The 2015 Medicare Advantage Final Call Letter = Unicorn Rainbow Farts
The Center for Medicare and Medicaid Services' (CMS) release of the final 2015 Call Letter for Medicare Advantage (MA) Monday after the close was a "unicorns farting rainbows" moment. Unicorn rainbow farts bring happiness and joy to all those that observe them, and then dissipate quickly. After a beating at the hands of the ever-more powerful insurance lobby for another draconian draft released in February, CMS reversed itself yet again and proclaimed a 0.4% increase in MA benchmarks. Lobbyists and Wall Street analysts rejoiced...only to find after a closer look that there are some nasty hooks in the pie CMS put on the windowsill.
We've tried for days to replicate CMS' math to get to a 0.4% increase, and can't, because it's vapor, magical horse methane. The truth is, we're looking at an average cut of at least 3% for MA next year, and our logic follows below:
Others agree: DeutscheBank says -3.5%; Morgan Stanley projects -3.1%, Bank of America says -3.3%. And that ushers in a two-year march in the desert for Medicare plans following the 6% hit they took in 2014. There will be wide variation among plans, with lesser negative impact for plans which can continue to bid below the benchmarks.
The trends by themselves cut the benchmarks a lot, to the tune of almost 8%. And there's a ripple effect there, on Star ratings of all things: the -4% trend on the old benchmarks lowers the ceiling, and the effect is to truncate Stars bonuses in almost half of US counties. Ironically, high-performing plans take a hit, especially in double bonus counties, in this final rate announcement.
CMS's second consecutive reversal of its proposed ban on diagnostic codes for risk adjustment from home visits was a huge win for the industry, and as we see it, the one ray of light in the final call letter. CMS delayed the change until 2016, and that delay makes up for most of the impact of the negative trends in the benchmarks. But this isn't an equal across the board fix. Given that the FFS normalization factor places a 4% multiple on every point of a plan's risk adjustment factor (RAF) score, plans have an even greater incentive to identify and document every diagnosis that maps to an HCC.
This is further amplified by the decision to roll back the phase in of the new HCCs. On average, the new HCC scores would cut about 2.6% out of MA plans' payments. In 2014, CMS is blending new and old HCCs, with new scores given a 0.75 weight. For 2015, they are rolling that back to a 0.33 weight. That's worth 109 basis points by our calculation. So, compared to 2014, one RAF point is worth 1.05 points in 2015. Given the deferral of the home risk assessment rule for at least another year, plans should be doing home visits intensively this year, and working to evolve their programs to be more clinically meaningful, e.g., a care plan for every diagnostic code submitted from a home visit, and making the house call into more of a "mobile medical home" including mobile labs, imaging and drug therapy counseling.
CMS also makes clear in the final call letter that Medicare Advantage plans ranked 3 Stars or less for 3 consecutive years will be nonrenewed. This means termination notices could be going out as early as August given plans have to execute 2015 contracts with the agency in September, before the Annual Enrollment Period. Many plans will choose to nonrenew rather than be publicly shut down by CMS for poor quality. Dozens of plans are now dead men walking, including several of the publicly-traded Medicaid plans and several Blue Cross/Blue Shield organizations. So in a matter of weeks, a Hunger Games-style "reaping" will occur that will change the face of this industry.
So the long walk in the desert for Medicare Advantage begins. Forward-looking plans will prepare by ramping up their risk adjustment operations, ensuring their Stars programs have the resources they need to keep scores moving up, revisiting their service models, and working daily on closer collaboration with their provider networks.
Resources
On April 11 GHG Comments on the Final Rate Announcement in a webinar hosted by Gorman Health Group Founder and Executive Chairman John Gorman, financial expert and former health plan CFO, Bill MacBain, and former regulator and industry-renowned policy expert Jean LeMasurier. Register for the webinar >>
Listen in as John Gorman shares his reactions to the 2015 Final Call Letter from CMS. He covers the implications of the final rates, as well as what the pull back on risk adjustment means to MA plans this year, and beyond. Click here to download the podcast >>
Join Gorman Health Group May 1 — 2 at the Red Rock Casino and Resort in Las Vegas for the 2014 GHG Forum. This two-day event builds on the success of past GHG Forums and is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population. Register now >>
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 >>
2015 Medicare Advantage Draft Rate Notice is a Bear: Messy, Noisy, and Smells Like Roadkill
Friday after the close of business, CMS released the draft 2015 "call letter", the rate announcement for Medicare Advantage. As expected, it's a bear: messy, noisy, and smells like roadkill. It's just about a worst-case scenario for flabby, distracted, uncommitted health plans in Medicare -- the roadkill to come. The table is now heavily tilted against low performers who can't keep up. Some topline observations:
- The benchmark calculations were anticipated and about as rough as they could be under the Affordable Care Act. Having said that, for the "glass half-full" types, the average MA benchmark is still 103.4% of Medicare fee-for-service expense. In the 1990's under the old AAPCC methodology, all plans got 95% of fee-for-service, and plenty of plans were profitable -- and that was before risk adjustment and Stars. We knew the Bush party was over. It's time to get over it and push forward because the only way out now is through.
- The Star Ratings quality demonstration is officially over, and those plans below 4 Stars are now leaving a blood trail in the snow. After this year, as required under the ACA, all plans above 4 Stars will get a 5% bonus, while those below get nothing.
- CMS makes it clear in the call letter that it will terminate sub-3-Star plans for three consecutive years at the end of 2014. The reaping is coming in a few short months.
- The demo's conclusion is a grave wound for 3.5 Star plans, who just missed the threshold and take an additional 3.5% cut for added misery.
- At the same time, CMS made a big move to remove Stars as a barrier to market entry for new plans, especially those spawned by high-performing veteran organizations. A new plan starts out with a 3.5 Star rating now -- and will receive the 3.5% bonus; a new plan born of a veteran MA organization gets a weighted average of all its other plans. It's a welcome mat for Stars heroes like Kaiser, Providence, and CIGNA to expand to new markets, especially those with weak competition.
- The risk adjustment provisions were very tough, but leave significant maneuvering room for sophisticated plans to adapt their much-maligned home visits into a mobile medical home model that closes gaps in care for the chronically ill.
- It's the beginnings of good policy but not there yet, and CMS is giving the industry an opportunity to shape it. We should not fight this policy change and should embrace the dialogue.
- The home is the most underutilized source of care for frail elders, and risk adjustment must be much more than a data collection exercise.
- While we got some hidden rate relief in a slightly favorable FFS normalization factor, we only anticipate 300 bps improvement on average, but for those flabby plans who can't keep up, the impact will be much less.
Our estimate is that the average MA plan will experience a real cut in payment of -4.9% if the draft is finalized in April. This includes a rough estimate of the impact of the new risk adjustment rules, and the average impact of the end of the Stars demo.
If this rate announcement is enacted, it's survivable for the adaptable and the high performers -- like the old adage about walking in the woods with a friend when you get chased by a bear, you just have to outrun the other guy. There is no question the 2015 call letter is an evolutionary event and some inferior species will be eliminated.
Want to know more? Watch this space for tons of additional resources from the veteran Gorman team.
Resources
Sign up for a Free GHG web account and receive an alert when GHG's summary of the draft 2015 "call letter" is available.
Join us on Thursday, February 27 to hear financial expert and former health plan CFO, Bill MacBain, and former regulator and industry-renowned policy expert Jean LeMasurier review critical take aways from the CMS Advance Notice, and what MA plans should prepare for in the next 45 days. Register >>
John Gorman featured in Wall Street Journal article "Government Proposes Cuts to Insurers' Medicare Payments." Click here to read more.
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 >>
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.
John Gorman Comments on CMS Proposed Rate Cuts in Modern Healthcare Magazine
CMS is scheduled to release initial guidance on Medicare Advantage (MA) rates for 2015 that insurers have estimated could reduce payments by as much as 7 percent next year. Insurers say cuts of that magnitude could cause premium increases and benefit reductions that could severely impact seniors.
In a recent article featured in Modern Healthcare Magazine regarding proposed MA rates, Paul Demko, provides insight into the scheduled release and interviewed Gorman Health Group's Executive Chairman, John Gorman, on what is likely to happen when CMS releases proposed cuts later this week.
Create a free Modern Healthcare web account and read the full article here,
Resources
Join Gorman Health Group financial expert and former health plan CFO, Bill MacBain, and former regulator and industry-renowned policy expert Jean LeMasurier for a 60 minute webinar presentation on February 27. Bill and Jean will review critical take aways from the CMS Advance Notice, and what Medicare Advantage Plans should prepare for in the next 45 days. Register now.
A recording of the webinar is now available on the "Financial Impacts of Growth and Attrition." Gain insight into the significant gains and losses health plan leaders need to account for when formulating their strategy in response to enrollment fluctuations. View the recording now.
ObamaCare's Winners and Losers -- Consumer Edition
I got my start in DC some 23 years ago as a reporter, and the profession's credo is always to "afflict the comfortable and comfort the afflicted." ObamaCare is the story of a lifetime for enterprising journalists, and the really poignant anecdotes that can shape and move public opinion -- and therefore politics -- are just beginning. Small stories will go viral in the echo chamber of 24-hour news cycles and social media in the coming weeks as enrollment and coverage begins in earnest. Here's how these very personal stories of what ObamaCare means to consumers will break down.
University of Michigan professor and senior Brookings fellow Justin Wolfers created a chart depicting the "winners and losers" under the Affordable Care Act, sourced to a Ryan Lizza article that used estimates from M.I.T. economist Jon Gruber, a former adviser to Mitt Romney.
The chart shows how the GOP and ObamaCare dead-enders have pumped up media coverage of the relatively small number of Americans whose substandard individual market plans were cancelled. It also shows how many Americans are unaffected by health reform. But it's not without its problems and does manage to oversimplify things, but as a visual processor, I appreciate this stuff.
You could say the biggest losers under ObamaCare are patients with expensive medical conditions who don't qualify for the just-extended state high risk pools and whose current plans have been canceled, and who are having trouble getting through HealthCare.Gov to purchase coverage by Dec. 23 -- the deadline for buying insurance that begins January 1. WaPo had a good piece with some gut-punching anecdotes here: ObamaCare losers who have given up hope. The best you can hope for in first quarter of 2014 is that vulnerable patients don't die because of an administrative screw-up or lapse in coverage. Those are the kinds of anecdotes that could become serious liabilities for the President, and it'd only take a few to shatter what little public or political confidence in ObamaCare still exists.
Other losers include those with lower incomes who live in states that decided not to expand their Medicaid programs. The Advisory Board looked at which states will have the most uninsured in 2016. Being uninsured but too poor for exchange subsidies in a state that refuses to expand Medicaid, or being an undocumented immigrant and ineligible for ObamaCare benefits, means you lose out.
ObamaCare's consumer winners thus far include the "bro's" and young invincibles who can now remain on their parents' health plans until age 26; consumers with serious pre-existing conditions who have been denied health insurance; and residents of states that opted to expand their Medicaid programs up to 138% of the federal poverty level. Anecdotes abound here too, from across the country, like these from Nebraska:
Obamacare will benefit retired Windstream Manager John Gapp, who now pays $1,375 a month for a plan available through his former employer that covers him and his wife. The premium is high because he pays both company and employee shares. Gapp, who isn't yet 65 and eligible for Medicare, wasn't able to get less expensive private health insurance last year because of a pre-existing condition -- a mild heart attack in 2012. He hasn't signed up for an ACA policy yet, but he has done some online window shopping. Because Gapp's income is less than 400 percent above the federal poverty level, he will qualify for some subsidy and likely will pay $580 to $800 less per month, depending on the plan he chooses. Without the subsidy, his insurance premiums under ACA plans would be similar to what he's now paying, $100 less for one plan and $125 more for a so-called Cadillac plan that has better benefits than the one he has now.
Lori Schwartz will pay $200 less a month for a better insurance plan under Obamacare, because insurers no longer can charge people more or deny coverage because of pre-existing conditions. Schwartz, who has diabetes, has been buying insurance under a state program for people who couldn't get health insurance on the private market. She was paying more than $750 for a policy with a $5,000 deductible. Her husband, Mark, recently signed her up online for an ACA-approved plan that will cost $526 a month, even with no tax subsidy. And it is a much better plan, with a $1,500 deductible, she says.
There will be plenty of ammunition in the coming weeks for both sides of ObamaCare. The trick for issuers is to ensure you're not the one plastered across your hometown paper or Twitter by a wipeout in your enrollment department this month.
Resources
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.
Aaron Eaton, Chief Development Officer at Gorman Health Group, discusses the latest announcement from CMS related to payment process changes for the Health Insurance Marketplace. Access the podcast >>
In this recorded presentation Gorman Health Group strategy and data analysis experts discuss actual case studies that show how plans can mine data for precious insight that can help improve performance.
Zombies in Washington!
Zombie: (a) a will-less and speechless human only capable of automatic movement who is held to have died and been reanimated. (b) The Sustainable Growth Rate.
By means of the Balanced Budget Act of 1997, Congress created the Sustainable Growth Rate, or "SGR" to us who know and love it, a will-less and speechless rule whose automatic movement seeks to annually wreak havoc with Medicare payments to physicians. This inane auto-pilot tries to link total physician payments under Medicare to the growth rate in the overall economy. Why Medicare physician payments, as distinct from other Medicare payments, should grow in lock step with all of the other, unrelated, components of the nation's economy, has never been stated. What has often been stated is the fact that Congress, in what passes for its collective wisdom, wishes with all of its collective heart that it could drive a stake through the heart of the SGR. Every year it threatens to cut physician payment rates by 20% or more. But the Congressional Budget Office, who is charged with calculating the cost of such things, finds that ridding us of this zombie would have a ten-year cost of $139 billion (with a "b"). And that assumes that the docs get a pay freeze for those ten years. Any raises would up the cost.
In another mindless act, Congress requires itself to offset new spending with an equal amount of either tax increases or other spending cuts, or some combination. Since it's impossible to get a majority of both houses to support either (a) tax increases in the house or (b) payment cuts in the Senate, nothing can happen, and the SGR lives on, annually "fixed" by kicking the can down the road a year, only to arise reanimated the following year.
Some observers of the optimistic persuasion believed that, maybe this time, the SGR might have met its match. We have a conference committee meeting to reconcile differences between House and Senate budget proposals, and maybe, just maybe, they would include a permanent fix to the SGR in their bargain. Any dreams of a grand bargain have long ago died, but there lingered the hope for a mini-bargain that might include the SGR. That hope is now dead, as time has essentially run out for a fix before the SGR kicks in January 1, 2014. The best one can hope for now is a repeat of the annual can-down-the-road kicking exercise.
What does this mean for Medicare Advantage? Well, actually, not much. Until this year's political pressure enlightened the calculation of the annual increase to Medicare Advantage plans, the SGR had a depressing impact on Medicare payments to private plans. Until this year, CMS had always assumed that the SGR's pay cuts would actually happen. They calculated payments to Medicare plans accordingly. When Congress did the inevitable, and postponed the SGR cuts by a year, CMS corrected the following year's payments, but by then, the SGR was back and cutting more. So, over time, payments to Medicare Advantage lagged more and more as they continued to be included in the calculation and only fixed a year later. However, the 2014 rates, for the first time, include the assumption that Congress will do what it has done the past eleven years, and fix the SGR cuts, at least for one year. The rates were increased accordingly. Maybe you didn't notice, since the SGR impact was offset by other cumulative corrections that decreased rates to make up for prior year miscalculations and overpayments. But the SGR is now gone from Medicare Advantage benchmark calculations.
So, as long as Congress keeps fixing the SGR one year at a time, there will be no impact on Medicare Advantage rates. The fix is already baked into the rates. And a permanent doc fix will also have no impact.
But the SGR is still an annoyance. Nobody wants it. Nobody expects it to ever save Medicare a dime. Everybody knows Congress will fix it one year at a time. Yet every member of Congress knows that to approve a permanent doc fix without offsetting taxes or cuts will be branded a "budget buster" by opponents, super-PACS, and tax exempt social welfare organizations all too eager to educate us on the evils of whoever is running against the incumbent. And tax increases or cuts to Medicare will provide even more fodder for election season TV commercials. So it lives on. And on.
Resources
Listen as GHG expert Bill MacBain dives in to what the Sustainable Growth Rate is, why it matters and how we can measure its impact. Access the podcast >>
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 >>
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 >>
Much Progress on Healthcare.gov, But "Back End" Fixes Will Determine Success
Of the many, many things I gave thanks for last week, there was Jeffrey Zients, the White House management guru brought in to sort out the mess that is the launch of ObamaCare, and for his geek squad working feverishly on the fixes. His long-awaited progress report was released on Sunday, and it's amazingly sanguine for a government document. Knowing big IT projects as we do, it's impressive how far the fix team has gotten in a matter of weeks, much of it in consumer-facing functionality on the "front end" of the website and the enrollment process. What remains to be seen is what can be done this month on the crucial "back end" functions that connect to insurance companies participating in the exchanges -- the functions for which ObamaCare will ultimately be judged when coverage kicks off on January 1, and the true test for Mr. Zients and his geeks.
"HealthCare.Gov on December 1 is night and day from where it was on October 1," Zients told reporters in his victory lap Sunday morning. "While we still have work to do, we've made significant progress with HealthCare.gov working for the vast majority of consumers." The administration released some geek speak to make its case. Response times, capacity, and system stability are markedly improved, and conventional wisdom is that the consumer-facing functionality -- the "B to C" part -- is in much better shape.
It's the "B to B" piece that's still a problem. The metrics Zients released Sunday focused almost exclusively on the front end of healthcare.gov -- there were precious few details on the back end, specifically on the all-important "834" transmissions to insurers that tell them who's signed up, and which have been problem-plagued since the launch. You'll recall that last month Henry Chao, who oversaw healthcare.gov's technical development, said 30-40% of the back end functions remained to be completed, including a system to send payments to insurers. Without timely and accurate 834s from the Federal data hub, coverage can't be effectuated, members can't get their insurance cards, insurers can't get paid, and claims can't start flowing through the system for the uninsured.
The omission was glaring, and the Administration jumped in to address it. White House spokesman Jay Carney said that 834 fixes were ongoing but that the problems were "vastly improved." "We believe that the majority of fixes to the 834 forms have been made, including significant ones over the weekend," Carney said. "We're going to continue to work with issuers to make sure that the remaining problems for issuers will be fixed."
"A number of the fixes that went into place this weekend in particular will significantly address some of the highest priority things that we know were a particular concern with those transaction forms," said Julie Bataille, spokeswoman for CMS.
But there's still clearly a very long way to go. Administration officials and a new "Payer Exchange Performance Team," made up of insurance industry leaders, in a meeting on Monday acknowledged that about one-third of completed applications since Oct. 1 contain errors generated by healthcare.gov. The errors included failure to notify insurers about new customers; duplicate enrollments or cancellation notices for the same person; incorrect information about family members; and miscalculated federal subsidies. It's still bad enough that yesterday CMS recommended that consumers who choose a health plan through HealthCare.gov contact the insurer afterward to make certain they are actually enrolled. "Consumers should absolutely call their selected plan and confirm that they have paid their first month's premium, and coverage will be available Jan. 1," Bataille said.
There is no margin for error this month. Deadlines for enrollment are coming up in less than 2 weeks for people to get insured by Jan. 1. If the 834s can't be fixed by then, and it appears likely they won't, the next big barrier to enrollment is the ACA's requirement that eligible exchange customers pay their first month premium before they receive coverage. Without clean 834s, susbidy verification and calculations given to the plans, no one knows what the first month's premium will be. That may be the next "audible" to be called on the field: the Administration will seek a way around the premium payment requirement, and then ask insurers to take a leap of faith, issue coverage, and hope that premiums and subsidies catch up later. And that's a real problem that strikes at cash flow for many of the smaller, regional players in the exchanges, and especially for start-ups, like the ACA's co-ops. Nobody set aside contingency funds for this kind of headache.
So Mr. Zients and his geeks can't let any grass grow under their feet, and we all ought to spill some Starbuck's or Red Bull for what lies ahead for them. But to also give some perspective, a hat tip to Dr. J. Mario Molina, CEO of Molina Healthcare: "A few people are going to have data that's not correct; but compared to the tens of millions of people who don't have coverage right now, that's a minor problem." He's thrilled with the progress made, and points out "We process a couple million patients through our system the last week of the month as it is."
Whether you're a glass half-empty or full type of person, I think we can all agree we are looking at one wild and hairy enrollment reconciliation process in Q1 and 2 of 2014, so grab your shovels. There's a pony in here somewhere.
Resources
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 >>
Gorman Health Group's Valencia, was designed to create workflows organizations need for critical operational functions, and give you insight into where your membership and premium-related data is out of sync. See how Valencia can revolutionize your capitation management >>
Medicare Advantage Showcased as the Model for Medicare Reform
The National Coalition on Health Care (a nonprofit organization representing 80 organizations who support comprehensive health system change) and the Partnership for the Future of Medicare (a bipartisan organization supporting the long-term security of Medicare) have a new lobbying message — don't kill the golden goose. Recognizing the upcoming budget battles this year and next, these organizations presented their lobbying strategy which will feature Medicare Advantage plans as the model for a sustainable Medicare program. John Rother from the National Coalition, Lanhee Chen from Stanford University, and Ken Thorpe from Emory University highlighted the innovations in Medicare Advantage plans that should serve as the model for reforming Medicare fee-for-service. These innovative programs focus on beneficiaries with multiple chronic conditions that drive Medicare costs and include care coordination, disease management, team-based care, transitional care, medication management, prevention, health coaching, and evidence based lifestyle programs. They argued that Medicare Advantage plans are already facing a 6.7 percent payment reduction in 2014 and that any further cuts will lead to threats to these innovative initiatives that should be encouraged and not penalized. They discussed research studies showing that MA plans had higher quality scores in 9 of 11 HEDIS measures compared to FFS, 13 — 20 percent lower readmission rates, lower hospital costs including a spillover effect to the overall health system in areas with high MA enrollment, and lower mortality rates.
Dr. Ken Thorpe and Senators Ron Wyden and John Isakson discussed their upcoming initiatives to pursue introducing successful MA innovations in FFS Medicare. Dr. Thorpe is supporting a program he calls "Medicare Integrate" that would build prevention and care coordination into original Medicare. Under this program, CMS would contract with health plans, home health agencies and other entities to provide to provide team-based diabetes prevention services, care coordination services and pharmacotherapy services to FFS Medicare beneficiaries. These services would be provided at no cost to beneficiaries. The bipartisan chronic disease legislation being developed by Senators Wyden and Isakson would also authorize Medicare to pay for teams to provide care coordination services for FFS beneficiaries with chronic conditions.
Although Senator Wyden estimates that his proposal will result in 5 — 10 percent savings to Medicare in the current budgetary climate, it will be difficult to enact a new Medicare benefit without a structure such as an ACO or medical home to produce offsetting savings. While some demonstration projects adding care coordination services to FFS Medicare have achieved savings, other demonstrations have not achieved savings and resulted in CBO scores of higher costs to Medicare.
Resources
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. Click here to register >>
What's next for the ACA
Here we are on November 15th one day after President Obama unexpectedly delayed a key provision of the Affordable Care Act, which allows insurance companies to continue, for one year, offering health care plans that fall short of the requirements as outlined in the ACA . The next day our "stewards of national well being" elected to pass a bill in the House of Representatives which is intended to allow insurance companies to sell individual health coverage to anyone who wants it, irrespective of any required standards in the ACA. As expected, the vote was justified on the grounds that the House is concerned that people will be left without health insurance under the current law, no consideration at all, wink wink , was given to 2014 reelection concerns.
Although the measure is expected to fail in the Senate, the underlying issue remains - that partisanship continues to prevent any attempts to take a more reasoned approach to bolster what is good about the ACA and to work out solutions on what is not working.
I think most of us already agree that the ACA or ObamaCare will be a major election topic as it was in 2012. In the meantime we will continue to see repeated efforts to roll back any and all provisions of the law.
What gets lost in all of the machinations by Congress and our Executive Branch is that not much has changed. We still have 40 plus million people uninsured, we still have the elderly making choices between buying food or prescriptions, and we still have lots of false or misleading information published on a daily basis about the intended impact of the ACA.
Personally, I believe the effort was flawed from the beginning but what's done is done and although I may be a lone voice in the wind, I believe it is the responsibility of Congress, consumers and health professionals to stop sniping and start working on how we make the ACA as successful as can be. If that requires changes along the way so be it. What we don't need is continued political posturing. In many respects our future is at stake depending on how we move forward..
Resources
Gorman Health Group Senior Vice President of Public Policy Jean LeMasurier, summarizes the final rule that sets standards for refunds when a Marketplace or QHP improperly applies federal subsidies or incorrectly assigns an enrollee to a plan. Download the summary here >>