Lighting the Path in the Golden Age of Government-Sponsored Health Programs: Join Us for the GHG Client Forum
More than 300 guests will convene on May 1-2 at the Red Rock Casino in Las Vegas for the 2014 Gorman Health Group Forum, our annual strategic retreat for leaders in government-sponsored health programs. This year's gathering promises to be the most actionable, content-packed conference you could attend on how to succeed in this new Golden Age of government business. And when the learning and planning is done for the day, we will celebrate this unique moment in health care history as only GHG can in Vegas. Here's what's happening this year and why you've got to join us:
- The event features 27 content-charged sessions, including multiple presentations on Star Ratings tactics, quality improvement, risk adjustment, and compliance challenges unique to Medicare Advantage and Part D, Medicaid, and the ObamaCare exchanges
- A keynote presentation from CMS leadership
- An expert roster of presenters from Gorman Health Group and leading health plans in government-sponsored programs. No fluff, no sales pitches, no history lessons -- it's all about what to do NOW
- Approved for up to 12 continuing education credits from the Compliance Certification Board
- The perfect off-the-strip venue to minimize distractions during the day, but close enough to the action to make plenty of bad decisions in the evenings. ;)
Based on feedback from last year's Forum, I'm speaking in three separate sessions on overall strategy and implementation planning for government programs. If you've heard my "state of the industry" presentation before, you may think you know what to expect from me on stage. Think again. This is my favorite gathering of the year, and I'm building three brand-spankin' new presentations that are focused on specific steps and mileposts your organization needs to reach this year in care management innovation, risk adjustment, Star Ratings, and operational performance improvement. In each session I'll drill down to specific steps, and we'll leave you with a self-assessment tool in our closing session to help track your progress.
Many of our clients use the Forum as an offsite retreat for their government programs executive teams, and so we offer huge group discounts to encourage it. It's a unique opportunity for team-building and action-oriented planning and budgeting.
If government-sponsored health programs are central to your company's future, do yourself a favor and join us in Vegas. You'll come back tired, happy, and ready to win in this crazy new environment of health reform.
Don't believe me? Hear what last year's attendees thought about the event, and why they keep coming back for more.
Resources
Register today for The Annual GHG Forum held May 1-2 at the Red Rock Casino and Resort in Las Vegas. This two day event is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population.
On April 11, Bill MacBain and Jean LeMasurier will be back, and this time joined by John Gorman, Executive Chairman of GHG, to offer insight on the Final Rate Announcement from CMS. You will walk away from this session with critical to-do items and issues to tackle in order to ensure your success in 2015 and beyond. Register now >>
Innovating in 2014
CMS has developed an Innovation Center to address health care payment and service delivery models. It is a great site to find information about current Innovation Model Partners, and a place to share your ideas on how care can be delivered and paid for in ways that will lower care cost and improve quality of care. As always, the service to beneficiaries is at the heart of these initiatives, and for the program to continue, partners must be innovative.
There is also room for innovation within a Medicare health plan or Part D sponsor in terms of operations and compliance. You have heard that necessity is the mother of invention, and we often hear that departments need more money, more staff, and more technological resources in order to meet their needs.
This doesn't mean that those needs are always met. That is why it is important to be creative with the tools and resources that you have. How can you implement best practices without the budget required? Without the outline or work plan for success? Have you developed a checklist of necessary things to do, and can you accomplish those things with the staff you have? Are you and your leadership all aware of what the highest risks are to the organization, and how those risks might be affecting Star ratings?
At this year's GHG Forum, we will be addressing these types of issues facing our partners, and you will notice that we will consistently be encouraging innovation throughout the event. No problem is solved overnight — except perhaps the problem of getting a good night's sleep — that can be solved overnight! Join us and fellow attendees to gain valuable insight into what works, what doesn't, and allow necessity to spark inventive actions that you can take back to your organization. In the meantime, tell me what troubles you in your efforts to maintain an effective compliance program, or even in operational shortcomings. We are always happy to brainstorm and share ideas. You just might get a Forum discount code from me just for sharing your pain points.
Resources
Register today for The Annual GHG Forum held May 1-2 at the Red Rock Casino and Resort in Las Vegas. This two day event is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population.
On April 11, Bill MacBain and Jean LeMasurier will be back, and this time joined by John Gorman, Executive Chairman of GHG, to offer insight on the Final Rate Announcement from CMS. You will walk away from this session with critical to-do items and issues to tackle in order to ensure your success in 2015 and beyond. Register now >>
Navigators and Agents Gone Wild
Since the October 1 launch of the ObamaCare health insurance exchanges/marketplaces, there's been a growing din over the field conduct of navigators and insurance agents, in the process of enrolling eligibles on behalf of the exchanges or the health plans participating in them. Meanwhile, the associations backing brokers are putting pressure on the Obama administration, insisting that brokers should be more involved in the enrollment process. Add a regulatory infrastructure that is lax — at best — when it comes to training and enforcement … does anyone else have a sense of déjà vu? It's the market conduct growing pains of the Part D inception all over again. There is no doubt that some of the "navigators and agents gone wild" stories out there are simply anecdotal rumor mill reports coming from enterprising local reporters, or are "stings" by conservative bloggers and activists scoring cheap anti-reform points.
But it's also true that navigator and broker involvement has been controversial since the inception of ObamaCare. You likely remember that in the early versions of the ObamaCare laws, that brokers were not even in the picture and Republicans have made great political hay so far of the navigators as the healthcare equivalent of ACORN. Over 100 community organizations in 34 states won $64 million in Federal grants to field thousands of outreach workers to find and help enroll the uninsured, and they've been hounded mercilessly by Congressional oversight committees, local reporters and ObamaCare dead-enders. Even the most well-intentioned brokers and navigators have had a rough go of it during these first two months. Here's the harsh reality: Brokers face a backlog of enrollees who, for one reason or another, have not been able to submit their application. And the current flood of beneficiaries out there stuck in the application process are overrunning the system — there isn't enough time left to process them all, ESPECIALLY when you take into account the difficulty brokers have helping consumers who are already halfway through the process before they ask for help.
To add insult to injury: Because of insufficient training, many brokers weren't prepared for how this would play out. It wasn't until they encountered real problems, sitting next to their real clients, that the lack of training and preparation made itself painfully clear. The deck is stacked against the broker community here, and the media spotlight will continue to get hotter.
For health plans using brokers to distribute their products in the exchanges, there is very little chance that it can or will be done effectively. Every plan's goal is to understand and have some degree of control over how the brokers are representing the brand and the products in the field. But the huge influx of brokers into the process, very little training beyond the bare minimum required by the feds, no guidance from CMS on broker conduct, and the enrollment portal problems --- can oversight of these agents even be on the radar?
It's all so reminiscent of the perfect storm of sales misconduct during the launch of Medicare Advantage and Part D. In 2007 and 2008 Congress held several hearings where witnesses testified that sales agents had marketed without licenses, portrayed themselves as Medicare employees, and misled Medicare beneficiaries about plan benefits. Some of these events were a simple matter of insufficient training or understanding of the implications of their behavior, which we are ripe to experience in the exchanges. Others were blatant fraud. Congress's response to these incidents was the enactment of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), which prohibited or limited certain marketing activities by sales agents and plan sponsors, required that all sales agents be trained and tested annually, and be State licensed, among other things. Plans responded by adopting leading-edge solutions like GHG's Sales Sentinel (now covering over 55,000 agents in Medicare and the exchanges) to help them onboard, manage and oversee their brokers and agents in the field. In the exchange world, the biggest risk of all of the mayhem is a health plan's reputation -- which we've seen shattered by agent misconduct in the past. And the biggest counter balance initiative is for plans to blaze the trails when it comes to providing field agents sufficient guidance and training on conduct and repercussions, until CMS and the states catch up.
Resources
GHG's Sales Sentinel is the only sales oversight tool designed specifically for health care organizations operating in regulated government markets. To learn how Sales Sentinel can help your organizations agent onboarding and ongoing oversight process, visit our website >>
During the 2013 GHG Forum, Executive Chairman & Founder John Gorman, discusses how important it is to successfully train, on-board and conduct ongoing agent oversight for your Plan's success. Click here to access the recording>>
Listen as Senior Director of Product Operations at Gorman Health Group, Alex Keltner discusses GHG's Sales Sentinel, the solution to train, credential and onboard your sales force. Access the podcast here >>
Join us December 11 from 2:00 — 3:30 pm ET for a lively session with Gorman Health Group strategy and data analysis experts who will discuss actual case studies that show how plans can mine data for precious insight that can help improve performance. Register now >>
Pay me now or pay me later: Things to keep in mind when you set your 2014 budget
Back in the '80's Fram Oil Filters had an advertising campaign that featured an actor dressed as a mechanic, admonishing viewers to get their oil changed and get a new oil filter, to prevent costly engine damage. "Pay me now or pay me later," he said.
When it comes to some key Medicare Advantage functions, the "pay me later" scenario can be perilous indeed.
Take data reconciliation, for instance. MA plans, especially those with drug coverage, need to reconcile at least a dozen different types of data with CMS: Enrollment data; Transaction reply reports; Retro processing contractor; Beneficiary churn ; Capitation payments; Premium data; Out-of-area residence; Subsidy payments; Medicare as secondary payer; Prescription claim (PDE) data resolution; Part D coordination of benefits (COB); Enrollment data validation; Compliance & reporting; Medicaid state roster and best available evidence of Medicaid enrollment.
The sheer volume of data and transactions dictates use of automated processes and controls to manage the reconciliation workflow. Spreadsheets won't cut it, and quasi-manual processes rapidly fall behind the need for daily data import and analysis. Failure to reconcile results in incorrect claim and capitation payments, premium collection issues, enrollment and benefit errors, reduced quality scores, and the potential for excess repayment under drug plan risk corridor reconciliations. Even for small plans, there can be millions of dollars at stake.
Compliance is another area where failure to invest in automated systems now can cause a bad "pay me later" outcome. The cost of a bad CMS compliance audit isn't just the staff time to correct problems. Most compliance problems are directly linked to member satisfaction issues, and a "bad" audit is symptom of deeper problems that lead to high member services call volume and disenrollment rates. Not only does CMS expect plans to be audit ready all the time, members expect things to go right all the time. We have found that the best approach is to use information technology tools to continually monitor compliance at the department level, to maintain complete and organized documentation, and to identify areas where compliance is lagging — where management intervention is warranted. Compliance programs need to be documented, regimented and sustainable. Compliance doesn't wait to happen. It takes an organized and on-going campaign, supported by automated tools to remind, track, document, and spotlight problems.
A third opportunity for trouble is in how sales agents are trained, vetted, and monitored. CMS requires annual training, which is best done using computer-based learning systems. Embedded testing provides documentation of comprehension. On-going supervision requires diligent tracking of complaints and allegations to confirm, respond, and assess improvement. As with other complex tasks, an automated solution reduces opportunities for errors and omissions.
At a time when every dollar counts, it's a good idea to consider budgeting for an investment in software solutions that solve these problems. Gorman Health Group has built software that supports our own consultants as they work with health plans on these issues, and these tools are available for health plans to use in their own operations. The GHG software is unique in that all of these applications are Web-based, fully hosted solutions that present no strain to IT resources. And GHG's subject matter expertise drives each product's unique functionality.
I invite you to contact my colleague RaeAnn Grossman, to start a conversation about your goals, the risks you face, and your available resources and budget for the 2014 year.
RaeAnn Grossman
Chief Sales and Marketing Officer
Rgrossman@ghgadvisors.com
Resources
Decision-makers from Health Plans and Provider Organizations are invited to join GHG for a free webinar on November 19th: "The future of the Government sponsored health care." Register for this free event now >>
The Online Monitoring ToolTM (OMTTM) is a complete compliance toolkit designed to help organizations track the compliance of their operations. Visit our website to learn more about how the OMT can help your organization >>
The way in which you onboard, train and conduct ongoing oversight on your sales agents is critical. GHG created Sales Sentinel™ specifically to meet the needs of health care organizations operating in regulated government markets. Learn more here >>
Every health care organization is looking for improved outcomes, better compliance and enhanced process efficiency when it comes to managing membership and premium payments. GHG's Valencia was designed specifically to meet those needs.
Reading the Stars in Medicare in 2014-2015
Whatever you may think of healthcare.gov, CMS is killing it on the Medicare Star Ratings Quality Demonstration.
As we move into the final year of CMS's historic and controversial $8.5 Billion Quality Demonstration, we see clear evidence that quality incentives are working, plans are making major investments to improve their ratings, and quality is improving across the industry. One thing we can be sure of in uncertain times: proven performance-based payment systems like MA Star Ratings will spread to Medicaid, the exchanges, and commercial accounts in the next 3-4 years under banners of transparency and accountability. $8.5 Billion in a $3 Trillion industry seems infinitesimal, but Stars are moving the industry in ways outsize to their impact.
Many industry experts giggled at the Affordable Care Act ‘s (ACA) provision allowing MA plans to earn up to 5% additional reimbursement from the government for quality metrics based on the CMS star system, and 10% in double bonus (mostly rural) counties. The Star ratings system was, at the time, a laughable ranking barely 2% of beneficiaries paid any attention to. Not anymore. In 3 years, CMS has evolved Stars to an increasingly sophisticated carrot and stick for quality improvement, with massive financial implications for payers.
To date, each half-star rating equated to roughly $50 per member per month in bonus payments. For 2014, we estimate the enrollment weighted-average increase to plan paymentst from Star bonuses is approximately 4.75% and 3.3% in 2015. Anything below 4 Stars in 2015 means no bonus and a major financial headwind for plans. With MA plans seeing roughly 5% margins, 2014 being the worst year of MA reimbursement cuts from the ACA, and 2015 meaning the end of bonuses for plans below 4 Stars, plans are making significant investments to improve their ratings.
There was clear evidence that Stars incentives are working: 52% of MA plans are now at 4 Stars, up from around 37% of all MA plans. The average member weighted ranking for 2013 is 3.86, up from 3.7 in 2012. The biggest chunk of MA enrollment is now in 3.5 Star-rated plans: 30% or 4.4 million. There are now 16 5-Star rated plans up from 3 this year.
While tremendous progress is being made on Stars, GHG's analysis of the data also shows what a long, hard journey these performance metrics present to health plans. We have much improving to do in managing conditions like osteoporosis and mental health, where most plans scored badly. And the data shows a need to continually improve the service model, like providing interpreters, managing member complaints and coverage disputes.
MA plans in qualifying counties, mostly rural, can receive a "double bonus," the payment impact of which is significant. There are about 4 million MA members in double bonus counties, roughly 27% of the total MA population. Double bonus counties add about 100 basis points to payments across the entire MA program.
5-Star rated MA and Prescription Drug-only plans can enroll members year-round in 2014, rather than just during the annual enrollment period. This is a major strategic advantage for Star leaders, but one that few have taken full advantage of yet — and that's about to change. With big nationals finally attaining the honor, they'll be ready and hustling all year.
CMS has been very clear that it reserves the right to terminate MA contracts that are below 3 Stars for 3 consecutive years, citing its authority in an April 2012 final rule which became effective this year. About a half-million Medicare beneficiaries are enrolled in plans with less than 3 stars.
Resources:
Interested in seeing how your Plan's performance compares to others in your market? Download GHG's Star Ratings Database that combines the CMS-issued 2014 Star Ratings with those over the program's history from 2008 on.
Hear from GHG Stars expert Jane Scott on October 29th. GHG and AISHealth team up to present a 90 minute webinar: "Inside the 2014 Star Ratings for MA and Part D: Trends and their implications." Register now >>
Want to hear more from John? Decision-makers from Health Plans and Provider Organizations are invited to join GHG for a free webinar on November 19th: "The future of the Government sponsored health care." Register for this free event now >>
The Shutdown Will Become the Siege of the ObamaCare Teahadists
If you're paying any attention to the worsening drama here in DC, dig in because the calendar is not our friend. With the stalemate over the government shutdown ossifying, the Congress just backed into the debt ceiling, which we'll hit in less than two weeks. Now we're going to need a big deal both reopening the government and raising the debt ceiling to get out of this mess, at the very moment postions are hardening. A few days ago, I thought a shutdown would go on for about a week...now I'm thinking it might be a month, or even longer. And that could have big implications for ObamaCare, Medicare and Medicaid.
The supreme irony of this week has been watching right-wing House Republicans shutdown the government over ObamaCare, on the very day ObamaCare launches and almost crashes because so many Americans want it. There is no clearer evidence of the lunacy of the anti-ObamaCare dead-enders. This shutdown and manufactured budget crisis never had a chance of stopping ObamaCare. It's doubly ironic because as the exchanges launch and stumble, its harshest critics are now trying to figure out what they want.
Compounding failures in stopping ObamaCare, resoundingly negative public opinion, and legislative charades like a string of piecemeal "reopen this favorite monument and federal agency that I voted to close" are strengthening the right's resolve, but for what? One of them, conservative Representative Marlin Stutzman (R-IN) summed it up today: "We're not going to be disrespected. We have to get something out of this. And I don't know what that even is." The fight has become a zero-sum game -- if the Democrats win, Republicans lose -- and it's taken on a life of its own. A moderate Republican, Rep. Michael Grimm (R-NY), said "This is not just about ObamaCare anymore."
Head. Banging.
As the extremists -- let's call them the ObamaCare Teahadists -- about 40 in the House and 15 in the Senate -- move the goalposts, we're backing into the Oct. 17 deadline to raise the $16.7 trillion national debt ceiling. Cold reality set in here in DC today that the shutdown and debt ceiling are now intertwined...and the President has been rock-solid that he will not negotiate on the latter. Preparations are being made to dig in for a long siege. And that has implications for our favorite government-sponsored health programs.
The launch of the ObamaCare exchanges this week were predictably messy. The big story has been the astounding level of interest -- over 7 million unique visitors nationally in three days, more than Southwest Airlines' website gets in a month, over 100,000 phone consultations. Several state-based exchanges like Maryland had to delay full openings. California overestimated its volume, literally, by 900%. New York and a handful of states had isolated reports of right-wing bloggers and commentators urging their followers to clog phone lines and ping exchange websites, literally waging electronic warfare against ObamaCare.
The Department of Health and Human Services furloughed over half its workforce this week but hundreds of CMS staffers are soldiering on, unpaid, trying to get this plane off the ground. Tech glitches with the CMS data hub and holes in healthcare.gov made raw by the volume prevented more than a few thousand applications from being accreted this week. Several former colleagues of mine in the agency acknowledged that eligibility and enrollment vendors signed just weeks ago weren't ready to go, but that there was no moving the start date. "It's going to be weeks of crises and workarounds trying to make this work by January 1, all while we're getting bombed by the Taliban on the Hill," one said.
By next week media attention will turn from high interest to insufficient results of open enrollment, and HHS Secretary Kathleen Sebelius will be forced to play a shell game with her department's budget to reinforce the exchange staff in the middle of a shutdown. One casualty already: the Centers for Disease Control's annual flu vaccination campaign got iced, right on the brink of flu season, with direct implications for Medicare and Medicaid plans. All of this will put more fire in the Teahadists' bellies, entrenching positions further: longer shutdown, longer debt crisis. To whit, as House Speaker John Boehner (R-OH) just said: "With Obamacare proving to be a train wreck, the president's insistence on steamrolling ahead with this flawed program is irresponsible. It's time for the President and Senate Democrats to come to the negotiating table and drop their my-way-or-the-highway approach that gave us this shutdown."
Wooooo-sahhhhh.
This doesn't start to get too ugly for Medicare Advantage, Part D, or Medicaid plans unless this nonsense stretches longer than 30 days. But if we're still at impasse heading into Thanksgiving -- and that is very much a possibility now -- we could be looking at the winter of our discontent in government-sponsored health programs. With a side of Tea.
Resources
Exchange enrollment is a multi-pronged strategy with member outreach and connection embedded within. Driving clinical and quality outcomes is contingent on financial alignment and market segment management. Find out how Gorman Health Group can help you overcome challenges in the Exchanges.
Medicaid health plans must be able to navigate through State and Federal regulations and work well with State agencies.
GHG solutions-based consulting drives results to your Medicaid health plan. Visit our website to learn more about how GHG can help your organization.
Healthy Outlook for Medicare Advantage and Part D from CMS in 2014
Last week amid all the ObamaCare drama on the Hill CMS released the 2014 data for Medicare Advantage (MA) and Prescription Drug Plan (PDP) bids. The numbers show a better-than-expected 2013 and a healthy 2014 ahead for Medicare health plans. The market will see new service areas, lower bids, more zero premium plans, and more mainstreaming of Medicare Advantage as it approaches one-third of the program. CMS noted significant gains on plan quality measures, pointing out that more plans are receiving a rank of four -plus on Star Ratings, the minimum threshold for quality bonuses in 2015 when the quality demonstration expires. Overall there is clear evidence that CMS quality incentives are working, and that MA will continue its steady ~10% growth in 2014.
For MA, there were 35,070 bids for 2014, down 18% from 2013, but when you extract Private Fee-for-Service (graciously in its death throes), HMO/PPO/Special Needs Plan bids were only down 5.7%, and those largely due to consolidation among plan sponsors this year. Medicare health plans continue to wind down PFFS plans 61% year over year, and PDP bids showed similar stability, and evidence of continuing consolidation.
Some of the major points and trends we observed:
Medicare Advantage
- CMS indicates that Medicare Advantage membership will close 2013 with 10% growth, with similar gains expected next year. Three years after passage of the Affordable Care Act, and on the verge of its deepest cuts to MA phasing in in 2014, it's clear plans are adapting and evolving — and that there's no exodus in sight.
- Beneficiaries will have an average of 28 MA plan choices. The average MA national benchmark was around $31, and premiums are expected to increase by $1.64, or 5.3%, over 2013, at $32.60. There are thousands of benefit design changes coming in 2014, like plans adding and eliminating copays and deductibles. So while relative premium stability would suggest less volatility this enrollment season, benefit design changes will force millions of beneficiaries to go shopping this winter.
- As a barometer of the industry's continued health, each of the major publicly-traded MA companies are offering new HMOs in new markets for 2014:
- Humana is expanding its HMOs in PA and OK.
- UnitedHealth is expanding in VA, ME, MA, and NH.
- Aetna/Coventry has new HMOs launching in LA, TX and WV.
- Cigna is expanding in GA, AR, IN, NC and SC.
- WellPoint is expanding in WA, NH, IN, ME and MO.
- WellCare expands its footprint with its recent acquisition of Windsor Health Plans.
Medicare Prescription Drug-only Plans
- A stunning finding in all the clutter, likely the result of the move to preferred pharmacy networks and the effect of increased buying power from consolidation: the cheapest PDP plans available in 2014 are a better buy than in 2013, and have 31% lower premiums than those available in 2010. Unbelievable.
- ObamaCare haters take note: seven years after its launch, Medicare Part D serves as a shining example of how the Federal government can create an insurance market from a green field, regulate the hell out of it, and achieve a tremendous public good at much lower-than-expected cost.
- Channel partnerships have come to define the top of the PDP food chain. Humana now offers the cheapest PDP plan across all 34 regions. The company's Walmart Rx Plan has a monthly premium of $12.60 across every region, and this will be the fourth consecutive year that Humana is eligible for auto-assigns nationwide. UnitedHealth continues to make big gains with its AARP MedicareRx Saver Plus plan.
- WellCare was "most improved bidder", and is now be eligible for auto-assigns in 32 regions, up from 19 this year. Aetna is losing auto-assignment in 5 regions, though none with significant enrollment. These were evidence of clear strategic shifts by new Medicare leadership in both companies: WellCare deeper into the low-income segment, Aetna shifting more upscale.
All in all the CMS bid data shows Medicare health plan vital signs in hale and hearty territory for 2014. It's one ray of light — and should be a beacon for bipartisanship — as ObamaCare anarchy rages on.
Another Pound of Flesh for Government Health Programs This Fall?
With summer drawing to a spectacular close here in Washington, it's abundantly clear that the "train wreck" everyone's expecting won't involve the launch of ObamaCare, but rather an epic legislative pile-up in Congress. With the collision of the debate on Syria, the immigration bill tearing the GOP apart, and now a near-concurrent exhaustion of government funding and the debt ceiling at the end of September/early October, the President and Speaker Boehner will be picking up the pieces of their agendas come Halloween. The question is whether government-sponsored health programs will have to give up another pound of flesh in the process.
Congress returns from summer recess Monday, and it'll be all about Syria, and that will crowd out other Congressional priorities like immigration, continued government funding for the new fiscal year, and the positive bipartisan progress made on the long-awaited "doc fix" for Medicare fee-for-service physician payment rates.
Funding for the government expires on September 30, 2013. You'll recall that earlier this summer, a right-wing cabal led by Senator Ted Cruz (R-TX) threatened to use continued government funding as leverage to defund ObamaCare. While they don't have nearly enough votes in either House or Senate, they made enough noise for Speaker Boehner to try to mollify them. The GOP leadership pitch was "don't shut down the government over ObamaCare, that'll kill us in public opinion. Let's use the debt ceiling as leverage at year-end instead." But now the government is expected to hit the debt limit by mid-October, two months earlier than expected, so the calendar just called Boehner's bluff with his right wing.
All of this will erupt in late September and Boehner will have to punt. We expect a 6-12 week extension of government funding to the latter part of the year, and certainly no "grand bargain" with the President. In the meantime, capital markets will be a panic for months given uncertainty over continuing government operations and US credit ratings. So this whole noisy mess will drag on toward the holidays, right while ObamaCare's exchanges are launching.
While this is happening, the basic outlines of the last budget meltdown, the loathed across-the-board spending cuts called "sequestration," will remain in place. Syria raises the potential that sequestration is eased for the Pentagon so we have plenty of bombs and missiles on hand. Sequestration's cuts to domestic programs, and therefore the impact to Medicare and Medicaid, are likely to remain in place. But the Pentagon will need its pound of flesh, and Medicare and Medicaid are always at risk as the biggest contributors to the deficit. If this happens, we suspect Congress will get it in the form of higher beneficiary out-of-pocket costs like deductibles and physician copays.
The biggest casualty of this legislative train wreck may be the doc pay fix. Congress made significant bipartisan progress on the Medicare physician payment fix of the flawed "sustainable growth rate" formula which will cut 30% in 2014 unless offset. While the cost of a long-term fix was recently reduced (~$150B vs. $300B) and raised hopes for a deal, it will now get thrown into this latest manufactured budget disaster. This is significant for Medicare Advantage because a long-term doc fix means MA rates go up about 6-7%; no fix, no boost. So, ironically, physicians and beneficiaries could end up helping pay for bombs and missiles aimed at Syria, and plans may not get the very positive ripple effect of a doc pay fix. Sigh.
So, our prediction: punts on continued government funding and the debt ceiling until the holidays; a noisy, messy launch of ObamaCare exchanges; panicked global markets as this budgetary kabuki theatre act drags out; and physicians and beneficiaries extorted.
Resources
No matter what delivery system arrangement you currently have, or what course you intend to pursue, GHG can help. Visit out website to learn more.
Gorman Health Group Senior Vice President of Public Policy Jean LeMasurier, summarizes the final rule from CMS regarding exchange functions, eligibility for exemptions, and miscellaneous minimum essential coverage provisions.
Join us on Oct. 1 and hear Gorman Health Group's Chief Sales and Marketing Officer, RaeAnn Grossman, outline the components of a successful risk-adjustment program.
What a Difference a Year Makes
Since the passage of the Medicare Modernization Act, Gorman Health Group has been discussing the value that Medicare Advantage (MA) and Prescription Drug Plans (PDP) offer to both public sector and private sector employers for their Medicare eligible retirees. The value proposition includes FASB/GASB benefits as well as more affordable coverage. A number of employers have moved their retirees to these plans over the last seven years. Some employers contract directly with a MA plan or PDP plan while other employers offer their retirees a choice of plans through a private exchange such as Extend Health. This has been a gradual movement. However, during the last year, the shift has been very dramatic. CMS enrollment data for August 2013 show that employer group enrollment in PDPs was 4.4 million which is more than double the 2 million employer group enrollment in August 2012. Employer group enrollment in MA plans increased to 2.6 million in August 2013 compared to 2.4 million enrollment in August 2012.
One of the drivers of the PDP enrollment has been the repeal of the Retiree Drug Subsidy tax benefits in 2013. The repeal provided an opportunity for private sector employers to review their coverage of retiree drug benefits and many concluded that the PDP was the best choice for both the employer and the retirees. We expect this shift to MA and PDP plans to continue as more employers are moving their retirees to private exchanges. The Wall Street Journal reported on September 9 that Time Warner has joined IBM in shifting retirees to Extend Health which is owned by Towers Watson & Co. to choose a Medicare plan. Extend Health offers MA plans, PDPs and Medigap supplemental plans. According to the Journal, Extend Health has 300 companies that use their private exchange and that one third of these employers joined this year.
Resources
We can help your PDP develop and implement efficient and compliant internal operations and prepare effectively for CMS audits with professional services and unmatched compliance tools. Visit out website to learn more.
Join us on Oct. 1 and hear Gorman Health Group's Chief Sales and Marketing Officer, RaeAnn Grossman, outline the components of a successful risk-adjustment program.
Big News: A Health Care Cost Indicator Went *DOWN*. AGAIN!
The national average bid for Medicare Part D drug coverage is going down, again. Since 2011, the average bid has declined every year. The amount of each year's reduction, compared to the prior year, has ranged from 1.4% in 2011 to 5.8% in 2013. The 2014 decrease of 4.7%, fits the pattern. So why, you ask, is the price of Medicare drug coverage going down? And especially why is it going down at a time when drug plans are being required to fill in more of the coverage gap (aka "donut hole") each year?
First, a detour to discuss the donut hole, the gap between coverage of routine prescriptions and catastrophic coverage: The Affordable Care Act includes a provision that requires Part D plans to fill in the hole for generic drugs, by covering 7% more cost each year, until they cover 75% by 2020. Meanwhile, manufacturers of brand name drugs will offer increasing discounts on their products until the cost of brand drugs for people in the "hole" is only 25% of retail. At that point, coverage in the hole will be equal to coverage before a beneficiary falls into the hole, with beneficiaries paying 25%.
So, all other things being equal, we would expect to see bids increase each year to fund the added cost of this annual 7% increment in coverage in the coverage gap. In addition, the Affordable Care Act imposes a fee on all insurance companies, starting in 2014, to help fund the premium subsidies for low income enrollees. This fee, which is a fixed dollar amount that is pro-rated among insurance companies based on their relative premiums, will fall more lightly on Part D plans, due to their relative low premiums compared with comprehensive health insurance. But it still represents an added cost that one would expect to flow through to the bid.
The logical conclusion, since the average bid went down instead of up, is that all other things are not equal.
Since the average bid was announced, there has been considerable speculation about what's happening. Here's my guess. First, remember that the national average bid is a weighted average, and so reflects the bids submitted by the behemoths of the industry. The small guys' bids essentially don't count. It's logical to conclude that the big guys are continuing to improve their ability to wring more price concessions from both manufacturers and drug chains.
Second it's just possible that medication therapy management (MTM) is beginning to make significant inroads into the cost of total drug therapy. Or, since the bids represent plans' expectations about 2014 costs, it's at least possible that plans expect MTM to make significant inroads.
Third, it's possible that more of the total cost of the program is being transferred to the federal government through the reinsurance payments for catastrophic coverage. More on that in a minute.
And, finally, 2014 is the year that the 85% floor on medical loss ratios goes into effect for Medicare drug plans. If a plan is running a lower loss ratio, it will need to refund money to the government if it carries the low loss ratio into 2014. A low loss ratio is no longer a mark of success. Faced with a potential refund to Uncle Sam, the most profitable plans may have concluded it's better to reduce their premium to achieve the minimum loss ratio floor, and use the lower premium to gain a market place advantage. Of course, if everyone has done this, they are really just avoiding the loss of market share.
Curiously, while the average bid has gone down every year since 2011, the base beneficiary premium has gone up in three out of those four years. The base premium is used to calculate the subsidy payment from Medicare to Part D plans. The subsidy is the average bid minus the base premium. The base premium is 25.5% of the average bid, adjusted to account for the expected payments from Medicare to plans to cover the catastrophic reinsurance segment of the Part D benefit. When a beneficiary exits the donut hole due to cumulative prescription costs above the upper bound of the gap, Medicare pays 80% of any additional drug costs. The calculation of the base premium is adjusted to compensate for these payments, in a way that varies the base premium in proportion with changes in expected catastrophic payments. As these reinsurance payments increase, the base premium increases. That is what we have seen in three of the past four years, meaning that the costs to Medicare of the catastrophic component are going up faster than the average bid is going down. Since Medicare pays 80% of these costs, and plans only pay 15% (members pay the rest), an increase in catastrophic, above-the-donut-hole, claim expenses will be borne disproportionately by Medicare, which would be consistent with slower increases, or absolute decreases, in the average bid. That is, more of the total cost of the benefit package is being shifted to Medicare from the Part D plans due to this catastrophic reinsurance provision. But increasing the base premium reduces the subsidy to the plans, since the subsidy is the average bid less the (higher) base premium.
Whatever is behind this, it's been a trend since 2011, and this year's result shouldn't be surprising in that regard. Three conclusions suggest themselves:
- Part D plans will get paid less because the average bid is less, and because the base premium that is deducted from the average bid is greater;
- It's going to be tougher for small plans to compete with big plans, if the main driver of low bids (and lower subsidies as a result) is better price negotiation due to bigness; and,
- Herb Stein's law will eventually overwhelm whatever else is going on.
Stein's law, which is becoming my favorite response to criticisms of Medicare, and the general ill humor of the governing classes these days, says that "If a thing cannot go on forever, it will stop."
So take heart. And, if you are a Medicare beneficiary, enjoy your lower premium.
Resources
The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult -- to say nothing of actually managing to them. Find out how GHG can help.
In 2013, GHG Forum attendees went on a detailed walk-through of Part D rejected claims including frequency, sampling, data validation and documentation. Learn what CMS was looking for in past audits, and what plans need to do differently when filing 2013 audits.
Navigating through the maze of Part B versus Part D coverage can be difficult. See how GHG Senior Consultant, Sharon Durfee, breaks down the differences between Medicare Part D and B.