Politics Distort Similarities Between RomneyCare, ObamaCare and RyanCare
I was quoted in Monday's New York Times story on the success private plans are having in Medicare, pointing out the similarities between RomneyCare, ObamaCare, and RyanCare -- Paul Ryan's proposal for Medicare reform, now receiving unprecedented scrutiny following his selection as Vice Presidential candidate. When you remove the distortion of election-year politics, it's easy to see the three approaches share the same DNA.
Only in an election year could you see a conservative advance a proposal for Medicare reform with a liberal pedigree and get demagogued for it. The same could be said for Obama -- a liberal advancing health reform with conservative concepts. Consider:
- RyanCare's premium support or vouchers resemble the subsidies of Romney's Massachusetts' health reform and Obama's Affordable Care Act. All three proposals have roots extending to President Clinton's and subsequent bipartisan entitlement reform commissions, as well as to conservative think tanks like the American Enterprise Institute and the Heritage Foundation.
- All three feature a government-regulated insurance exchange, modeled after Medicare Advantage and Part D, as the central marketplace where consumers will choose the coverage that fits best.
- All three feature critical insurance reforms and foster regulated competition among payers and providers at their core. To be clear, Ryan's second Medicare proposal with Senator Ron Wyden (D-OR) features much stronger consumer protections.
Medicare really wasn't a leading issue in the election; now it is with Ryan's selection, especially in senior-heavy swing states like Florida and Pennsylvania. Both camps are jockeying to define the other, with Ryan the Democrat's poster boy for "Medi-Scare" or "Medagoguery" tactics. An honest debate over Medicare is delusional in an election year -- but will be unavoidable in 2013 as the "fiscal cliff" looms and the deficit debate comes to the fore again.
My concern is that Democrats and Republicans will stake out positions during the election cycle that prevent them from having the thoughtful discussion the country needs about Medicare's future next year. We must first agree that Medicare in its current form is unsustainable. The most recent Medicare Trustee's report stated the Part A Trust Fund will be bankrupt in 2024 under a rosy outlook, and we know the program is a major contributor to deficit projections. We can't go on this way.
Ryan-Wyden lays out a carefully considered approach shown to be successful in Medicare Advantage and Part D. Without Ryan-Wyden's kind of structural reform, we have no hope of getting our debt under control. Ryan-Wyden was a significant improvement over "Ryan 1" -- his first, draconian Medicare reform proposal two years ago -- and it shows Wyden's liberal, former Gray Panthers fingerprints. It keeps traditional Medicare as an option, with heavily-regulated competition at its core. Ryan-Wyden is adequately funded whereas Ryan 1 pegged subsidy growth to inflation, which would result in a huge cost shift to beneficiaries. Ryan-Wyden's subsidies are pegged to the second-lowest bid or traditional Medicare, whichever is cheaper. Seniors who choose a plan above the benchmark would pay the difference, just like in Part D. It calls for the formation of a Medicare exchange modeled after www.Medicare.gov, and even adds a new catastrophic benefit, also like in Part D. It is inextricably related to both RomneyCare and ObamaCare.
The fundamental difference between the parties is what we'd do with the savings, and that's what elections are for. My hope is that it doesn't get so nasty that battle lines harden and Ryan-Wyden doesn't get its moment.
Join us Thursday for First in New Webinar series: Risk adjustment in the exchanges
On Thursday July 26th at 1pm ET we'll kick off our new webinar series, "Lessons from Medicare Advantage and Part D", a monthly webinar series around what we've learned in Medicare that can be applied to the exchanges and other aspects of health reform. We'll begin with a deep dive on risk adjustment in the exchanges.
Risk adjustment is the defining health care finance issue of the decade, and MA and Part D represent the largest experiments in risk adjustment on the planet. MA and Part D's risk adjustment system is the blueprint for ACOs, the exchanges, and a growing number of state Medicaid programs as well. We'll explore the risk adjustment provisions in the ACA and the final regulation, and apply what we've learned in the last 7 years to the future of health plan payment, with our partner Dr. Jack McCallum, CEO of GHG sister firm CenseoHealth. Bring your CFO, Chief Strategy Officer, CMO,Chief Marketing Officer, and your actuaries for a geektastic discussion on how to follow the money post-2013. In the coming months we'll examine other reform topics where the Medicare, Part D and Medicaid Dual Eligible experience shines a light: In early September: Distribution In and Around the Exchanges: Lessons from MA and Part D. We'll explore how individuals with subsidies and small groups will be sold the "metal" plans, especially in the Exchanges through Navigators and other impartial facilitators, to the deployment of brokers and sales management. Our focus will be on the Federally-Facilitated Exchange, which could operate in as many as 40 states, with updates on specific states as applicable. In late September: we'll explore the Nuts and Bolts of the Federal Exchange: Lessons from MA and Part D. We'll focus on how the Federal Exchange will function from a 10,000-foot level perspective, where the plan interfaces are and the broad strokes of anticipated reporting requirements. In late October: Product Strategy in the Exchanges: Lessons from MA and Part D. How subsidies will work based on income determinations; a landscape view of where states are on accepting ACA Medicaid expansion dollars in the wake of the SCOTUS ruling. For Red States: what the new "near-Medicaid coverage gap" means in those states that refuse the ACA funds. We'll examine how to segment the market for Platinum, Gold, Silver, and Bronze plans, and the allowability of supplemental insurance products (like dental) in the exchanges. What existing commercial and government programs provider networks mean to product pricing and strategy. The imperative for a database of local individual claims to wargame product designs on. More to come. The scars on our collective backsides in Medicare the last 16 years provide some great "teachable moments" for the new world post-ACA. We look forward to the discussion.
The Supremes Say the Mandate is Constitutional. But Voters Get the Final Word.
Washington's best-kept secret since JFK and Marilyn Monroe came out today: the Supreme Court upheld the individual mandate in the ACA in a 5-4 decision made by Chief Justice John Roberts. The President ducked a bullet in the ruling and comes out strong heading into the election on this issue; the decision will galvanize the right and embolden the left; and Chief Roberts finessed the issue by calling the mandate a tax, avoiding new precedent and getting the Supremes out of the nastiest domestic squabble since Bush v. Gore. But the Supremes didn't get the last word on the ACA: that rests with the voters in November. Making Obama a one-termer is now the GOP's only hope to stop health reform.
The Supremes' decision means reform moves forward without delay. That means most of the 26 Red States that brought the case to the Court, and a handful of others, are now WAY behind in implementation and will likely have the Federal Exchange jammed down their throats in January 2014 for their intransigence. That's the Supreme irony of the case: for all their bitching about a government takeover, that's exactly what those states will get for having done nothing while the case worked its way through the Courts.
The decision also means there is no impact whatsoever to Medicare. The cuts to Medicare Advantage (MA) remain and will continue to be phased in. The Star Ratings bonuses and rebates remain untouched. The new Part D coverage expansions -- the "jelly" in the donut hole -- are as sweet as ever. Accountable Care Organizations (ACOs) move forward. Minimum medical loss ratios (MLRs) take effect in Medicare Advantage in 2014. The coding intensity adjustment in MA remains. The Retiree Drug Subsidy (RDS) continues to phase down by 2016, compelling more employers to push their retirees into MA and Prescription Drug-only Plans. Insurer and provider taxes stay put. And 9 Million Dual Eligibles continue their march into health plans. It's as if the case never happened. And that means, as we've said many times here, it's still all about Star Ratings, Risk Adjustment, and chronic care management as keys to survival in Medicare this decade.
Now the only thing standing in the way of ACA implementation in January 2014 is if Obama is deposed in November and the GOP can get enough votes for "repeal and replace". Republican nominee Mitt Romney -- the original baby-daddy of the individual mandate in Massachusetts -- said he raised over $1M in campaign contributions in the first two hours after the decision came down. Obama will use the decision to try to reboot his health reform message. And the election becomes a referendum on the ACA.
Strap on your crash helmet and hold onto your butt -- the next 4 months will be the nastiest campaign cycle this country has ever seen. But for now, the ACA lives. And if you're in health care, you should be turning cartwheels today.
The Part D Experience: What are the Lessons for Broader Medicare Reform?
The Kaiser Family Foundation sponsored a forum on the Part D program which was enacted in 2003, almost ten years ago. At the time of passage, there were many uncertainties about how the program would fare, e.g. would plans participate, would beneficiaries enroll. The Part D program has had much success in many areas. The following slides highlight the Part D program in 2012 and trends since 2006.
http://www.kff.org/medicare/upload/Overview-of-Medicare-Part-D-in-2012-Slides.pdf
Jack Hoadley summarized the following findings from his Issue Brief "Medicare Part D Spending Trends: Understanding Key Drivers and the Role of Competition" http://www.kff.org/medicare/upload/8308.pdf
• Part D enrollment is significantly below projected levels — Enrollment is 73 percent in 2012 which is below the projected enrollment of 87 percent. (Note — this includes RDS enrollees). 10 percent of beneficiaries have no equivalent coverage and are assumed to have made a decision not to enroll or are not aware of their drug coverage options.
• Benefit costs are lower than projected — Part D spending is 68 percent of the projected costs. This is due to a variety of factors including the shift to generics, lower overall drug pricing trends, slower drug pipelines, lower enrollment, impact of competition and informed consumer shopping.
• Generic drugs — Generic drug use increased from 60 percent to 75 percent thus significantly impacting lower program costs.
• MA-PD enrollment is higher and premiums are lower than PDPs — MA-PD premiums are lower than PDPs even after taking into account the use of savings from the medical side.
• Average utilization has increased however this is consistent with projections.
• Rebates have been higher than expectations but there is no publicly available information on the trends.
• There is evidence that competition has influenced Part D spending — The Part D market is robust (national average of 31 plans although there has been some consolidation) and bidding has affected premiums and availability of low income subsidies. However over half of enrollment is concentrated in a five plans and. Consumer tools have improved over the course of the program and have influenced plan selection, however only six percent of beneficiaries switch plans from year to year.
Jim Capretta emphasized the remarkable success of Part D in controlling costs especially when factoring in MA-PD premiums which result in an overall Part D average premium of $30 and average increase of $1 per year. Karen Ignagni mentioned high consumer satisfaction with Part D plans and plan tools to manage costs such as tiering, Medication Therapy Management and utilization management. Ignagni also reported that Part D plans are working with specialty societies on clinical pathways to assist with bundling and management of chronic diseases. Marilyn Moon pointed out that reinsurance, risk adjustment and risk corridors have reduced the risk for insurance companies in Part D thus ensuring plan participation.
Panelists noted that the Part D program has several lessons for Medicare reform and discussion of premium support models. Jim Capretta stated that while there is more complexity on the medical side than on the drug side, that Part D should provide lessons in who should do what, for example, the plans are better at negotiating drug prices and avoiding the FFS problems when the government regulates prices. He also noted that the government has been effective in overseeing the marketplace. Marilyn Moon noted that Part D has more controls and protections than are being discussed in the premium support models, that much of the Part D success has been in riding the generic wave, and that MA subsidies will be going away. Ignagni noted that MA plans are doing better in controlling diabetes and preventing readmissions. Jack Hoadley observed that the plan finder would be much more complicated when adding cost sharing and quality information on medical services.
Times Are A-Changin'...Get Your Team to the GHG Forum June 12-13
In response to client requests, GHG is holding its first-ever Client Forum June 12-13 in Washington. With so much change in the air in government programs, the Forum is the perfect opportunity to get your team focused on the road ahead.
This isn't a disjointed lineup of vendors selling from the podium like at your usual industry conference: the presenters are all GHG's elite subject-matter experts, and the agenda is designed to be a silo-busting deep dive for government programs executive teams, with downtime built-in to allow you and your team to process and plan ahead. If you want answers, this is your gathering.
Change is a constant in the government programs world, and most of the folks who call us for help are those who are too busy these days to do anything but react. We have a motto at GHG: you can't react your way to excellence. Take two days to join us, bring your team leaders, and learn about how to get ahead of what's coming.
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.
Good to Know
Usually CMS leaves us wondering about the benchmark that they have in mind for plans to achieve. But the latest 2013 Draft Call Letter left little to the imagination.
It states, "We expected more Part D beneficiaries would be eligible for MTM following changes to the eligibility criteria requirements in 2010. However, the eligibility rate has remained at 10 to 13% since 2006. We are concerned that the Part D sponsors are restricting their MTM eligibility criteria to limit the number and percent of beneficiaries who qualify for these programs and are required to be offered CMRs."
By reading the tea leaves, one can surmise that CMS thinks a ten to thirteen percent (10%-13%) MTM eligibility rate is not high enough. CMS is further adding the percentage of Comprehensive Medication Reviews as a Part D star measure and adding Alzheimer's and End Stage Renal Disease with dialysis as chronic conditions. There is a required MTM format now and increased emphasis on increased contact with members to get them to agree to a Comprehensive Medication Review.
When considering Medication Therapy Management program criteria to be submitted (due May 7, 2012), organizations should consider expanding the program criteria so that more members are eligible and requiring their MTM vendor or their internal staff providers to get the Comprehensive Medication Review numbers way up. This time CMS has given us a good look at where the bar is.
Don't waste your travel budget
We're less than three months from the GHG Forum. This is NOT your usual conference. We've developed a unique educational retreat for management teams working in government programs. I'm thrilled at the presentations our faculty are preparing: we're putting our senior consultants on the stage to deliver case studies, war stories and tales of best practices. But just as importantly, we're building in time for you to react to these sessions with your team--- to develop questions for your track faculty, compare notes, discuss implementing the best practices you've learned about.
We know it's a new concept in an industry that's become accustomed to sales people masquerading as subject matter experts. But we think that's it's badly needed. Many management teams we work with bemoan the lack of time and space to learn, collaborate and plan for success. In this environment, it's easy to simply react. But no one has ever reacted their way to excellence.
No doubt, if you send one to two people they will benefit individually. But isn't the isolation of our departments from each other central to our basic challenge of reforming our plans? We invite you to join other plans (some are sending as many as a dozen attendees) in making the GHG Forum your travel investment for the year. Send a team. We'll show you around.
More Good News for Medicare Advantage in 2013 Rate Announcement
CMS released the 45-Day Notice of CY 2013 Medicare Advantage (MA) rates after the market close on Friday, and while it's the usual hot mess of green-eyeshade factors that comprise payment, it brought unexpectedly positive news for the industry. If it holds up in the final rate announcement on April 2, it will represent the largest increase in payments to plans in 4 years. Here's a brief rundown of what's hot, what's not, and what to watch in the runup to the final rates.
HOT
- The weighted average rate increase for 2013 is 2.47%, net likely flat. Most Wall Street analysts expected a cut of 2-4% in 2013. Again, this represents the largest increase in payments to MA plans in 4 years.
- CMS maintained the risk adjustment coding intensity adjustment at 3.41%, for the third consecutive year. 2013 will be the last year CMS can offer this concession -- the ACA mandates that coding intensity increase to 4.71% in 2014, and then by at least 25 basis points/year 2015-2018, bringing it to at least 5.7% by 2019. There is no incremental impact on 2013 rates, and plans get an extra year to get their risk adjustment houses in order before the pain starts.
- CMS made no mention of Risk Adjustment Data Validation (RADV) audits, which have been looming large over the plans for the past 3 years and remain a prominent source of revenue recoveries in the President's last two budget proposals.
- The fee-for-service normalization factor, which adjusts for upward trend in risk scores in MA vs. FFS, was a big positive for 2013. It usually rises or falls by 1-2% a year, and in most years it increases. For 2013, CMS is dropping the FFS normalization factor by almost 5 points, boosting 2013 rates by around 150 basis points.
- CMS's general tone toward the industry was decidedly more positive, as it was last year. CMS noted that the proposed annual growth rate "will sustain a strong Medicare Advantage landscape for 2013," and highlighted that enrollment increased roughly 10% in the last year. I guess once you top 25% enrollment in Medicare the agency has to show you some love.
- Star Ratings quality bonuses and rebates remain a key source of revenue boosts for high performing plans, which helps to offset the cuts to MA in health reform. Bonuses will increase in 2014 for plans with ratings of 3.5-4.5 Stars. We estimate that Star bonuses will increase payment by more than 4% in 2012 and around 25 basis points in 2013, as MA plans' overall Star rating increased to 3.56 stars, up 0.11 Stars year-over-year.
- CMS is also rebasing MA county rates for 2013. Historically this is usually a good thing for the plans (though CMS notes it could hurt a little next year). CMS is required to undertake this exercise every 3 years, and the consensus among many Wall Street analysts is that rebasing will add approximately 60 basis points to the 2013 rates.
- The "Doc Fix": In the past, CMS has insisted on basing its trends on the law in force at the time they made the projection. The doc fix on the books for 2/17/2012, the date of this advance notice, only extends through 2/29. The new doc fix, through 12/31, hasn't been signed into law yet. So our guess is that the advance notice doesn't include a catch up correction for a doc fix for the remainder of 2012. The fact that CMS didn't hold a conference call makes us think they didn't want to discuss the matter until the bill is signed. If we're right, we'll see a higher trend and higher rates in the final notice on April 2, when an additional 10 months of higher doctors' fees is factored in.
- Sequestration: the 2% cut to Medicare from the failure of the not-so-Super-Committee is the law of the land as of today, so CMS should have included that in their trending -- and we still came out ahead.
NOT
- CMS is updating and recalibrating the HCC (risk adjustmetnt) system for Medicare Advantage for the first time since 2009. The current HCC model for Medicare Advantage has 70 HCCs, a decrease of 7 from 2011. Our best guess of the impact of the HCC changes will cut 2013 rates by 125 basis points on average. Some
diseases will pay better and some will pay worse after recalibration, which could have a significant impact on some plans. CMS is looking for a better way to calculate the coefficients, one that is not so sensitive to
plans' activities to improve coding accuracy and completeness. One thing they are looking at is the impact when plans target a specific subset of members for prospective evaluations.
WHAT TO WATCH
- Repeal of sequestration before April would, presumably, result in a higher 2013 trend -- but that ain't gonna happen in an election year. Wait for something in the lame duck session after the election, when Congress has to deal with sequestration, the expiration of the Bush tax cuts, the expiration of the payroll tax holiday and the 2012 doc fix. Should look like a cross between cage fighting and smash-mouth hockey. If sequestration is repealed, it will show up as a correction to the 2014 rates.
All in all, a very positive development for our favorite program, considering the Age of Austerity we live in.
CMS to Part D Plans: "Curb Use of Antipsychotics in Nursing Home Patients"
Medicare Sponsors' are failing to monitor the safe utilization of antipsychotic drugs among the elderly. CMS is stepping up its warnings to Medicare Plans to implement more effective management of these drugs. Plans can expect increased scrutiny. Will your plan meet the standard?
Patrick Conway, Chief Medical Officer and Director for the CMS Office of Clinical Standards and Quality, told lawmakers that Medicare officials need to do more to stop doctors from prescribing powerful psychiatric medications to nursing home patients with dementia, an unapproved practice that has flourished despite repeated government warnings.
The antipsychotic medications are prescribed to treat people suffering from schizophrenia and bipolar disorder, but they're also given to hundreds of thousands of elderly nursing home patients in the US to pacify aggressive behavior related to dementia. These medications increase the risk of death in seniors, prompting the Food and Drug Administration to issue multiple warnings against prescribing the drugs for dementia.
Medicare improperly paid about $116 million in the first half of 2007 for prescriptions filled in nursing homes for a class of drugs called atypical anti-psychotics, Daniel Levinson told the Senate Committee on Aging in a hearing. Nursing homes should be held accountable for inappropriately dispensing antipsychotic medications for Medicare beneficiaries and pay back the Part D program for those misused medicines.
Since the beginning of the Medicare Part D program, CMS regulations have instructed Part D sponsors to implement cost-effective drug utilization management processes to monitor and control for both under- and over-utilization §423.153(b). However, controls currently in place to address overutilization are largely limited to claim-level edits do not seem to effectively address the type of overutilization.
On September 28, 2011, CMS issued a bulletin entitled "Improving Drug Utilization Review Controls in Part D" stating that CMS expects Part D Sponsors to implement an enhanced retrospective drug utilization review process in which sponsors (and/or their PBM) of opioids, antiretrovirals, and atypical antipsychotics, by:
- Establishing clinical upper thresholds for appropriate dosing consistent with clinical guidelines through sponsor Pharmacy and Therapeutics (P&T) committees.
- Creating and monitoring beneficiary-level utilization reports that could identify unusual patterns of drug use at or near the established clinical thresholds;
- Assigning clinical staff, such as case managers, to review these reports and the beneficiaries‟ medication histories, and determine whether interventions are warranted;
- Address any exception requests through the exceptions and appeal processes.
CMS has provided a roadmap to step up monitoring activity. Plans will face increased scrutiny by CMS for meaningful Drug Utilization Management (DUM) systems both concurrently and retrospectively to ensure appropriate use of antipsychotic drugs.