Health Insurance Premium Guessing Game
Health insurance issuers are generating enough fodder for a good guessing game. Will Obamacare increase rates for individual insurance or not? And if so, will the increase be modest or catastrophic. Writing in the April 25 edition of the Washington Post, Ezra Klein reports that the Blues plan that serves the national capital area is warning of big increases in individual premiums. The cause? More sick people are going to get health insurance, now that the pre-existing condition limitations have been removed by the Affordable Care Act. But is that the whole story? Klein also reports that insurance companies in Vermont and Rhode Island are projecting a more modest impact in announcing their proposed 2014 rates. But in Massachusetts, where "Obamneycare" has been in place since 2006, individual premiums are the highest in the nation.
The individual mandate, which gives people the choice of either getting insurance or paying a tax, is supposed to stimulate enrollment of healthy people who might otherwise go without coverage until they get sick. Why not, since they can't be denied due to preexisting conditions? But the tax is less than the premium, so its anybody's guess how effective the mandate will be in bringing low risk people into the insurance market.
Until we see how enrollment pans out this fall, and how many healthy people dive into the risk pool, there's no way to know how big an impact the sick will have on premiums.
One thing Klein overlooked is that individual insurance will be sold both in the new health insurance exchanges (which the Feds are now calling "marketplaces," a terminology change the rest of us are ignoring), and in the open market. Klein rightly points out that the impact of higher premiums will be ameliorated for many people by the subsidies that they get through the exchanges. But those who don't qualify for the subsidies, whether they buy through exchanges or in the marketplace outside, will bear the full brunt of any premium increase. These are the folks who, if they are healthy, may well prefer to pay the tax and go without.
The Administration is gearing up for a major public relations campaign to publicize how health insurance will work for individual purchasers in 2014. We hope they will include a strong message about the importance of buying health insurance, even if you are healthy. While you may not be denied due to a preexisting condition, lack of insurance still leaves you open to catastrophic costs due to accident or unforeseen acute illness.
Health insurance: It's not just a good idea, it's the law!
Resources
Gorman Health Group policy expert Jean LeMasurier provides a summary of proposed rules from the Department of Treasury, IRS and OPM regarding the implementation of health reform.
The Exchanges will create a large risk pool that will allow risk to be managed more effectively with reduced administrative costs, read this white paper for estimates from the Congressional Budget Office (CBO) and more.
To learn how Gorman Health Group can help your organization get involved in the Exchanges or other government programs, visit our website.
Attend the GHG Forum, June 13-14 in DC, and hear from the nation's recognized leaders in health reform implementation and ongoing development of exchanges about the challenges facing both the government and private partners pre-launch, plus what lies before us in 2014 and beyond.
Uneven Funding Provides Opportunity for Agent and Brokers in Federal Exchanges
It seemed like everyone in Washington last week was discussing the upcoming outreach and enrollment prospects for the federal and state exchanges. Kaiser Family Foundation held a forum on Consumer Assistance that emphasized the uneven funding among states in the first year and the need for coordination among the various types of assistance programs. Several Congressional hearings and news articles also focused on the large discrepancy in funds for Navigators and In-person Assisters that will be available in state-based Exchanges and Consumer Partnership Exchanges compared to the Federal Exchange (FFE). HHS announced the availability of $54 million for Navigator grants for the 33 Federally operated and State Partnership exchanges. The Navigator grants range from $600,000 per state to over $8 million based on a formula that considers the size of a state and the number of uninsured. There will be no funds available for In-person assistance programs in the FFEs. In contrast, State-based Exchanges can use federal Exchange grant funding for their Navigator and In-person assistance programs. California expects to spend $43 million, New York will spend $27 million and Maryland will spend $25 million on outreach, and enrollment and application assistance for Navigators and In—person assisters. Ohio with 1.5 million uninsured will receive a $2.2 million Navigator grant and will not have a consumer assistance program.
The gap in Navigator and consumer assistance funding in Federal Exchanges offers an opportunity for agents and brokers to serve a more critical role in helping the uninsured understand their options and enroll in Exchange products.
Resources
To learn how Gorman Health Group can help your organization get involved in the Exchanges or other government programs, visit our website.
Gorman Health Group SVP of Public Policy, Jean LeMasurier, summarizes the proposed CMS regulation CMS-9955-P- Patient Protection and Affordable Care Act; Exchange Functions: Standards for Navigators and Non-Navigator Assistance Personnel.
To get more information on how Gorman Health Group helps onboad sales agents in one easy step, visit our website.
Employer Health Coverage Post Recession
A new report on employer sponsored health insurance issued by the Robert Wood Johnson Foundation shows some interesting trends in coverage post-recession. "State-Level Trends in Employer-Sponsored Health Insurance"
The overall trend in employer health insurance coverage has been on a downward slide for several decades and that trend is continuing. In 2000, almost 70 percent of non-elderly workers got their health coverage from employer plans but by 2011 the percent fell to 60 percent. Interestingly, it wasn't just because the number of employers offering coverage declined by 6 percent, but also because 5 percent fewer workers who were offered coverage actually enrolled. It seems that the intersection of the recession and the cost of health insurance created a perfect storm. The report found that premiums for family coverage increased by 125 percent over the last decade, and even though the employee share remained fairly constant, the net impact on worker's out-of pocket costs was dramatic, increasing from $1,526 to $3, 842. The decline occurred in 47 states but the impact varied dramatically by state. Michigan, which was hard hit by the problems in the auto industry and other economic woes, led the way with a decline in employer sponsored coverage of over 15 percent. The study found that while employer coverage declined for all income groups, the impact on the lower income groups was disproportionately greater.
These trends will be interesting to watch with the launch of the Exchanges in 2014. The report raises an interesting question about whether small employers will increasingly shift to self-insured plans rather than offer insured plans through the SHOP Exchanges. If that is the case, there could be possible adverse selection for employers who use the SHOP plans.
Resources
To learn how Gorman Health Group can help your organization get involved in the Exchanges or other government programs, visit our website.
Providers Eying Medicare Advantage
The March 28 edition of Medicare Advantage News cites a possible trend for provider organizations to sponsor their own Medicare Advantage plans. In the waning days of the old Medicare+Choice program, many provider-sponsored plans came on hard times, so this may seem like an unusual reversal. However, Medicare Advantage lives up to its name, and offers advantages to sponsors as well as members. This includes risk adjusted capitation payments, the option to offer drug coverage that is subsidized by Medicare, and bonus payments for achieving quality targets. Even with the payment reforms imposed by the Affordable Care Act, Gorman Health Group is hearing from a number of provider organizations that the predictable capitation revenue under MA is looking preferable to the fee-for-service treadmill. Medicare fee-for-service reimbursement is becoming increasingly complex, and fee-for-service margins are eroding. The prospect of moving up the food chain is especially appealing to organizations whose costs are largely fixed. MA matches predictable fixed revenue to fixed costs, while FFS requires a constant scramble after variable revenues to achieve necessary margins.
Resources:
Learn how Gorman Health Group can help you reengineer your health care delivery system.
From strategy to operations, from revenue management to compliance, learn how GHG can support your Medicare Advantage goals.
.
Pioneer ACOs: Who will stay and who will go?
Thirty-two Pioneer ACOs sent a correspondence to CMMI in late February, suggesting that they would exit the Pioneer ACO program if CMS did not accept their recommendations for changes to the quality measures employed to determine pay for performance in the Pioneer program. As a group, the Pioneer ACOs suggested to CMMI that because of their collective experience with performance based contracts and performance reporting on quality measures, they -- not CMMI -- know what works and what doesn't when it comes to benchmarking quality to reimbursment.
The Pioneer ACOs argued in their correspondence that the benchmarks set by CMMI were more rigorous than those typically adhered to in the commercial and Medicaid programs. They also argued that the data CMS was using for benchmarking was the Medicare Advantage data, which was not typical of a non-managed care population such as that attributed to the ACOs.
Bottom line: the Pioneers were asking to work with CMMI to come up with a different approach to benchmarking or they would leave the program.
CMS has responded by giving the Pioneer ACOs until May 1 to decide whether to stay or go. What is not clear: Whether CMMI/CMS is willing to compromise and modify the current approach to benchmarking and whether the Pioneer ACOs will leave the program en masse if their wishes are not met.
Note that the the non-Pioneer ACOs are also subject to the same performance based benchmarking approach. So... will a Pioneer exit from the program result in a similar flight from the MSSP ACO program? If that were to occur CMMI/CMS would be faced with a public relations nightmare, one that I would think could be easily avoided by taking another look at the benchmarking issue.
Just saying!!
Resources
Read more on ACO opportunities in our white paper on the topic.
Read about how three Gorman Health Group clients were approved by CMS to become Operating Accountable Care Organizations.
SGR Cut In MA Rates: To Be or Not To Be
With the MA Final Notice due out on April 1, and the 45-Day Notice suggesting the biggest decrease to MA rates in years, the new Congressional Research Service report, which evaluates the HHS Secretary's authority with regard to including or not including an SGR fix in calculating the trend in FFS costs, is of paramount importance. The report concludes that the HHS Secretary, and therefore CMS, likely have broad authority with regard to whether or not CMS assumes that Congress will eventually create an SGR fix, in calculating CY 2014 MA rates.
As background, CMS for years has indicated that the reason it has not included an SGR fix in the coming year's MA rates, is that it does not have the legal authority to do so, because it is required to go by current law, which would presume the SGR cuts would go into effect. In the 2013 Call Letter, published on April 1, 2012, in direct response to commenters suggesting that an SGR fix should be included in calculating MA rates, CMS stated: "CMS's consistent interpretation and longstanding practice has been to base the projected growth percentage on the law as it exists on the date of the announcement…". CMS goes on to explain that they believe the best reading of the statutory language requires them to use current law, and not assume an SGR fix. Therefore, it is of paramount importance, that since CMS's decision is based on their interpretation of what Congress requires of HHS / CMS, that Congress has now had evaluation done by their own legal advisors. "The Congressional Research Service (CRS) works exclusively for the United States Congress, providing policy and legal analysis to committees and Members of both the House and Senate, regardless of party affiliation." CRS is a Legislative Branch Agency, that is part of the Library of Congress.
Whether or not an SGR fix occurs likely represents the largest wildcard in terms of the potential magnitude of change in MA rates versus the approximately 7.5% cut, should the rates be updated as per the 45-Day Notice. In addition to whether or not the SGR fix is included being the largest wildcard, it is also the component that, in the name of "fairness" and "reasonableness", is the most important to fix. Specifically, CMS should assume that the SGR cuts will not take effect, and therefore CMS should increase the trend factor versus what is included in the 45-Day Notice.
As noted above, for many years, in determining the FFS trend factor, which drives MA rates, CMS has assumed that the SGR cuts will occur, which has artificially depressed MA rates. Of course, the SGR cuts have in fact never happened (at least without being fixed retrospectively for FFS providers), so that physicians have never actually lost a dime due to SGR cuts. On the other hand, MA Plans have lost billions of dollars, compared to the way the rates were intended to be calculated, since the rates are set on April 1st, for a period 9 to 21 months in the future (the following calendar year). Of course, the SGR fix has always has always happened after April 1st, once MA rates are set, so that while the physicians are not subject to the SGR cuts, MA plan rates assume the SGR cuts occurred.
Therefore, given the timeliness of this CRS report, which was likely requested by a Member(s) of Congress in able to determine if CMS has the authority on April 1st to assume that there will not be SGR cuts in 2014, it is hopeful that the Secretary / CMS will in fact do what is "fair" and "reasonable", and assume there will be no SGR cuts in calculating the 2014 MA rates. Looking at the language of the CRS report, CRS for example states: that the Medicare Advantage formula "does not specifically address the inclusion or exclusion of the effects of the Sustainable Growth Rate formula on the Medicare physician fee schedule when congressional action may be anticipated at a later date"; that the Secretary has "considerable discretion to interpret the law"; and, that given 11 years of consistent legislative action to avoid SGR cuts that "the foreseeability of congressional action makes such as assumption both authorized and reasonable".
Finally, key reasons as to why it is so "fair" and "reasonable" for CMS to change their method, and assume that there will be no SGR cuts, in addition to that they now have CRS saying the authority may well exist, are that MA rates are: 1) legislatively tied to FFS; and, 2) much closer to FFS costs (and still falling) than in the recent past. The ACA mandates that MA rates are a specified percentage of FFS costs, and in doing so, it is the only reasonable assumption that Congress meant for CMS to accurately calculate expected FFS costs, which would require that they assume no SGR cuts. In fact, the CRS report suggests that the Secretary has a lot of discretion in making an accurate projection. Additionally, with rates now much closer to FFS costs and still falling, it seems much more fair than in the past to not utilize a "back door" method to "inaccurately" calculate the trend in FFS costs, in order to reduce MA payments. According to MedPAC, MA rates as a percentage of FFS have trended down from 114% in 2009, to 110% in 2011, to 104% in 2013. Between the fact that rates are much closer to and trending towards FFS, and that rates are legislatively tied to FFS, it seems only fair that HHS / CMS assume no SGR cuts in calculating the 2014 rates.
Guess we'll see on Monday, April 1 …
Resources
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Click here to review GHG's comments in response to the Advance Rate Notice, submitted to CMS on March 1, 2013
Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.
Listen in to John Gorman's take on the draft call letter and his thoughts on the implications for Medicare Advantage health plans - and their providers.
Strange Bedfellows Come to Medicare Advantage's Rescue
If you can say anything about Medicare Advantage (MA), it definitely makes for strange bedfellows in both the private sector and in the halls of Congress. Last Friday the full lobbying fury of the industry was in evidence as three separate groups of legislators appealed to the Centers for Medicare and Medicaid Services (CMS) on its 2014 rate proposal.
First was a bizarre, bipartisan collection of Representatives: Reps. Bill Cassidy and John Barrow and 93 other lawmakers — mostly GOP, but some Dems — begged CMS to reconsider its approach to the 2014 MA rates, saying CMS shouldn't enact new risk adjustment policies and to assume that the 2014 Sustainable Growth Rate cuts will go into effect. "This reduction in funding will leave many vulnerable seniors with fewer benefits, higher out-of-pocket costs, and in some cases the loss of their current MA coverage," they wrote.
Then, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), leaders of the Senate Finance Committee, fired their own salvo. In a rare joint letter, they poked CMS for not giving MA plans enough notice on changes to the Star Rating calculation, and for assuming the SGR cuts would not be blocked, as they have every year for the last decade. This one change to CMS's proposal would restore about 5% to MA payments in 2014. "The lack of transparency surrounding this proposal is troubling," Baucus and Hatch wrote, asking CMS to delay changes until they can be vetted. Their voices are particularly important on the 2014 rates, as it is their panel that will handle the long-awaited confirmation of Marilyn Tavenner as CMS Administrator in the coming weeks.
Later that day a group of 22 other Senators sent a letter to CMS expressing their concerns about the 45-Day Notice. Another strange bipartisan assortment including several influential Democrats urged CMS to assume that Congress will address the Sustainable Growth Rate.
We don't have any doubt that CMS will walk back some of the draconian measures they included in the 45-Day Notice. The agency has the most discretion around its proposed risk adjustment changes, and I suspect many of them won't make it into the final rates on April 1. And while the most meaningful remedy is for CMS to assume an SGR fix will be passed later this year, the agency has never taken such a step and we don't expect they will here.
We believe an SGR fix will pass the Congress again, but not until later this fall and well after 2014 bids are due to CMS in June. That means we'll see a roughly 5% bump in MA rates in 2015 -- but still very tough times for MA plans and their members next year.
Resources
Click here to read the MA rate letter Max Baucus and Orrin G. Hatch sent to CMS on March 15, 2013.
To read the MA rate letter the US House of Representatives sent to CMS on March 15, 2013, click here.
Click here to review the MA rate letter the US Senate sent to CMS on March, 15 2013.
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Click here to review GHG's comments in response to the Advance Rate Notice, submitted to CMS on March 1, 2013
Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.
What Sequestration Could Mean to Medicare Advantage Claims Payment
Last Friday CMS's Medicare Learning Network released some details on how the sequester will impact Medicare fee-for-service. By extension we see some implications for what it means to Medicare Advantage (MA). The CMS notice offered the following:
| To All Health Care Professionals, Providers, and Suppliers: Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) Program — "Sequestration" The Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for 2 months. As required by law, President Obama issued a sequestration order on March 1, 2013. The Administration continues to urge Congress to take prompt action to address the current budget uncertainty and the economic hardships imposed by sequestration.
This listserv message is directed at the Medicare FFS program (i.e., Part A and Part B). In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013. The claims payment adjustment shall be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments. Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare's payment to beneficiaries for unassigned claims is subject to the 2 percent reduction. The Centers for Medicare & Medicaid Services encourages Medicare physicians, practitioners, and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact of sequestration on Medicare's reimbursement. Questions about reimbursement should be directed to your Medicare claims administration contractor. As indicated above, we are hopeful that Congress will take action to eliminate the mandatory payment reductions. |
Here's what it means for Medicare Advantage:
First, CMS is applying the 2% cut to fee-for-service claims based on dates of service on or after April 1, not dates of payment on or after April 1. Plans that pass the 2% cut on to providers on the same basis as Medicare FFS will be paying at full value for incurred claims with dates of service before April 1, even if paid after that date. However, we expect that CMS will deduct the 2% sequestration from payments to MA plans starting with the April payment. This may cause a short term cash flow issue, with April claim payments for prior months' claims being made at full value, while the April capitation from CMS is at 98% of full value.
Second, the 2% is applied after all other calculations. For instance, assume the Medicare allowable rate for a service is $100, and the service is subject to the Part B coinsurance of 20%. Payment to the provider would normally be $80, with the beneficiary paying the other $20. With the sequestration, it's $78.40 to the provider. But, since the coinsurance is calculated before applying the 2% cut, the beneficiary still owes $20. The original fee schedules still apply: the 2% comes off the payment, not the calculation of the payment.
We're not sure yet how this will affect how MA plans pay claims. For instance, if a plan covers office visits at 100% of Medicare allowable, less a $10 copay, and if they determine that their contracts allow them to pass the sequestration through to providers, does this mean that they would pay $78.40 instead of $80 for the Part B benefit, plus $10 (the $20 coinsurance minus the $10 copay)? That's a total of $88.40, versus $90 the plan would have paid prior to the sequestration, a reduction of 1.78%. But the plan's capitation is being cut by 2%. So revenue gets a bigger hit than claim payments.
If this is an accurate example, calculating this is going to be a nightmare for MA plans' claim systems. They will have to be able to calculate the Medicare Part A or B payment, net of the Part A and B deductibles and coinsurance, and subtract 2%. Then they'll have to add back the full value of the deductibles and coinsurance, and subtract the plan's copayments.
But it gets worse. If plans will only be able to apply the 2% against what Medicare would have paid, they will need deductible accumulators for the Part B annual deductible, and the per benefit period deductible for Part A. And they will need to calculate the different copayments for regular hospital days and lifetime reserve days. Presumably there is no way to know if someone has used up the lifetime reserve, since that would require access to claim data from periods when beneficiaries are covered by FFS Medicare or other MA plans.
It is a little simpler for capitation payments. For plans that capitate providers based on a percent of premium, the 2% cut will just flow through to the capitated provider group. Plans that pay a specified fixed capitation per member month will probably have to eat the reduction. But either way, the capitated delegated provider group will need to follow the Medicare FFS logic if they apply the 2% reduction to their provider payments. So the same complications remain; they just move downstream from the plan to the capitated provider entity. We think this is something that health plans need to address immediately with their capitated providers, to ensure that the capitated entities are prepared to administer the 2% sequestration accurately -- and within the next month.
It's only a matter of time before the complications of sequestration and Congressional inaction reach the point that no one in Medicare Advantage can administer it. That time may come next month if the President and Congress can't come to agreement to avoid a government shutdown on March 27, and if CMS keeps most of its draconian 45-Day Notice proposal in place when final MA rates, and the final terms of the 2014 Call Letter, are announced on April 1.
Resources
Listen in as Gorman Health Group Senior Vice President Bill MacBain shares an update on the sequester, what GHG thinks is likely to happen next, and the potential impact on Medicare Advantage.
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Click here to review GHG's comments in response to the Advance Rate Notice, submitted to CMS on March 1, 2013
Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.
Impact of the Sequester on CMS Funding
On March 1, 2013, the President issued a sequestration order that cuts $85 billion in federal budgetary resources for FY 2013.
By law, on March 27, 2013 Medicare Trust Fund spending will be cut 2 percent and Medicaid will be exempt.
Other CMS expenditures are subject to the sequester on March 1, 2013. The CMS administrative budget falls into the non-exempt non-defense category. In the report, OMB states that sequestration requires an annual 5.0 percent reduction in discretionary programs and a 5.1 percent reduction in mandatory programs. Because these cuts must be made over a 7 month period, OMB estimates the effective percent reductions will be 9 percent for non-exempt nondefense programs.
Following is the official impact of the cuts on CMS in the OMB sequestration report.
The OMB report states that "There is no requirement that sequestration be applied to equally to each type of budgetary resource within a budget account". A variety of news reports and comments from supporters and critics of health care reform have discussed the discretionary authority of the Secretary to move CMS money around in the various accounts. In particular, these reports emphasize the Administration's interest in assuring that Health Care Reform gets off the ground in 2014 and that funding be found for the Federal exchange which was not previously appropriated. Other ACA related cuts include: $51 million in the Prevention and Public Health Fund and $267 million in IRS enforcement funding.
Click here for the OMB report on the impact of sequestration.
Resources
Listen in as Gorman Health Group Senior Vice President Bill MacBain shares an update on the sequester, what GHG thinks is likely to happen next, and the potential impact on Medicare Advantage.
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Little Good News for Medicare Advantage in Senate Finance Hearing
The Senate Finance Committee held a hearing on Medicare yesterday and received testimony by CMS Medicare chief Jon Blum. Almost a week after the shocking 45-day Notice for Medicare Advantage (MA) and Part D was released, Blum offered little in the way of good news on the 2014 rates.
Blum said CMS is committed to ensuring seniors have strong choices and accuracy in payments. He briefly addressed the draconian 45-day Notice and said that one reason 2014 proposed rates to MA plans are lower is because Medicare spending is lower, and that's good news for the program. He also said it's longstanding CMS policy not to assume a Sustainable Growth Rate (SGR or the "doc pay cut") fix until it is current law, and said the best way to stabilize both traditional Medicare and MA is with a long-term fix to the SGR. He's certainly right about that, but with a $130 Billion price tag, may not be feasible while the budget debate rages here in DC.
Blum admitted that CMS does have discretion with respect to the risk adjustment model, and that could be good news for MA plans -- changes to the HCC model drove a significant portion of the cuts in the 45-day Notice. He suggested -- obliquely -- that CMS's proposal to refine the HCCs "to exclude certain conditions that are most commonly coded by Medicare Advantage plans" could be reconsidered.
Finance Committee Chairman Max Baucus (D-MT) said there is a need to address the 45-day Notice cuts, but did not offer any specific proposal, and neither did Blum. CMS has lowered the overpayments to MA plans relative to FFS from 14% in 2009 to just 4% in 2013 (before the proposed 45-day Notice cuts to 2014 rates), with the difference to be "phased down further." Blum stated on several occasions that the Medicare Advantage rates were proposed, not final. He said the payment reductions over the past few years coupled with membership growth in the program is evidence that CMS can reduce payments and yet the program can grow.
Blum later suggested that CMS's goal was to ensure that seniors have opportunities to enroll in 4 and 5 star plans, and pointed out that those plans not achieving 4 stars on the CMS rating system would face significant additional payment challenges.
So the brutal proposed 2014 payment rates for MA have Congress' attention, but a solution is far from clear with the sequester looming on March 1. The probability of a legislative SGR fix by June -- when MA bids for 2014 are due -- is virtually nonexistent, and that's tragic as an SGR fix of two or more years would bump up MA rates by about 5%, offsetting much of the shortfall in payments. Fixing the risk adjustment proposals won't impact benchmarks, so are only of limited value. Relief on other proposed payment changes like the Total Benefit Cost limits would be helpful but wouldn't significantly change the rate cuts.
So we got a few rays of daylight in the gloom of the 45-day Notice, but no clear path to fixing its worst features. AHIP is on the Hill with a massive lobbying campaign, and there's a steady stream of visitors to CMS seeking relief, but no evidence yet that we might duck the 9-10% cuts in the proposal with 30 days before it's final.
Resources
Listen in to John Gorman's take on the draft call letter and his thoughts on the implications for Medicare Advantage health plans — and their providers.
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.