are being paid for non-members or not paid for members consuming the benefit and everything in between.
- See the big picture.
- On a weekly or monthly basis, your organization needs to understand its discrepancy rate and the formula the rate represents. Is it 2%, 8%, 12%? Measure it, and work that rate downward.
- If you have a 5% FFM orphan discrepancy rate in January 2016, what is your January discrepancy rate in April 2016? Monitoring by coverage month each report month is critical to being paid accurately and other downstream issues impacting revenue.
- Put your CFO hat on.
- Institute a monthly review of your organization's discrepancy rate with your CFO.
- Be able to tell a story on the difference between expected and actual payment along with your retroactivity predictions. Now that the 820 will be paying prospectively and retroactively back to 1/2016, Issuers will be able to measure the swings in payment activity.
- Track discrepancy drivers within your organization and look for process improvement opportunities you can operationalize along with aligning resources more effectively.
- Track CMS-defined payment issues and submit timely through the Payment Dispute template. Remember, these are discrepancies sourced to an FFM system issue since your Issuer data matches the FFM data (Pre-Audit File).
- Summarize, work, and measure success of the FFM Recon Outbound File (RCNO).
- Update your enrollment system or dispute Issuer action flags.
- Track and monitor the FFM action flags as well as ensure CMS is applying corrections to the FFM database in conjunction with Issuer corrections. This is a two-pronged approach.
- Track orphan discrepancies (both Issuer and FFM) by coverage month through the FFM Pre-Audit file and resolve each subscriber case.
- Categorize the causal such as FFM BAR error, missing 834, Issuer processing error.
- When you know your data, you are able to answer every audit question that arises.
- At a maximum, when monthly orphan identification is working well, move to weekly discrepancy tracking by comparing the authoritative Pre-Audit file to your Issuer data. This allows you to detect internal issues more timely before interfacing with the government.
While none of this is new for government programs as history always repeats itself, it is clear you can apply the same guiding principles. Positioning your organization to succeed in this new environment is directly tied to an optimal reconciliation approach so you can answer the question, "Is this payment real?"
To learn more about Gorman Health Group's 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.
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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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10 Millon People Expected to Have Marketplace Coverage in 2016
The 2016 Health Insurance Marketplace open enrollment is right around the corner, opening on November 1, 2015. With premium rate increases well above 10% for 2016, it's no surprise the 2016 enrollment projections for the Marketplace are estimated to increase by less than a million from the total current 2015 enrollment, bringing the total individuals enrolled by the end of 2016 to 10 million.
In the most recent press release from the U.S. Department of Health and Human Services (HHS) on October 15, 2015, HHS is aiming to enroll more than one out of every four individuals eligible for Marketplace insurance. It's great news that more individuals will be enrolled, but 10 million is a rather conservative target set by HHS and significantly lower than the January 2015 Congressional Budget Office (COB) estimate of 21 million individuals. HHS anticipated the migration from employer-sponsored coverage to the Marketplace would be much more significant. Companies are still choosing to work with insurance companies directly to purchase health insurance as opposed to purchasing insurance through the Small Business Options Program (SHOP) or sending employees to the Marketplace to purchase health insurance on their own. This is contributing to the slower enrollment increase.
Starting in 2016, the definition of a small group employer will be increased to include companies having 51-100 employees. The enrollment increase we will see in 2016 will be due, in part, to this change. In previous years, these companies were classified as large groups and not subject to the Affordable Care Act (ACA) regulations. By changing the definition of a small group, it now requires companies having 51-100 employees to abide by the ACA regulations and will increase Marketplace enrollment. The annual tax penalty for not having health insurance will also be a driver for increased membership in 2016. The penalty for not having health insurance has been gradually increasing each year. The uninsured are becoming more aware of the tax penalty which will be applied to their annual income tax filing if they cannot provide proof of insurance coverage. For 2016, the penalty is $695 per person, or 2.5% of yearly income, whichever is greater. For each child under the age of 18, the penalty is $347.50. If 2.5% of your yearly income is greater, then the penalty will be capped at no more than the national average premium for a bronze plan. If your penalty is based on the per person/per child method, then the maximum penalty for a family is capped at $2,085. As the penalties start to increase, the more people with be inclined to purchase health insurance coverage.
For health plans, this means consumers are not just looking towards the Marketplace as the only channel to purchase health insurance. Health plans still need to be actively working with their sales brokers and potentially exploring new channels of enrollment, such as a private exchange. Redefining internal operations to support the changes implemented by the ACA should be the biggest focus for health plans right now. With the growing trend of members enrolling into a Qualified Health Plan (QHP), health plans need to be looking at transforming internal operations to support a more value-based outcome approach. This approach is driven by the company, provider, and membership knowledge acquired from internal data analytics.
The top three areas health plans should be focusing on are:
- Transitioning from a fee-for-service model to a value-based model
- Data management and analytics
- Risk adjustment operations
Ensuring all Americans have affordable healthcare is the core reasoning behind the ACA. The three areas listed above are starting points to help health plans keep the cost of healthcare down while ensuring individuals are offered affordable insurance with quality benefits.
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Registration for the GHG 2016 Forum is now open! This year we are offering a tiered pricing schedule. Register between now and November 30 to receive the biggest savings at $795. Come December 1, the price increases to $1,095. Register today >>
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