The Market is Working in Part D (Just Like it Will in ObamaCare)
We've always maintained that Medicare Part D is one of the most successful market-based experiments this country has ever attempted, and that it provides the playbook for ObamaCare's health insurance exchanges. There's further evidence out today of the FACT that the government is capable of creating an insurance market from a green field, regulating the hell out of it, and achieving an enormously popular social good.
WaPo reported today that the average monthly premium for Medicare prescription drug plans will creep up by $1 next year, to $31. Average Part D premiums have held steady at around $30 a month for the past 3 years. We'd agree with CMS's assessment that the negligible increase means competition among drug plans is holding down costs, even as benefits have improved for seniors with high prescription bills. It's a dynamic that will become familiar in the exchanges in a few years.
But there's more: last year 7 out of the top 10 plans raised their 2013 premiums by double-digit percentages -- which means that by aggressively shopping, and by some 5,000-6,000 Baby Boomers aging into Medicare daily with low drug utilization, seniors helped keep the average premium from going up more than a buck. That speaks to the growing maturity of the Part D market now 7 years in operation (such as the shift coming in 2014 to "preferred" pharmacy networks), the availability of real consumer information to make good choices, and the improving sophistication of beneficiaries in making them.
Seniors have learned in these seven years some important but subtle tenets of plan selection, many of which are transferable to the exchanges. First is, the monthly premium isn't the whole story. Many seniors, especially those who take several drugs for chronic conditions, have learned that the best values for them often aren't the low-premium plans but rather those with drug formularies and benefit designs that don't penalize them for their health status in out-of-pocket costs.
Example:
- XYZ Health Plan offers a $20/month Part D program, but with a very tight "Tier 1" formulary with few drugs at lowest cost sharing (say, a $5 copay here) and the most common drugs for seniors on Tier 2 with a $25 copay.
- ABC Health Plan charges $40/month for its drug plan, but its Tier 1 covers most oral insulins, statins and cardiac therapies for a $5 copay.
- Therefore, the typical Medicare beneficiary taking one or more of those drugs gets a much better deal from ABC when total out-of-pocket costs are considered.
- Sure, XYZ plan's monthly premium is a fraction of ABC's ($240/year vs. $480/year), but that "savings" is wiped out by higher copays: three drugs on XYZ's Tier 2 gets you copays of $75/month or $900/year. At ABC, those same three drugs are $15/month or $180/year. So, interestingly, the 3-drug senior saves $480/year by joining the higher-premium plan.
I'm willing to bet that we're seeing mid-60's Boomers skew toward the low-premium plans as many aren't yet using multiple drug therapies and are unconcerned by tighter pharmacy networks; and older, sicker beneficiaries beginning to look to higher-premium plans with more generous formularies and cost-sharing. This kind of consumer sophistication takes a few years to take hold in a new insurance market. But it's exactly the kind of purchasing behavior we'll be seeing in the exchanges in 2014 and beyond.
The Part D experience shows how important it will be to bring the "bro's" and the "young invincibles" into the exchanges early to spread risk and help suppress premium growth, and how tight provider networks of high performers impact pricing. It also shows how wildly popular ObamaCare will be after what promises to be a rough first year of implementation and consumers finding their way through the confusion and white noise from the opposition.
Resources
In 2013, GHG Forum attendees went on a detailed walk-through of Part D rejected claims including frequency, sampling, data validation and documentation.
GHG Founder and Executive Chairman John Gorman addressed the critical issues issuers must address before the launch of the Exchanges at the 2013 GHG Forum. Click here to download the recording.
Join us on August 13 and hear GHG's Chief Development Officer, Aaron Eaton, and Independence Blue Cross' Senior Vice President of Health Care Reform Implementation, John Janney, walk through an operational readiness checklist to help make sure your health plan is ready to go live on October. 1.
Cost Sharing in Medicare
The Alliance for Health Reform held a meeting on "Streamlining Cost Sharing in Medicare: The Impact on Beneficiaries" on July 22, 2013 which focused on a number of proposals to modernize Medicare benefits. The Medicare benefit package has not been updated since 1965 and it needs streamlining and improving. Medicare Advantage has already updated many cost sharing features, for example charging co-payments rather than coinsurance for many services and charging a single predictable premium that covers Medicare cost sharing for Parts A, B, and D and supplemental coverage. Medicare Advantage plans also have an out of pocket maximum that protects beneficiaries from catastrophic costs. My colleague Bill McBain recently discussed "Medicare Essential" which was developed by the Commonwealth Fund and would combine Medicare Parts A, B and D into a single premium plan run by the government unlike Medicare Advantage which is offered by private plans. The Bipartisan Policy Center (BPC) has developed its own proposal to modernize Medicare Fee For Service benefits beginning in 2016. The BPC proposal would build on some of the reforms already offered by MA plans and recommended by CBO and MedPAC including a unified Part A and B deductible and an out of pocket spending cap. The BPC proposal includes a catastrophic cap of $5,300, a single $500 deductible and a simplified copayment structure. To provide incentives for primary care, the BPC proposal would not apply the deductible to physician office visits. The BPC proposal would also provide new federal subsidies for beneficiaries between 100 — 150 percent of the FPL. The BPC plan would prohibit all supplemental plans including Medigap, employer coverage, FEHBP and Tricare for Life from providing first dollar coverage.
All of the proposals under discussion would cause major restructuring in the Medigap industry. The impact on Medicare Advantage would depend on the details. MA plans have successfully competed against high cost Medigap policies because beneficiaries realize significant cost savings and have greater protection from catastrophic costs. The BPC proposal is not that different from the cost sharing structures that many MA plans offer today. It is hard to imagine that the BPC's proposed new subsidies for low income beneficiaries would not be extended to low income beneficiaries enrolled in MA plans. MA's value proposition compared to Medigap might not be as strong if the expensive first dollar coverage Medigap policies were eliminated but MA delivery system reforms should continue to give MA plans a competitive advantage.
Resources
Join us on August 8 to get practical advice on the best ways of getting into the MA market from GHG's Chief Development Officer, Aaron Eaton, Senior Vice President of Finance, William A. MacBain, and Senior Director of Compliance Solutions, Regan Pennypacker.
On June 14th at the 2013 GHG Forum, William MacBain presented on the future of Medicare and ways to combat its projected increase in per capita spending in the next two decades. View the recording here.
Leavitt's Take on ObamaCare Mirroring Medicare Part D
Former UT Governor and Bush HHS Secretary Mike Leavitt had a terrific op-ed recently in the Washington Post examining similarities and differences between the launch of ObamaCare's health insurance exchanges and implementation of Medicare Part D in 2006. As always, Mike's insights are on-point and a rare constructive voice from the right on how to actually improve the program's takeoff.
Leavitt says at one point, "I'm not hoping for a wreck. That outcome would hurt ordinary people, not just politicians." That's a bold statement from a GOPer these days. When was the last time you heard an elected Republican official say anything other than "wreck and repeal" about ObamaCare? To the point, the Post had another piece on how many House Republicans, like Reps. Tim Huelskamp and Jason Chaffetz, have said flatly they will deny any assistance to constituents who call their offices looking for assistance with the law. So from that standpoint Mike offers a fresh perspective that will hopefully change some minds in the lower chamber and maybe a few statehouses.
Mike points out the extensive parallels between ObamaCare and the launch of Part D. Both were the result of fierce fights on the Hill and involved the creation of a heavily-regulated insurance market from a green field. Both suffer from an uninformed public and heavy opposition. Both involve data exchange on eligibility and enrollment that are enormously complex. The team writing the ObamaCare regulations are mostly folks from the Medicare Advantage and Part D offices of CMS, and they're building a system based on that experience. But the similarities end there, and Leavitt offers some insights into how the Administration can avoid the "train wreck" we've been hearing about is coming.
Leavitt is right that the challenge of a misinformed public and insufficient education and outreach is enormous: "With the ACA's initial enrollment period three months away, 78 percent of Americans lack awareness about the law and the changes it will bring. Four in 10 don't even know the law is set to take effect." He then details the PR effort he engaged in on Part D as HHS Secretary. But he's understating things here. The education push on ObamaCare will be hampered by unprecedented political opposition at both state and Federal levels:
- At the Federal level, Congress barely appropriated 10% of the Administration's request for Navigators, the impartial enrollment counselors, and are fighting all agencies who intend to help -- like the Education Department distributing brochures through libraries. The kinds of PR activities Mike engaged in as Secretary to support the Part D rollout would earn Secretary Kathleen Sebelius a Congressional subpoena today.
- At the state level, remember, the states were bought in on Part D as it shifted their Medicaid drug spend for dual eligibles to Medicare with only a maintenance of effort. Roughly half the states have rejected the ObamaCare Medicaid expansion and refused to build their own health insurance exchanges. Many of those states are actively resisting any participation in outreach or education.
So from the standpoint of public awareness, this is a huge difference between ObamaCare and Part D and it has a lot to do with the blind opposition of Leavitt's own party.
Next, Leavitt speaks to technology breakdowns and subsidy errors, pointing out rightly that the successful launch of ObamaCare is dependent in part on the "data hub" that will connect and transfer eligibility and enrollment data among health plans and several Federal and state agencies. He's correct on this point, too, but again, doesn't go far enough in illustrating the challenge.
CMS's own data systems to manage Part D and their interaction with the plans' systems created a hot mess that persisted through much of 2006. It was the seemingly-simple-but-insanely-complex task of getting "the pig through the python" of health plan enrollment shops, where people and processes got overwhelmed and applications piled up or got pushed through with human errors. The result was months of confusion and work-arounds as seniors arrived at pharmacies and couldn't access their benefits. This was after a year's worth of training camp in 2005 we called the Medicare discount drug card that served as a bridge to the "real" Part D.
ObamaCare's launch will be much more complex and therefore more prone to benefit-denying errors. There's no training camp for the exchanges. The eligibility and enrollment process is much more complex than Part D given the income tests that determine the amount of your subsidy and the number of agencies involved. And remember: Part D is a benefit; you qualify, pick a plan, get a member card, and most seniors opted to have their premiums deducted from their Social Security checks. The exchanges are all about the subsidy, which determines which plan you can afford. If CMS gets the subsidy wrong, it's a confidence-sucking hassle, and they couldn't try to claw that money back from low-income beneficiaries. And the workaround for those who don't have bank accounts to push the subsidy into makes your head spin. Every quandary will have a human story -- and right-wing media and social outlets like Twitter barely registered in 2006. In 2014 the news cycle and online vitriol will make each tragic story seem pervasive -- and the resulting "white noise" will get in the way of the outreach and education effort.
Finally Leavitt closes with advising ObamaCare policymakers to assume full responsibility for the mess to come. He recalled a briefing he gave to Senate Finance members on status of the Part D rollout. He spoke candidly about challenges and the Administration's plans to fix them, by when -- "candor bought us time," he says. This time around, candor will buy you a subpoena and endless finger-wagging from the talking heads.
Mike Leavitt is one of my favorite Republicans, but my friend dropped a whopper at the conclusion of his otherwise excellent op-ed: "The ACA reflects the belief that government should play a much bigger role in making our health-care decisions, while the drafters and implementers of Part D held the view that government's role in health care should be limited to organizing a system of competition, where consumers are empowered to make choices and are protected from unfair treatment."
Sorry, Mike, but the exchanges emerged from the conservative Heritage Foundation as just that: a system of regulated competition, modeled after Part D. I don't see a much bigger role for the government in making our healthcare decisions in ObamaCare, just a much bigger undertaking with a Presidency at stake.
Resources
The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult. Visit our website to find out how GHG can help.
GHG's Founder and Executive Chairman John Gorman addresses the critical issues issuers must address before the launch of the Exchanges in this recording from the 2013 GHG Forum, June 13-14 in Washington, DC.
Join us on August 13 and hear GHG's Chief Development Officer, Aaron Eaton, and Independence Blue Cross' Senior Vice President of Health Care Reform Implementation, John Janney, walk through an operational readiness checklist to help make sure your health plan is ready to go live on October. 1.
The ObamaCare Enrollment Push Begins
So we're less than 100 days away from the official launch of outreach and marketing for the new Health Insurance Exchanges, and the enrollment push began in earnest this weekend. It's happening in the face of some tremendous headwinds unlike anything seen since the launch of Medicare Part D in 2006, maybe ever. The Medicare drug benefit' s takeoff didn't have to contend with furious political opposition at both state and Federal levels, a horribly misinformed public, and the demographic challenges of ObamaCare.
Enroll America, the Obama-driven leftie coalition that's tasked with pushing enrollment in the exchanges, kicked off its boots-on-the-ground effort last week. Enroll America President Anne Filipic told POLITICO today that the first week went well as the group tried to change the conversation from politics to benefits. They had 1,000 volunteers out, 1,000 on a strategy call, 78 events in 25 states (they expected to do 50 in week one), and knocked on 3,200 doors. Not a bad start for a group that sprung from Obama's legendary campaign ground operation.
Changing the debate from politics to benefits is no small task for the pro-ObamaCare forces in the field. Health and Human Services Secretary Kathleen Sebelius has been getting slammed for her fundraising calls on behalf of Enroll America to industry stakeholders like insurance companies. Last week 28 GOP senators sent a letter to HHS Secretary Kathleen Sebelius asking her to "immediately stop" fundraising for Enroll America until she has answered more questions about it.
Then Sebelius called all the professional sports leagues last week to seek their help in outreach to potential ObamaCare beneficiaries this fall -- and Congressional Republicans wailed again. Senator Minority Leader Mitch McConnell (R-KY) and Senator John Cornyn (R-TX) wrote "Given the divisiveness and persistent unpopularity of the health care [law], it is difficult to understand why an organization like yours would risk damaging its inclusive and apolitical brand by lending its name to its promotion," in letters sent to the commissioners of the NFL, MLB, NBA, NHL, PGA and NASCAR. It appears most if not all of professional sports will not participate. It's too bad -- I loved the speculation of what the ads might look like.
All of this is of course happening against a backdrop of a terribly misinformed public, especially among uninsured prospective ObamaCare beneficiaries. An April Kaiser health tracking poll found 42% of Americans are unaware that the Affordable Care Act (ACA) is still the law of the land, including 12% who believe the law has been repealed by Congress, 7% who believe it has been overturned by the Supreme Court, and 23% who don't know whether or not the ACA remains law. And about half the public says they do not have enough information about the health reform law to understand how it will impact their own family, a share that rises among the uninsured and low-income households.
The biggest problem the ObamaCare rollout faces, though, is demographic. First, many ObamaCare eligibles are low-income, and not necessarily English-speaking. They may not see or understand ads on English TV channels this fall, and they'll need different messaging, outreach and hand-on counseling at the kitchen table. And with Congress literally appropriating 10% of what the Administration requested for insurance Navigators to help the uninsured through the enrollment process, and literally dozens of Red State governors in opposition and of no help on the ground, that's a tall order for Year One. CuidadoDeSalud.gov is getting a makeover this summer, and HHS announced it has opened its 24/7 call center, which is supposed to be able to handle millions of consumers' questions in 150 languages.
Second, the viability of the exchanges rests on risk selection, and that means if we don't get the "young invincibles" and the "bro's" to sign up to offset the risk of the sick uninsured we know will flock to the program, we'll fall into a rate-setting death spiral. The Administration is looking for 7 million enrollees in Year One, including 2.7 million young adults. And there's actually some encouraging news here: Kaiser's poll found more than 70% of those under 30 said that having health insurance is "very important," something they need, and that it's worth the money. Overall, just a quarter of those ages 18-30 feel they are healthy enough to go without insurance. Doesn't necessarily mean assured enrollment, but it is a ray of hope through all the white noise.
Things are sure to get Presidential campaign-level crazy right after Labor Day, when the Administration is convinced folks will start paying attention. Expect a blizzard of pro and con communications across every medium imaginable, and millions of confused uninsured consumers in between.
Resources
Read Gorman Health Group's recap of the 2013 GHG Forum, which includes details regarding preparing for the health insurance exchanges. This free download is available on the Point.
Listen to a GHG podcast from GHG's Executive Vice President Steve Balcerzak regarding the unbanked and the uninsured, and the implications this population will have on ACA enrollment. This podcast is freely available on the Point.
GHG policy expert Jean LeMasurier provides an overview of key takeaways from CMS' proposed rule that establishes financial integrity and oversight standards for Health Insurance Marketplaces, QHPs in FFMs, and states that operate risk adjustment and reinsurance programs. This regulatory summary is available to members of the Point.
Lessons from Part D for ACA Implementation
It was interesting to hear Mike Leavitt and Mark McClellan compare their experiences in launching the Medicare Part D program in 2005 and 2006 to the challenges facing HHS and CMS in launching the new Health Insurance Marketplaces at a recent Brookings Institution forum. There are so many parallels and yet important differences. The lessons from Part D are also discussed in a new report from Georgetown's Center on Health Insurance Reform funded by the Robert Wood Johnson Foundation.
Several of the parallels include:
- Outreach and Education Challenges — HHS began a public education campaign 15 months in advance of the Part D program including over 500,000 events and a bus tour by the Secretary and HHS officials. However at the start of enrollment 80 percent of beneficiaries reported they would not enroll or were uncertain about enrolling. 100 days before the Marketplace open enrollment period, HHS is just beginning its outreach program and they are using successful techniques from the Part D program, e.g. extensive use of partnerships and local events conducted by Regional Offices. However, funding for the ACA educational efforts is limited, timing is shorter, and HHS does not have a list of the target population for the individual marketplaces since they do not currently have insurance. Social media offers a shortcut to reaching a key target audience, the 18 — 35 year olds, who are essential to keep premiums affordable. However the challenge will be the messaging. HHS is hopeful that they will be able to build a culture of coverage with the offer of access to an insurance card for the first time and the encouragement from Mom.
- Public Skepticism — The lack of public support for health care reform has been consistently documented by the Kaiser Family Foundation surveys. However the recent discussions remind us that public opinion was actually less favorable for Part D where only 21 percent of beneficiaries had a favorable opinion in April 2005 compared to 35 percent with a favorable opinion of the ACA in April 2013. Mike Leavitt observed that now the sides supporting the change have reversed. A big difference in Part D was that the penalties for not enrolling carried on forever, thus spurring last minute enrollment. The ACA penalties are comparatively smaller and will not provide the same incentive. That will mean that we will need a longer window to assess ACA performance as enrollment continues to grow over a multiple year period.
- Plan Participation and Costs — CMS officials worried that stand alone drug plans that did not exist in the private markets in 2005 would not sign up to participate in Part D. There was also controversy about the cost and affordability of the premiums. It turned out that there probably too many choices under Part D and costs came in below projections. There are similar worries about plan participation in the Marketplaces. CMS reports that 120 plans applied to the Federal Marketplace, however participation in the state marketplaces is more uneven and particularly low in the SHOPs with no plans in the Mississippi SHOP and only 1 plan in the North Carolina SHOP. Most of the plan premiums have not been released, however early reports suggest that there will be variation by marketplace and the number of competitors. A study of 9 states by Avalere shows rates lower than CBO predicted. However, we have also read about an average 25 percent increase for plans in Maryland. HHS will post final rates in the FFM in September, although some states may release final rates in late summer.
- Market Readiness — Despite short timeframes, CMS was ready for enrollment in November of 2005, but we all remember the anecdotal stories of beneficiaries who showed up at pharmacies on January 1 unable to get their drugs. Fortunately, the states came to the rescue and the glitches were ironed out over time. The same concerns about operational readiness face the implementation of the ACA where the number of potential enrollees is higher, the systems more complicated and the subsidies more complex. The longer enrollment period will provide more time to iron out any problems. However, most states will not be willing or able to jump in if the federal roll-out stumbles.
Resources
Listen as Whitney St. Jean, Chief Administration Officer of Gorman Health Group, outlines the components of a successful go-to-market strategy for MA plan sponsors and their partners.
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.
Gorman health group can help position you for the challenges—and opportunities—posed by health reform, designing a strategy that takes into account your service area, market environment, core competencies, and vision of the future, click here to find out how.
Humana's CEO on Implementing ObamaCare
Reuters got a nice scoop with Humana CEO Bruce Broussard, who took over from the legendary Mike McAllister in January, with an interview on their approach to implementation of ObamaCare in less than 100 days. It was good enough to reprint in full below. A couple impressions:
- Broussard points out how much the industry wants the launch of ObamaCare to NOT fail. Congressional Republicans could take a lesson: the time for foaming-at-the-mouth opposition is over -- it's time to roll up our sleeves and make this thing work for the good of the country.
- The comparisons to the launch of Medicare Part D, which Humana dominated with United, are appropos. There will be mass confusion and disruption in the system as outreach and marketing begin in October. There will be horror stories of administrative meltdowns keeping sick people from benefits. But it will work itself out in the latter half of 2014 and will become immensely popular. Let's just hope an eligibility screwup doesn't kill someone next year -- the media frenzy will be fueled by the reporters' credo to "afflict the comfortable and comfort the afflicted," and there's nothing more afflicted than a sick American thwarted by governmental or corporate ineptitude.
- Humana was brilliant is deploying its veterans of the Medicare Advantage and Part D wars earlier this decade to the front lines of ObamaCare. The similarities between the programs are stunning and the company is way ahead of most of its competitors by leveraging their own vast experience. Most plans made the mistake of thinking "individual = commercial" when it came to product strategy; the reality is that the exchanges will much more closely resemble government business, with much sicker enrollees and more administratively complex systems to reconcile.
- Note Humana's retail strategy at the conclusion of the interview. That's the same playbook that won the day on Part D: "wallpaper" presence in places like WalMart. It'll have the same result in the 14 states they're chasing exchange business in.
Humana's CEO on the massive undertaking of health reform
By Caroline Humer
(Reuters) - Bruce Broussard took over as chief executive of Humana Inc in January, just in time to steer the health insurer's entry onto the health insurance exchanges created by President Barack Obama's reform law.
Humana plans to sell subsidized insurance plans in 14 states, including Arizona, Colorado, Florida and Kentucky, where it is based, about the same number of states as rivals like WellPoint Inc and Aetna Inc.
The exchanges are expected to bring in 7 million people in 2014. Insurers must offer plans to any individual who applies, regardless of prior health problems. The government will provide subsidies to people who earn up to 400 percent of the federal poverty level, or $94,200 for a family of four.
Humana already has experience with government healthcare programs - it has more than 2.5 million members in privately administered Medicare Advantage plans for the elderly. It also manages Medicare pharmacy benefits for more than 3 million people.
Here is a discussion that Reuters had with Broussard this week on the effort to roll out "Obamacare":
Q: What has proven harder than you thought about the development of the exchanges?
A: This is a massive project. A number of months ago the industry met with the president and he made the comment this is probably the largest healthcare project since the Truman-Kennedy era, and he is right. We are taking on a very, very large project and so there are a lot of details that the states and the federal government are working on. It's keeping up with those and being able to implement them where they are already behind schedule, and trying to keep up so that we do fulfill the needs of the public promise that has been made.
Our challenge right now is it is moving so quickly, keeping up with it and being able to assist the state and federal governments for it to be successful because I think the last thing we want is for it not to be successful. So we are dedicated to helping it. But the details are coming out and they are coming out as quickly as the federal government can get them out.
Q: What did you think about the recent U.S. Government Accountability Office report that said some states are behind?
A: I'm not going to take a different stance than the GAO. I'll just say in general there are a lot of details and everyone is working hard to get this done. The industry is working hard, the states are working hard, the federal government is working hard, but this is a big task that's been taken on and I'm sure details will be get lost in the process just because of the size and the enormous effort that is required here.
Q: When consumers decide on which plan to purchase, would you expect that access to certain doctors and hospitals will play a large role?
A: It's going to be interesting. This is where price and choice are going to come at a crossroads here. I think a more cost-effective product is going to have less choice. It is a test. Most of our products are going to be narrow networks and limited providers because we feel that is the best way we can offer a product that is going to be cost-effective.
Q: How else can consumers judge the value of these products?
A: This isn't much different from (Medicare) Part D and Medicare Advantage when it came out in 2005. There was a lot of confusion around what it meant and there was a lot of time being spent on educating both around choices and options and subsidies to the type of plan.
As we look over the coming number of months, we look at that as a responsibility that we have in educating in the 14 states we will be in. We are going to take our market point sales group that today also handles the Medicare Advantage program, we are going to expand that and they will be an active part of the individual exchange. So we are going to have people on the ground helping people.
We also believe in having relationships where people are in their normal course of life, so retail chains are an important part of that. So not only are we going to have people go to their homes, but in addition we are working with partners with retail outlets so we can staff individuals where it is convenient to a potential member to incorporate in their life.
Q: Do you mean grocery stores and pharmacies?
A: Yes, that's right.
(Reporting by Caroline Humer; Editing by Michele Gershberg and Douglas Royalty)
Resources
Gorman health group can help position you for the challenges--and opportunities--posed by health reform, designing a strategy that takes into account your service area, market environment, core competencies, and vision of the future, click here to find out how.
Listen to a three-part podcast series where GHG Executive Chairman, John Gorman discusses the Importance of a Readiness Checklist for the Exchanges for Sales Marketing Enrollment and Risk Adjustment.
Visit our website to learn more about how Gorman Health Group can help support your Medicare Advantage goals.
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.
Drugs and Patient Safety - the Disconnect
The recent Washington Post piece published May 11, 2013, on the prescription drug dangers for Medicare patients raises some interesting points about the current prescribing habits of some outlier physicians/prescribers, as well as the lack of a coordinated effort to exclude those same prescribers from participating in Medicare.
The use of atypical antipsychotics (identified by CMS as protected class drugs) in the elderly is particularly troubling in light of numerous studies and a FDA Black Box Warning which states in part "Elderly patients with dementia-related psychosis treated with atypical antipsychotic drugs are at an increased risk of death compared to placebo. Although the causes of death were varied in clinical trials, most of the deaths appeared to be either cardiovascular (e.g. heart failure, sudden death) or infectious (e.g. pneumonia) in nature." Those with family in Long Term Care facilities or those working in LTC settings know that the staffing model is dependent on quiet, non-disruptive patients—unfortunately atypical antipsychotic medications are often used to ensure that scenario.
The High Risk Medication list or revised Beers criteria is one of the Part D performance or Star measures. Part D sponsors have been fairly successful in the past couple of years at deleting these drugs from the formulary or adding a CMS approved prior authorization edit for > 65 years old. Has this completely eradicated the use of drugs like carisoprodol (Soma) or cyclobenzaprine (Flexeril)? No, but physicians do have to provide a medical necessity explanation or describe why the benefit of using the drug outweighs the risk.
More troubling and potentially in most need of action is the inability to exclude those "prescription mill" physicians/prescribers from participating in Medicare. The data available to plan sponsors listing the highest volume opiate prescribers is actionable information. Where documented, proven and egregious prescribing behavior is found, State Board, Medicaid and Medicare exclusion should be a logical outcome and the best route to enhanced patient safety.
Resources:
Senior Consultant, Pharmacy Services, Roxanne Spalding dives deep into the barriers to medication adherence, for both providers and health systems, and outlines varied multi-faceted strategies to overcome them in this white paper.
Learn how GHG can help your MAPD or PDP develop and implement efficient and compliant internal operations and prepare effectively for CMS audits with professional services and unmatched compliance tools.
Gorman Health Group can help you develop unique and adaptable management programs for use across the many departments managing components of your Star Rating, visit our website to learn how.
Medicare Essential — Is this the future of Medicare?
According to The Hill's Elise Viebeck President Obama is receptive to combining Medicare Part A (in-patient hospital) and Part B (outpatient and doctor) deductibles, into a single deductible just like every other insurance scheme in the US. Predictably those to his left complained, maybe because Virginia's Eric Cantor also likes the idea. The impact would raise the deductible for people who use only physician services, lower it for anyone who is hospitalized, and, net, save Medicare money by shifting more costs to beneficiaries. However, some of the savings would also be used to add an annual out-of-pocket cap on what beneficiaries would have to spend. This is good insurance logic: don't cover relatively low cost, predictable expenses. Focus coverage on protecting beneficiaries from catastrophic loss.
The combined deductible idea is echoed in a recent article in Health Affairs that proposes unification of Parts A and B, and Part D drug benefits. The Health Affairs article also proposes reducing beneficiary cost sharing to levels comparable to Medicare Advantage plans, eliminating the need for Medicare Supplemental coverage. The new Medicare plan, called Medicare Essential, would become the default for people who qualify for Medicare for the first time. New Medicare beneficiaries could opt out and take old traditional Medicare, and go buy their own Part D and Medicare Supplement plans, or they could buy Medicare Advantage plans. Medicare Essential would have a much higher premium than Medicare Part B, but the authors of the article claim that the overall cost would be less than Part B plus Part D plus the full-coverage Medicare Supplement Plan F that most seniors select. So proponents could argue that the added cost of the increased premium is a bargain and that people could always opt out and avoid the higher cost if they wanted to. Medicare Essentials could show significant savings by avoiding the broker commissions that add to the cost of Medicare Supplemental and Medicare Advantage plans. Whether the new program would be able to achieve the supposed 2% administrative cost ratio sometimes claimed for Medicare is highly suspect, but elimination of the need to re-process claims to pay Supplement benefits, along with simplification of coverage rules overall, would probably yield some further efficiencies.
This proposal could significantly change the dynamics of the Medicare market place. For starters, Medicare Supplemental plans would be in trouble. Who would opt to pay more for similar coverage when you are already enrolled in a less expensive plan? Also, it's not clear whether Part D plans would survive for long if Medicare Essential provides the same drug coverage. The effect on Medicare Advantage is less obvious, but Essential would certainly put pressure on Advantage premiums, since the benefits would be comparable.
For those who want to speculate further, imagine a competitive marketplace along the lines of Paul Ryan's plan, but with Medicare Advantage plans competing with Medicare Essential. In the competitive market, the federal subsidy would equal the premium of the second cheapest plan in each market, and the current benchmark approach would go away. Beneficiaries choosing a more expensive product, whether Medicare Advantage or Medicare Essential, would pay the difference. People who pick the cheapest plan get a check for the difference.
Oh, and one more thing. Medicare Essential benefits would be more generous for services provided by preferred providers, just like a PPO benefit design.
This is something to watch. The Health Affairs article, available to subscribers, or to others for a fee, is titled "Medicare Essential: An Option to Promote Better Care and Curb Spending Growth," in the May 2013 edition.
Resources
Attend the 2013 GHG Forum June 13-14 in Washington, DC to hear more about Medicare's Future and what it means for Medicare Advantage.
Visit our website to learn how Gorman Health Group can help support your Medicare Advantage goals.
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.
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.