Let's Just Say It: the GOP is the Problem
Two of Washington's most eminent political observers, Thomas E. Mann of the left-leaning Brookings Institution, and Norman J. Ornstein, resident scholar at the conservative American Enterprise Institute, published an awesome op-ed in today's Washington Post on the truly sorry state of our national politics. And they did something extraordinary: they courageously laid the blame squarely at the feet of a Republican Party that has become unhinged. They make the point that unless Americans reject ideological extremism at the polls this November, we'll get the dysfunctional government we deserve. And the two guys they blame most? Newt Gingrich, the architect of the politics of division and destruction that began with the Congressional GOP takeover in 1992, and Grover Norquist, the founder of Americans for Tax Reform who pioneered the "No New Taxes Pledge" that's become a litmus test for GOP candidates.
Some of Mann/Ornstein's bon mots:
"We have been studying Washington politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party."
"The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition. When one party moves this far from the mainstream, it makes it nearly impossible for the political system to deal constructively with the country's challenges."
"Both sides do it" or "There is plenty of blame to go around" are the traditional refuges for an American news media intent on proving its lack of bias, while political scientists prefer generality and neutrality when discussing partisan polarization. Many self-styled bipartisan groups, in their search for common ground, propose solutions that move both sides to the center, a strategy that is simply untenable when one side is so far out of reach."
"Today, thanks to the GOP, compromise has gone out the window in Washington. In the first two years of the Obama administration, nearly every presidential initiative met with vehement, rancorous and unanimous Republican opposition in the House and the Senate, followed by efforts to delegitimize the results and repeal the policies...And Republicans in the Senate have abused the confirmation process to block any and every nominee to posts such as the head of the Consumer Financial Protection Bureau, solely to keep laws that were legitimately enacted from being implemented."
"In the third and now fourth years of the Obama presidency, divided government has produced something closer to complete gridlock than we have ever seen in our time in Washington, with partisan divides even leading last year to America's first credit downgrade."
"Rank-and-file GOP voters endorse the strategy that the party's elites have adopted, eschewing compromise to solve problems and insisting on principle, even if it leads to gridlock. Democratic voters, by contrast, along with self-identified independents, are more likely to favor deal-making over deadlock."
"Democrats are hardly blameless, and they have their own extreme wing and their own predilection for hardball politics. But these tendencies do not routinely veer outside the normal bounds of robust politics. If anything, under the presidencies of Clinton and Obama, the Democrats have become more of a status-quo party. They are centrist protectors of government, reluctantly willing to revamp programs and trim retirement and health benefits to maintain its central commitments in the face of fiscal pressures."
"No doubt, Democrats were not exactly warm and fuzzy toward George W. Bush during his presidency. But recall that they worked hand in glove with the Republican president on the No Child Left Behind Act, provided crucial votes in the Senate for his tax cuts, joined with Republicans for all the steps taken after the Sept. 11, 2001, attacks and supplied the key votes for the Bush administration's financial bailout at the height of the economic crisis in 2008. The difference is striking."
"(P)olitical scientists Keith Poole and Howard Rosenthal, who have long tracked historical trends in political polarization, said their studies of congressional votes found that Republicans are now more conservative than they have been in more than a century. Their data show a dramatic uptick in polarization, mostly caused by the sharp rightward move of the GOP."
"If our democracy is to regain its health and vitality, the culture and ideological center of the Republican Party must change. In the short run, without a massive (and unlikely) across-the-board rejection of the GOP at the polls, that will not happen. If anything, Washington's ideological divide will probably grow after the 2012 elections."
It's a terrific column and a cautionary tale. As I've said before, our national politics are in a death spiral as we are losing our ability as a nation to deal with complex, expensive issues before us -- like long-overdue Medicare reform -- because of Republican obstructionism. I continue to believe the President will be narrowly re-elected but the GOP will hold the House, and we will face another 4 years of vitriolic gridlock. This will be our "Lost Decade" like the Japanese had in the 90s. And all because the Grand Old Party has lost its mind.
Medicare's Wobbly Solvency
The Medicare Trustees released their 2012 report this week on the fiscal health of our favorite program and concluded that Medicare's Part A Trust Fund won't run out of gas until 2024, the same finding as last year. That's welcome news -- but the conclusion rests on some shaky assumptions, and therefore the day of reckoning could come sooner.
Last year, the Trustees also predicted that the fund would become insolvent in 2024, five years ahead of its 2010 prediction of 2029 due to the slowdown in the economy and diminished tax receipts for Medicare. This report acknowledges no further erosion in the economy by the Trustees since last year's. The Part A Trust Fund has been paying out more than it has received since 2008. In 2011 alone, Medicare used $27.7 billion in trust fund assets to cover hospital insurance expenses.
The Trustees found that Medicare's Part SMI Trust Fund -- which covers Parts B and D -- is balanced and that general revenue is expected to cover the program's costs. A problem here is that expenses for Part B likely will be higher than the report predicts because the report factors in a more than 30% cut to physician reimbursement rates scheduled for 2013 under the SGR formula. Congress has passed several "doc fixes" since 2002 to offset the cuts scheduled under the SGR and is expected to continue to kick the can down the road.
Over the next 10 years the Part A Fund's expenditures will grow by an annual average of 5.3%, and its income will grow by 6%. The Trustees expect the Fund to have only enough revenue by 2024 to pay 87% of projected costs that year -- and even that conclusion is suspect as it's based on several assumptions that aren't realistic, including:
- A scheduled 31 percent pay cut for doctors in 2013, which Congress is almost certain to override and will inevitably use Part A funds to offset the cost. A permanent fix to the SGR costs almost a half-year of solvency to the Trust Fund;
- That the 2% across-the-board cut to Medicare resulting from the collapse of the Congressional Super-Committee (sequestration) can be sustained over the coming decade;
- That the U.S. Supreme Court will not overturn the entire ACA in June, the possibility of which seems remote but increased given the tenor of the Court's deliberations earlier this month;
- The trustees also said Medicare is on an unsustainable path over the long term that could cause expenditures to more than double as a percentage of GDP, from 3.7 percent now to 10.4 percent in 2086, under a worst-case scenario.
- The ACA is slated to reduce Medicare payments to hospitals and other providers, which lowers the trustees' estimate of program spending. CMS Chief Actuary Rick Foster writes that that is unrealistic, noting "the best available evidence indicates that most health care providers cannot improve their productivity to this degree — or even approach such a level — as a result of the labor-intensive nature of these services."
All of this calls into question whether we really have until 2024 before Medicare is upside down. The only thing we know for certain is that the program will be the biggest political hot potato in the Washington debates for the foreseeable future, and that program volatility is the "new normal."
Change is here: CMS Finalizes Chapter 13
It seems like only yesterday that I was submitting comments in response to CMS' draft chapter 13. It was, in fact, way back in April of 2007, when I was a budding young compliance analyst determined to keep a plan on the right track.
The review of draft chapter guidance was one of the best examples of CMS partnership that the organization afforded to plans. But yesterday marked a new beginning: CMS released the final, updated Chapter 13: Medicare Managed Care Beneficiary Grievances, Organization Determinations, and Appeals, made effective retroactively to March 23, 2012. No opportunity to provide comment on a five-year old chapter in desperate need of a face lift. We can only speculate on why this is. It's possible that a deadline needed to be met and there was simply no time to share the draft with the industry. Many (but not all) of the changes had already been communicated to the public via memos and past call letters. I don't see it as a huge red flag; Chapter 4 was released as draft yesterday as well, and CMS recently solicited feedback on certain Marketing Guidelines changes. So you still have a voice.
For this final chapter, however, organizations should quickly begin reviewing which policies and procedures need updating. But don't stop there. Once revisions are made, be sure to communicate via specialized training. And document it! Not only will you be working toward your effective Compliance Program requirement to provide specialized training, but you will also be ensuring that this high-risk area stays sharp. And if you face endless hurdles for updated P&Ps to go through your internal approval process, take this final chapter on the road ASAP to the Medical Directors office, Customer Service, Utilization Management, Appeals and Grievances and your provider community. They are all directly affected by these recent changes.
Chapter 13: Read it, learn it, live it, love it.
I don't often pick fits with the GAO...But when I do, I prefer it's about Medicare Advantage
The non-partisan GAO doesn't much like the demonstration plan that accelerated the MA Quality based payment initiative, known as the Star Rating System. You can read why here, here, or here. For my colleague John Gorman's great summary, visit us over here.
I can save you the linkage: the gist is that (much) too much of the $8 billion in bonus money goes to average plans. A secondary theme to the criticism—articulated by politicians and commentators, not the GAO—is that the bonus money was cannily used by the Obama administration to soften the blow of the payment cut to MA plans that was a large source of funding for Obamacare.
Let's dispense with the second point first: The bonus program is at present worth $8B per year (that's about to change). The cuts to MA were over $130B. Soften? Not exactly up to his standards.
The first point is more interesting. It's true that on the bell curve most plans are average. And it's true that the demonstration program extended bonuses to these plans for three years. It's also true that the bonuses go away in 2015, when only the 4+ star plans will see any bonuses. So that $8B number will drop, and fast. Take a look at the best performing plans: they are by and large small, dense, local and affiliated with a dominant provider system in their home market. Further, the rating system is getting harder every year. Many measures are graded on a curve and the class is getting smarter. And as the industry masters certain measures, they are retired and replaced with new measures that are predominantly outcomes oriented--- hard things for the plans to manage.
And perhaps most critically, it has also been lost in the discussion that CMS has sent out dozens of letters to low-performing plans (those sub 3 stars for 3 years) reminding them that CMS has the authority to terminate that plan's contract.
That's a big stick to go along with all those carrots.
GAO Says Stars Bonus Demo is an $8 Billion Waste
The Government Accountability Office released a report yesterday recommending that CMS cancel the Star Ratings Bonus Demonstration, saying it would spend over $8 billion rewarding plans with only average quality improvement. That $8.3 billion -- to be awarded to plans with at least a 3-Star rating -- would offset "a significant portion" of the MA payment cuts in the Affordable Care Act (ACA).
Congressional Republicans who requested the study said the demo was an expensive political ploy designed to pump money to mediocre Medicare plans and shield beneficiaries from the effects of the ACA cuts. Sen. Orrin Hatch (R-UT) said the GAO report suggests that the administration abused its authority in implementing the program. GAO, the investigative arm of Congress, didn't speak to GOP charges that the bonuses are politically motivated -- but it did note that the Stars demo "dwarfs" all other Medicare pilot projects in nearly 20 years.
Most of the bonus money, of course, goes to plans in the middle of the bell curve with 3-3.5 stars on Medicare's five-star rating scale. Available through 2014, the bonuses do soften much of the impact of the ACA cuts to Medicare Advantage -- in 2012, the bonus program offset more than two-thirds of the hit from ACA, and has clearly helped MA enrollment growth and declining average premiums the last two years.
The GAO recommended that CMS should implement the bonus structure as outlined in the ACA, which costs less and rewards only the highest rated plans. Under the original ACA bonus structure, only MA plans with four or more stars would qualify for the bonus. CMS in late 2010 said it would instead move to a three-year demonstration program, which increased the amount paid and would make three-star plans eligible for the bonuses. The demo costs $5.3 billion more than the original ACA version, making it one of the biggest demonstration programs Medicare has undertaken.
Hatch, the ranking Republican on the Senate Finance Committee, which oversees Medicare, is questioning whether the administration had the legal authority to create the program in the first place. "The Obama administration seems to be using a technicality to sidestep Congress and write itself a blank check to spend more money for political purposes leading into this year's elections," Hatch said in a statement. "The White House does not have the authority to green-light spending on whatever program it wants," he added. "This report is just the beginning -- I will be demanding answers."
The Medicare Payment Advisory Commission (MedPAC), the expert panel that advises lawmakers on Medicare, also criticized the bonus plan as the administration was pursuing it. MedPAC said the Stars Demo amounts to "a mechanism to increase payments" and its design "sends the wrong message about what is important to the program and how improved quality can best be achieved." MedPAC Chairman Glenn Hackbarth added that the Stars bonus demo "lessens the incentive to achieve the highest level of performance."
The administration says it disagrees with the GAO findings and believes the bonuses will improve the quality of care. Medicare "believes the demonstration supports our national strategy to improve the delivery of health care services, patient health outcomes, and population health," CMS said in its formal response to the GAO report. "Absent this demonstration, we believe that many plans would not have an immediate incentive to improve the quality of care delivered to (Medicare Advantage) enrollees."
I get it and I don't get it. Everybody in Washington -- Republicans and Democrats alike -- knew that this demonstration had little to do with quality improvement and everything to do with lessening the ACA's cuts on plans and beneficiaries alike. The ACA's cuts were the remedy to the excessive subsidies to MA plans in the Medicare Modernization Act of 2003, and the Stars demo was the "glide path" that bridged the two. Hatch is one of the strongest advocates of Medicare Advantage in Congress, and he fought valiantly against the ACA's $137 billion hit to the program over 10 years. With this GAO report he seems to have decided that it's worth calling in friendly fire on the program to score political points against the President in an election year.
I can see alot of noise on this report, especially with the Medicare Trustees' Report also out yesterday. After all, the furor over the GSA's Las Vegas conference scandal was over a tiny fraction of the pile of money in play here, literally. But I think the recommendation of terminating the demo is dead on arrival. Rewarding high quality, and squeezing out low quality plans as CMS has promised for those below 3 stars, is so clearly a good idea that we don't expect the Star bonus demo to go anywhere...though CMS officials may want to arrange their own parking space on the Senate side for all the hearings they'll get called into for this.
Let the games begin
By now you should have started your benefit discussion for 2013. With the surprising higher rate coming to plans in 2013 — the competitive juices are flowing across the country. The stakes are high for 2013 and now is not the time to rest on past performances. If I was sitting in the product strategy chair at a health plan I would want the following team members sitting at the table with me: compliance, sales, marketing, medical, claims, network, customer service, Stars, and yes you better have the actuaries sitting with you early on so there are no surprises at the 11th hour.
I look forward to talking to you the next 60 days as we drive to the June 4th filing. Living the product development dream!
2013 Final Call Letter and Regulations
Along with the Final Rate Notice for 2013, CMS recently published the Final Call Letter and a Final Rule with Comments. These documents include changes to policy and operational guidance for Medicare Advantage (MA) and Part D plans for CY 2013.
Our summary of the Final Rate Notice and Final Call Letter
Our summary of the Final Rule with comments
While there are a lot of details in these documents, there were not very many significant policy changes. While CMS projects a weighted average county rate increase of 3.07 next year, GHG analysis suggests that after adjusting for Fee-for-Service rebasing, changes in county quartiles and the ACA phase in, that the actual county rate will vary widely and some counties could even see a net reduction. The Final Call Letter includes exceptions to the new regulatory provisions that allows MAOs to limit DME to specific manufacturers or brands and includes performance and quality criteria for Dual SNPs to offer additional supplemental benefits.
Not surprisingly, the Final Rule keeps the provision that allows CMS to terminate a plan that does not achieve at least a 3 star rating for 3 consecutive years. This is an important value-based purchasing authority that will put some teeth behind the star rating system. Fortunately the three year period starts with data collected this year and is not retrospective. Due to implementation challenges, the final rule does not require Medicare Advantage Organizations (MAOs) to apply the Fee-for-Service Hospital Acquired Infections (HAC) and Present on Admission (POA) Indicator policy for network hospitals. Capitation payments make it difficult for MA plans to reduce payment to hospitals retroactively. CMS sent another signal that it is serious about integrating care for Dual Eligibles by broadening the number of dual SNPs that can offer additional supplemental benefits. Based on the large volume of comments, CMS will not finalize the proposed changes to regulations on the conditions of participation for Long Term Care Facilities (LTC) that would require pharmacists to be independent. The comments identified the need for changes in this area, but the best solution is not the policy in the proposed regulation and CMS is encouraging more transparency in the industry.
Delegation Nation
Ongoing monitoring and auditing is a widespread challenge, but they are must-dos according to CMS' compliance program requirements. You have some tools, but not enough to capture the full picture. Responsibilities are spread out between departments and delegated entities. Is the risk assessment just a matter of asking for a list of risks, or is it simply a review of the OIG work plan? It's just not enough. Where does your sanity check fall on your annual risk assessment, let alone your daily planner?
When the decision is made to outsource a part of your Medicare Advantage or Part D responsibilities, the onus continues to be on the Plan Sponsor for compliance. That means effective pre-delegation site-visits, collaboration in monitoring and information exchange, and a delegate's demonstrated commitment to meet your organization's needs.
Many Medicare Compliance Officers don't have the resources to fully monitor and oversee the delegates. You get some reports, but then hear from another plan that your biggest delegate is having problems. Now CMS is asking you what you know about it. What systems do you have in place for routine and ad hoc exchanges of information between you and your delegated entity?
Think outside the box when developing your monitoring and oversight strategy, especially when it comes to delegates. Ensure that collaborative efforts are outlined at the service agreement level; otherwise, it's like being in the ocean with no life preserver. If you are not involved at the beginning, you may end up in a regrettable long-term relationship. Insist on being involved at the RFP process. Ask questions: Will the account manager be dedicated to your plan? What are the contents of their canned reports and how are requests for additional information handled? How do current clients feel about this delegate? You check references before you hire an employee -- do your homework before diving into a delegated relationship. CMS expects you to protect your members. Make sure any delegate is ready to meet the obligations for which your plan is responsible.
Put down the pitchfork, Mr. Governor
Not as discussed as the Mandate, but also under consideration by the Supremes is the provision of ACA that expands Medicaid eligibility under age 65. The States' position is this is a "coercive" expansion. The politics is that the provision is anti-Federalist, forcing the states to spend as wildly as the Feds. Well, the Feds may very well be spending wildly. But it's pretty hard to say that they're dragging the states down with them on this issue.
No one has a clue what will happen
... And anyone who tells you differently is trying to impress you.
A good friend who clerked for both Alito (when an appeals judge) and Chief Roberts (his first year on the SCOTUS) and his father who is a prominent conservative law school dean and Ambassador agree: it's too close to call. (Not namedropping here, just establishing the sources as being "familiar with the thinking…" Quite the resumes on those two.) Unless something substantially weird happens during the Court's deliberations, they're not going to kick it out on procedural grounds. As for the main issue, it comes down to whether Roberts or Kennedy buys the argument that you're born into the health care market.
Said my friend, "I honestly don't know what Roberts will do, but it seems likely he'll write the decision." The Chief is, among many thing, a man with a sense of the moment.