EXCHANGES: Looking for Help
CMS has posted a Q&A about their willingness to allow states to partner in plan management activities without submitting a blueprint. This makes a new fourth category of exchanges. So, in addition to state exchanges, partnership exchanges, federally facilitated exchanges, the new fourth category is states willing to cooperate in FFE states. Basically, CMS has decided to ignore the February 15th deadline for states to note their willingness to partner with CMS.
CMS is looking for a letter from an interested state's governor or insurance commissioner. The letter must provide attestations that the state has the operational capacity to oversee plan management activities, benefit packages, plan compliance and complaint resolution, conduct de-certifications and appeals as well as provide technical assistance to health insurance issuers. In addition, states need to show that they can participate in a one-day review of its operational plans and that they have the capacity to do that.
Once CMS gets the letter, they will initiate a review of the state's request and sign an agreement with the state to allow the state to have a role in regulating QHPs in the Federal Exchange. CMS also provided an enticement by noting that CMS can provide funds the state can use to support these additional activities.
This is the answer for states that wanted to avoid filling out the blueprint required in the Partnership Exchange. While credibility of CMS is challenged, it may just unearth those last states willing to balance their political resistance with their interest in having a hand in controlling health insurance issuers in their states.
Resources
Hear Gorman Health Group experts discuss the Federal Facilitated Exchange (FFE) and implications for health plans.
Gorman Health Group Senior Vice President of Public Policy Jean LeMasurier offers a summary of the latest guidance on the state partnership exchange, released on January 3, 2013 from HHS.
Download Jean LeMasurier's whitepaper on Insurance Exchanges in the ACA.
Draft Call Letter for 2014
The bad news in the 45 day notice is proposed payment cuts to Medicare Advantage plans for 2014 and big changes to risk adjustment but there is also good news about the reduction in almost all of the Part D benefit parameters. The draft Call Letter, which accompanied the proposed rate announcement, also included some news-worthy developments for MA and Part D plans. The document shows that CMS is actively using its regulatory and purchasing authority. CMS is planning to take action in several areas where oversight and monitoring have identified problems or where beneficiary complaints have been noted. In addition, CMS is signaling its intent to use MA plans as laboratories for achieving the Triple Aim.
CMS is proposing to limit beneficiary costs and to ensure fewer plans with clear choices in plan benefits for 2014. CMS is proposing to lower the threshold for increased Total Beneficiary Costs in the MA bids from $36 to $30 per member per month. In addition, CMS is proposing to reduce the minimum monthly cost-sharing out of pocket cost (OOPC) difference between Part D basic and enhanced plans from $23 in 2013 to $21 in 2014. The difference between enhanced plan offerings will be increased from $12 this year to $18 in 2014. And CMS will review supplemental benefits to assure that they provide reasonable value and not excess profits and retentions for plan sponsors
CMS continues to refine the Star Rating measures and is proposing to modify the methodology to calculate the overall Summary Ratings for MA and Part D for 2014. In addition CMS is proposing to modify the methodology to identify low performing plans by changing from a metric of 3 stars to 2.5 stars for any combination of part C or Part D summary ratings for three consecutive years.
CMS is signaling its interest in changing policies in the future in a number of areas. For example, CMS is planning to issue regulations to revise agent/broker compensation to pay renewal amounts for years seven and beyond. CMS is considering proposing requirements to ensure continuation of essential plan operations and critical IT systems in times of disaster. CMS is seeking comments on ways to reduce overutilization of drugs, for example by expanding the required Utilization Review programs beyond opioids to 4 other drug categories. CMS will also undertake a significant revision to the Summary of Benefits to make it more user-friendly for beneficiaries.
CMS is seeking to improve the health care system through private plans. For example, CMS is encouraging plans to use the Blue Button Initiative to make it easier for enrollees to share personal health information with their health team. CMS is encouraging plans to participate in the Million Hearts Initiative for example by lowering the costs of anti-hypertensive medications and expanding their MTM programs. CMS is asking plans for recommendations on shared decision making programs so that CMS can establish standards for such approaches as a feature in MA plans. CMS is asking for plan comments on reward and incentive programs so these can also be further expanded.
CMS monitoring has identified some unacceptable plan practices that will be corrected. CMS will require beneficiary consent for each new prescription or refill prior to delivery under auto-ship refill programs in Part D to avoid waste and excess costs. The draft Call Letter cites several examples where plans are inappropriately shifting drug coverage from Part B to Part D which is not allowed. CMS will require prior authorization for hospice and ESRD drugs to assure appropriate payment under Parts A, B or D. Plans may not inappropriately steer enrollees to sponsor or PBM mail order pharmacies. Plans will be required to have real-time access to critical systems in delegated entities in the future. CMS is tightening up guidance on post-point-of-sale full claim pharmacy adjustments to address abuse. CMS will also assure that costs are not higher in preferred pharmacy networks than non-preferred networks. CMS will monitor MAO and PDP marketing efforts to assure that there are no misrepesentations in areas where Medicare-Medicaid Capitated Financial Alignment demonstrations are operating.
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.
CMS Advance Notice for 2014: This Is What Austerity Looks Like
CMS's Advance Notice for Medicare Advantage and Part D for 2014 was released after the close on Friday and tanked health plan stocks on Tuesday. It is a shocking, stark portrait of what austerity looks like. There's nothing but bad news in it, and it's worse than anyone expected. Start with an average cut in payments of 6% (combined impact of ACA, proposed trend, and increase in coding adjustment); now add the likelihood of sequestration taking effect on March 1 -- another 2% cut; add the impact of draconian changes in risk adjustment and the 2014 industry tax for another point or two. All in, CMS could cut as deep as 9-10% if the proposed rates become final on April Fool's Day. The industry has little more than 5 weeks to howl, lobby, mobilize and cajole CMS to its senses before the meat-axe falls.
If the proposed rates become effective, it will lead to meaningful, painful benefit cuts. Plans will try to shift some of the pain to providers, and doctors, hospitals and pharmacists will see another year of payment cuts. It will stunt the stunning 10%+ growth in Medicare Advantage the last several years. Industry consolidation will intensify as local and regional MA plans struggle to make ends meet.
We knew the ACA cuts to Medicare Advantage were significant and were softened by the Star Ratings Demonstration. We expected that CMS would take a harder line with health plans in a second Obama term, especially with the deficit fight raging in Washington. The draft notice also shows that the Medicare fee-for-service physician pay cut could come home to roost as well on April Fool's Day. A permanent fix to the Medicare physician pay cut would help MA rates by 4.5-5.5%, offsetting some of the shortfall in payments. But it would cost upwards of $130 billion and we can't take that to the bank in the current political environment.
There's a difference between Chicken Little and Paul Revere...and there was an epic meteor shower on our planet this week. The clock is ticking for stakeholders in Medicare Advantage and Part D to engage with their legislators and CMS to prevent these proposed rates from becoming a cruel hazing on April Fool's Day.
Exchanges: Sales Agent Certification
CMS has released a notice seeking comments on their plans for training and certifying sales agents who could enroll persons into the federally facilitated exchanges. To be exact, the notice is about collection of data about the sales agents who are trained and certified for selling coverage offered by qualified health plans on the exchange. It just so happens that the vehicle for doing the collection is the training and certification program that is mandated by the law and the final regulations published last March. So, CMS does not want comments about the requirement to be trained and certified but they do want comments about what information is collected and maintained about individual sales agents.
In the process of telling us what they want to collect, CMS is also letting us know something about the training and certification program. First, they expect that approximately 250,000 agents will take the FFE training and certification program. They note that this excludes all states where a state operated exchange will function. If agents (approx. 240,500) are allowed to sell QHP coverage in state operated exchanges, the states need to develop and offer their own certification program. CMS also notes that captive agents (approx. 110,500) are expected to enroll persons through their QHP. This means any training for these sales agents must be conducted by the health plan and must follow required enrollment processes through the exchange.
CMS will collect basic identifying information such as name, location, and state license as the agent accesses the system. There is no paper process so agents without electronic access need not apply. After providing basic information, the agent will take the training course and complete the exam to be certified. CMS expects the agent to spend 4.75 hours to complete training and testing in the first year allowing for re-taking and re-testing for those who fail to complete it in the first try. For succeeding years, the expected time requirement falls to 3.25 hours. During this process, CMS can identify particular issues about the test such as time required or troublesome questions and concepts. In addition, CMS will know the individual test taker's training history and their relative success. There is no prohibition on retakes or how often an agent can re-take the training and test. Agents who are certified though the process will be listed on the FFE website so that interested persons can contact them for information and assistance.
CMS notes that they will use collected data for oversight and monitoring. CMS will take follow-up actions whenever they identify questionable activity. Also, from time to time, CMS will ask agents to make their records available for oversight and compliance purposes but does not make clear what records are involved in these requests or actions will occur. Finally, agents will be required to sign an agreement that allows all of this to occur plus documents their commitment to periodically updating information.
Access to the portal will begin around July 1. There is no indication of a fee for taking the training and CMS does provide an outline of the training program that covers the basic components of exchange operations and eligibility determinations.
No doubt there will be questions since any data collection efforts with federal implications for the agent call big brother into question. Clearly, sales agents will have concerns about another body getting complaints about their sales activity and CMS will counter that it has over 25 years of experience with sales agent mischief dealing with vulnerable populations in the Medicare Advantage program.
Click here for information on how to submit comments on this notice.
Click here for a description of the data collection program and some of the processes that will be used to train, certify and collect information.
Resources
Senior Vice President for Public Policy, Jean LeMasurier, summarizes the February 7, 2013 notice from CMS regarding Agency Information Collection Activity.
Download a podcast on the key components of OEV calls and get advice on how to handle rapid disenrollment — and other common challenges.
Learn how Gorman Health Group certifies, trains and manages sales agents with our Sales Sentinel software.
Obama Spikes Reform in SOTU Speech. Where Now for Medicare?
I hope you enjoyed the State of the Union (SOTU) address as much as I did -- it's the Super Bowl of policy geeks. I saw it as an effective rallying tool around a number of the President's goals that will deeply challenge the GOP opposition, like an increase in the minimum wage and immigration reform. But it was the utter lack of any new ideas for Medicare that struck me -- and definitely no olive branch to House Budget Committee Chairman US Rep. Paul Ryan (R-WI) on premium support. So where now for Medicare?
Medicare status quo advocates are turning cartwheels this week. Since the election Democrats have walked back every significant program reform that was on the table since the debt ceiling mess last summer -- eligibility age increase, means testing, and the like. On the eve of across-the-board spending cuts on March 1 and a possible government shutdown on March 27, both driven in part by Medicare deficit politics, the President slammed the door on Medicare reform in both his Inaugural Address and then again in SOTU. And that's tragic: Obama has no better opportunity to save Medicare for the long term than right now. Instead, we're sticking to the path of incremental fixes and accounting gimmicks.
As a nation we have our heads in the sand on the viability of this pillar of American life. Medicare will run out of money no later than 2024. The program is unsustainable in its current form. Everybody in Washington who knows anything about Medicare knows this. What they also know -- but nobody's saying -- is that premium support or something like it is inevitable as the only structural reform that can set Medicare on solvent footing for the long-term.
Former HCFA/CMS Administrators Drs. Gail Wilensky, Mark McClellan, Bruce Vladeck and I all comment on the future of Medicare in First Report Managed Care's latest edition here.
Resources
Listen in as Gorman Health Group's Senior Vice President Bill MacBain shares an update on the impending sequester, what GHG thinks is likely to happen next, and the potential impact on Medicare Advantage.
Visit our website to learn how Gorman Health Group can help support your Medicare Advantage goals.
John Gorman comments on the future of Medicare in the First Report Managed Care's latest edition.
Size Does Matter for Medicare Shared Savings ACOs
A recent article in CMS's journal, Medicare and Medicaid Research Review, reinforces our concerns about the prospects for small Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (MSSP). It appears that size does matter for these provider systems, and that small ACOs are extremely vulnerable to flaws in CMS's gainsharing methodology.
According to the article by Rutgers Unviersity researchers, an ACO with 5,000 assigned beneficiaries, and which makes no change in efficiency (neither loses nor gains money), faces a 50% chance that CMS will get it wrong and either reward them inappropriately or send them a bill for inefficiencies that were not real. As real savings grow, the probability that small ACOs will get at least some recognition grows, but the risk of error remains high.
The law of large numbers is a crucial consideration, according to the article. ACOs with 20,000, or better 50,000, beneficiaries, are much less likely to be graded inappropriately due to randomness. This analysis did not look at the impact of randomness in the quality measures, but it's probably as great a factor in causing even more payment error for smaller ACOs.
All of which points to an exodus of small ACOs from the MSSP in 2-3 years when the first round of the demonstrations conclude. Nobody wants to see "grand opening, grand closing" of these important experiments in evolving provider systems -- especially CMS. The agency needs to consider methodological findings like this one to ensure it doesn't cut small ACOs off at the knees, just as they're beginning to walk.
Resources
Visit our website to learn how Gorman Health Group can help you implement new models of finance, leadership and clinical values as systems adapt to health reform.
Some Scary Medicare News in the CBO Report
The Congressional Budget Office (CBO) released its new economic outlook yesterday with some interesting predictions on the launch of the Affordable Care Act's health insurance marketplaces (exchanges). But it was some of its Medicare findings that blew my hair back last night:
- CBO concurred with Medicare trustees that the trust fund will run dry by 2024, driven by rapid aging of the population.
- The number of Medicare beneficiaries enrolled in the program will grow by 36%, or an estimated 18 million people, between 2012 and 2023.
- The number of Baby Boomers turning 65 is projected to grow from an average of about 7,600 per day in 2011 to more than 11,000 per day in 2029.
- Over the next decade, annual net spending on Medicare will jump 82%, from $508 billion this year to $914 billion in 2023, according to CBO. As a share of the economy it will rise from about 3% of GDP today to 5% by 2037.
Check out this graph
Further proof that if you're not in Medicare Advantage and Part D, you won't be in healthcare soon.
Resources
Listen to a discussion focused on the lessons learned from MA and Part D when it comes to product strategy in the Exchanges.
Learn how Gorman Health Group can support your Medicare Advantage and Part D goals
250,000 Agents in the Federal Exchanges???
In a Federal Register notice out yesterday CMS officials are projecting 254,095 health insurance agents and brokers will sign up to sell the "metal plans" in the new federal health insurance exchange (HIX) system. Quarter. Million. Agents. OMG. And the scary part: they face a fraction of the regulatory requirements Medicare sales agents do.
"Federally facilitated exchanges" will operate in some two dozen states next year -- largely in Red States with a significant presence of independent brokers, such as Florida, Texas and Arizona. The final regs on the Federal exchange issued last May included a surprise provision allowing agents to sell exchange products to eligible individuals -- designed to get more enrollment into the program faster through this huge distribution channel.
CMS plans to collect information about producers through a registration process, and by verifying a producer's licensure status and issuer appointments. Once the agents get through the registration process, they will be able to get any required training and take any required exams on the CMS Learning Management System site.
In addition to using the producer data to run the exchange training process, "CMS will use the collected data for oversight and monitoring of agent/brokers." Exchange agents would probably have to register with the system annually, and getting through the entire process could take each agent an average of 4.7 hours, CMS estimated.
Here at Gorman Health Group, we certify, train and manage over 30,000 agents selling Medicare products. And I can tell you that less than 5 hours' training and a bare-bones certification process means there are going to be plenty of sleezeballs selling the "metal plans" to the chronically uninsured. And that will only serve to confuse and exploit huge numbers of them, diminish support for health reform, and bring complaints down upon sponsors. We need a tougher system than CMS outlines here to ensure these vulnerable Americans don't fall prey to predatory salespeople.
Resources
Senior Vice President for Public Policy, Jean LeMasurier, summarizes the February 7, 2013 notice from CMS regarding Agency Information Collection Activity.
Download a podcast on the key components of OEV calls and get advice on how to handle rapid disenrollment -- and other common challenges.
Learn how Gorman Health Group certifies, trains and manages sales agents with our Sales Sentinel tool.
CBO: Slower Growth in Exchange and Medicaid Enrollment
The Congressional Budget Office released its new economic outlook yesterday and predicts a slower start to enrollment in the new exchanges: 7 million people in 2014 -- down from 9 million last July -- and rising by 2016. The CBO report also estimates that 8 million people will enroll in Medicaid in 2014, so about 15 million people will obtain health insurance next year.
CBO says those numbers will jump, and quickly. By 2016, 24 million people will get coverage through the exchanges and 11 million through Medicaid. By 2024, they'll be at 26 million and 12 million, respectively. CBO attributed the slower start to a number of factors, including "the readiness of exchanges to provide a broad array of new insurance options, the ability of state Medicaid programs to absorb new beneficiaries, and people's responses to the availability of the new coverage."
CBO warned that the impact of the health law is a "source of great uncertainty" and said it's difficult to assess the full impact of the law, much of which hasn't been established in regulation or implemented yet.
Resources
Visit our website to learn how Gorman Health Group can help you develop and/or execute on a unique model of care for Medicaid Plans.
Gorman Health Group policy expert Jean LeMasurier provides a summary of proposed rule CMS-2334-P, which reflects new statutory Medicaid and CHIP eligibility provisions.
Listen to a discussion focused on the lessons learned from MA and Part D when it comes to product strategy in the Exchanges.
Hear Gorman Health Group experts discuss the Federal Facilitated Exchange (FFE) and implications for health plans.
Seven Years in the Wilderness for CMS?
We're coming up on the 7th anniversary of the last Senate confirmation of a CMS administrator. Seven years! There have been a succession of interim or acting administrators since, most notably the brilliant, visionary, and ultimately polarizing Don Berwick. Politico has a great piece out today on why our favorite agency has been in the wilderness for so long, and the implications of such long-term "temporary" leadership.
It's time to put partisanship aside and confirm Marilyn Tavenner. This agency has WAY too much crucial work ahead this year for her to not enjoy the full authority of the title Administrator.