Policy & Health Reform | GHG Advisors

The Effect of the New Part B Drug Payment Proposal on Medicare Advantage and Part D

It's no secret drug costs have skyrocketed in the past decade, and drug payment policymakers face an uphill battle in figuring out how to curb this exponential growth. The Centers for Medicare & Medicaid Services (CMS) has already taken a beating on its proposal to test a new alternative payment design to pay for drugs covered under Medicare Part B, calling into question whether this new methodology will go through looking anything like originally proposed. Part B spending is just a fraction of drug spending in Medicare, covering the drugs administered by a physician or hospital outpatient department. A major question for our industry is what effect this new proposal will have on Medicare Advantage (MA) and Part D plans if implemented.

Part B spending on drugs has increased annually by 7.7% since 2005. Currently, most Medicare Part B drugs are paid using the Average Sales Price (ASP) plus a statutorily mandated 6% add-on. This creates an incentive to prescribe more expensive drugs due to the higher payment amount. Under the new model, Medicare Part B would pay the ASP plus an add-on of 2.5% and a flat fee of $16 per drug per day. The lower add-on and inclusion of the flat fee would decrease the incentive to provide more expensive drugs as the revenue for the drugs would be more evenly distributed. CMS will then roll out the second part of the experiment in which they will test several other pricing methodologies currently utilized by commercial health plans and pharmacy benefit managers, such as discounting or eliminating cost-sharing, providing feedback on prescribing patterns and decision support tools, basing pricing on a drug's clinical effectiveness, and setting benchmarks for a group of therapeutically similar drug products.

The industry was quick to respond, arguing the proposal will lower incentives to give beneficiaries access to vital drugs due to the cost, leading to a reduction in patient outcome as well as patient satisfaction. Some physician groups threatened, if this new payment methodology doesn't adequately cover the cost of the drug, a physician would opt not to prescribe the more expensive, even if more appropriate, medication. The proposal is also facing much scrutiny from both sides of the aisle in Congress, although some Democrats did offer their support. The House and Energy Committee will hold a hearing on the demo on May 17, 2016, along with a bill aiming to quash the demo entirely.

We probably won't see a similar proposal under Part D, as CMS argued it is actually using some of the principles of Part D to inform their payment methodology in Part B. However, as America's Health Insurance Plans (AHIP) pointed out in their comments to CMS, this proposal would likely have some significant downstream effects on MA and Part D plans. AHIP noted the historical tendency of a reduction on pharmaceutical prices in one market segment to lead to cost-shifting practices by manufacturers, such as setting higher prices for new drugs and higher drug price increases for existing drugs. MA and Part D also lose out because they lack the flexibilities of the new value-based tools proposed under Phase II that could also benefit MA and Part D plans. The rollout of the new model could also the affect MA and Part D bid process for 2018, due to the cost-shifting effect of the proposal.

CMS has already noted it will seriously consider making changes to the proposal. For example, CMS announced it will re-examine whether certain types of practices would not be adequate enough to cover certain types of drugs — such as small rural oncology practices. We could also see CMS propose an alternative tiered approach instead of the ASP and add-on formula. CMS is also considering excluding the new oncology care model from this proposal. Despite these changes, questions as to the effect on the remaining Medicare drug programs remain.

Resouruces

We 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. Our broad array of services can assist you in post-audit remediation, implementation of best practices, PBM contracting and implementation, interim staffing, clinical process re-engineering, Star Ratings improvement, and claims and PDE assessment and adjustments. Visit our website to learn more >>

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by GHG Advisors

What a Clinton Administration Could Mean for Government Health Programs

So the people spoke and we are heading for an epic cagematch smackdown general election between reality TV star Donald Trump and former Senator and Secretary of State Hillary Clinton. And you're asking, what's going to happen to Medicare, Medicaid and ObamaCare? The answer is plenty -- below the waterline and out in the states. Stakeholders will need to pay attention or get left behind.

First, the likely scenario is that Hillary is going to win this thing big. While other Republicans may have had a chance to capitalize on her high negatives with likely voters, nobody's negatives trump Trump's. He's the most unpopular major-party candidate since polling began. Most polls have him losing by double digits in November.

At this moment, Trump's likely to lose so bad that many down-ticket Republican Senate and House seats are now in play. So: Hillary in the White House, Democrats likely running the Senate again, and poor Speaker Paul Ryan trying to corral an even more radical, noisy and smaller Tea Party caucus in the House. The only people those guys hate more than President Obama are the Clintons. So betting on more gridlock is safe money. Little or nothing gets done in Congress except the bare minimum to keep government running.

That means most of what happens in Medicare, Medicaid and ObamaCare will occur "below the waterline" in Administrative policy, regulation, and guidance, or is driven by the states. Here's what that could look like:

Medicare: the forced march to value-based payment across the program will continue. The recent MACRA rule makes it clear that a fundamental change to traditional Medicare is coming and that fee-for-service is dead. By the end of Hillary's term, a majority of Medicare dollars will be tied to provider performance. Medicare Advantage will continue its steady 5-7% annual growth and exceeding 25 million enrollees in 2020. But CMS raises the bar through a rapidly-maturing Star Ratings program and an aggressive compliance and auditing initiative carried over from Obama's last year in office. Regulations and guidance are pumped out in regular order, drafted by newly-emboldened career CMS staff and making the program a laboratory of continuing performance improvement with claws and teeth.
Medicaid: on the heels of the biggest regulation in 12 years, Medicaid converges more than ever with Medicare Advantage and ObamaCare, but also goes down some very strange alleys. With Obama out of office, several more red states like OK and TN finally take the Medicaid expansion deal from the Affordable Care Act. But with it they insist on "conservative principles" like work requirements and drug testing that dampen coverage and introduce new complexities to the program. At the same time, blue and red states alike flood CMS with new home and community-based services waivers to force dual eligibles into health plans and implement managed long-term care programs.
ObamaCare and health insurance exchanges: health plans in the public exchanges continue a market correction and shakeout for another two years. During that time, CMS issues even more regulations dove-tailing exchange operations with Medicare Advantage rules, and several states currently running their own marketplaces like CO revert to healthcare.gov.

Health plans and other stakeholders in these programs will need to pay more attention than ever to stay ahead as government solidifies its role as their biggest customer. These are changes that won't necessarily be splashed across major media, but rather in trade rags and expert blogs. The only thing that's certain: it won't be dull.

Resources:

The Centers for Medicare & Medicaid Services (CMS) issued the final Medicaid "mega-rule," a huge regulation that makes changes to every part of the current managed care rules. Read more >>

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by GHG Advisors

An Important Component of MACRA: Quality Measures Development Plan

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed regulation that will implement the payment incentives through the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). An important component of these new incentives is the Quality Measure Development Plan (MDP), which CMS finalized and posted this week. The purpose of the MDP is to create a strategic framework for the future of quality measure development to support MIPS and advanced APMs.

Under MIPS, clinicians will see a payment adjustment beginning in 2019 based on their performance score across four performance categories: quality, resource use, clinical practice improvement activities, and advancing the use of information technology. Under advanced APMs, payments must be tied to quality measures comparable to those quality measures used under MIPS. These quality measures will be developed by CMS by November 1, 2016, as required by MACRA, and CMS will utilize this new MDP to guide the development and implementation of these new measures. CMS currently has an ongoing solicitation to stakeholders to assist in finalizing the initial set of measures.

CMS will also incorporate the seven core measure sets recently released by the Core Quality Measures Collaborative, a partnership between America's Health Insurance Plans (AHIP), CMS, and other industry groups. The plan notes its focus on coordinating with federal agencies and other stakeholders in order to lessen the duplication of efforts within the industry and promote person-centered healthcare.

The MDP notes current known measurement and performance gaps and solutions to close these gaps through new quality measures. For the first measure set, the MDP posted the initial priorities for measure development in six quality domains: clinical care, safety, care coordination, patient and caregiver experience, population health and prevention, and affordable care. CMS will update the MDP as they identify new gaps in measurement and performance in order to develop additional quality measures annually.

In reviewing the recent MACRA legislation for potential changes, and putting together comments to CMS, organizations should also carefully review the new Quality MDP in order to ensure their comments are incorporated into the release of the first set of measures by November 1, 2016.

Resources

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CMS recently released the proposed rule that sets forth the replacement for the Sustainable Growth Rate (SGR) formula and creates the new payment system based on value rather than volume. Daniel Weinrieb, GHG's Senior Vice President of Healthcare Analytics & Risk Adjustment Solutions, along with our team of experts will provide a detailed analysis as well as industry recommendations. Stay tuned!

by GHG Advisors

Medicaid Final Rule Aligns the Program with MA and Exchange Regulations

The Centers for Medicare & Medicaid Services (CMS) issued the final Medicaid "mega-rule," a huge regulation that makes changes to every part of the current managed care rules. Although the final rule makes some tweaks based on the comments received from the industry, it largely adopts the proposals released last May. The new changes will be phased in over the course of three years, with some provisions going into effect starting July 1, 2017.

The new regulation, in essence, brings Medicaid managed care into the 21^st century. Many of the new changes align the Medicaid program with Medicare Advantage (MA) and Exchange regulations currently in place. The rule encourages efficient, realistic use of limited resources, creating more incentives to improve clinical outcomes, reduce cost, and improve benefit coverage. Below is a synopsis of the major changes in the final regulation:

Medical Loss Ratio (MLR)

The final rule directs states to comply with a federal MLR standard of a minimum 85%, with a one-year reporting year. The new MLR requirement begins with contracts starting on or after July 1, 2017. This does not prevent states from setting loss ratios higher than 85%, however. Several states already impose MLR standard on plans, and many plans are already in compliance or close to an 85% MLR, so the impact of this new regulation is uncertain. Time will tell if the imposed 85% MLR will be effective as a way to standardize the varying state rules. CMS estimates the federal government would collect from $7 to $9 billion over a span of two year from plans failing to meet the ratio.

While the calculation details largely align with MA, CMS did make some slight variations in order to account for program differences between Medicaid/Children's Health Insurance Program (CHIP) and MA. The proposed rule also originally suggested fraud prevention activities would be included in the MLR calculation, however, decided since MA and the private insurance industry have yet to adopt this, the new regulation would read that Medicaid will adopt fraud prevention activities when the private market does.

In addition to the development of the MLR, CMS is requiring more transparency and fairness between health plans and States in the rate setting process — this will mean a closer look into how health plans and States are utilizing government funds.

Quality Rating System (QRS)

CMS plans to develop a Medicaid and CHIP QRS, similar to the one currently being implemented in the Exchanges. The new system will align with Exchange indicators but will retain flexibility to use different measures in order to reflect the differences in populations served by Medicaid/CHIP. CMS will expand on the methodology it plans to use in a forthcoming proposed regulation and expects to implement the QRS over the next five years. Overall, the major quality provisions of the rule all work to increase plan transparency of quality information, making it more available to the consumers and to facilitate identification of high risk members with special health care needs. States will also have the option of waiving out of the federal QRS and establishing their own, as long as it is substantially similar.

Quality Incentives

CMS also included several avenues in which states can now develop quality incentive systems in order to move forward with delivery reform and the movement toward value-based care, similar to the MA and Exchange spaces. States can now enter contractual agreements with plans in which plans agree to work on delivery system reform and performance improvement activities. This will be especially helpful in managing members in need of long term services and support and/or have special health care needs. States can also include value-based purchasing agreements that would tie provider reimbursement to performance on quality measures. Finally, states can develop other incentive and penalty arrangements to reward plans meeting quality or performance.

Marketing

CMS is updating the marketing standards in order to provide more beneficiary protections due to both the creation of Qualified Health Plans (QHPs) and the changes in managed care delivery systems in the past decade. For example, the new regulation updates rules on the use of mail, email, and websites. The final rule also requires plans to regularly update provider directories and drug formularies and make these readily available. The final rules also codify accessibility and anti-discrimination rules. The new rules greatly align with MA and the Exchange.

Appeals and Grievances

This is yet another area in which CMS streamlines the process with MA and the Exchange. The new regulation sets clear timelines, definitions, and guidelines for the appeals and grievances process and sets an expedited appeals process. Plans will need to ensure completion of the new required turnaround times for requests for external review; availability of case file medical records, and other documents used to conduct coverage determinations to the member; and documentation of notices and recordkeeping. Enrollees will now also be required to use the new internal process before utilizing state fair hearings.

Network Adequacy

Though CMS leaves network adequacy details up to the states, it does direct states to establish time and distance standards for primary and specialty care, behavioral health, OB/GYN, pediatric dental, hospital, pharmacy providers, and Managed Long Term Services and Supports (MLTSS). States will be required to certify the adequacy of the network at least annually or if there is a substantial change in the program design.

Actuarial Soundness and Rate Setting

CMS established and updated its rate setting procedures in order to bring clarity and ease to setting and reviewing Medicaid managed care payment rates. Currently, rates must simply be "actuarially sound." The new regulation defines actuarially sound rates as "rates that are projected to provide for all reasonable, appropriate and attainable costs under the terms of the contract and for the time period and population covered under the contract." CMS also set standards that capitation rates must meet and that CMS will apply in the review and approval of actuarially sound capitation rates.

Fraud Prevention

CMS also updates procedures to prevent, monitor, and identify fraud, including internal monitoring, audits, and mandatory reporting to CMS. The new rules include procedures for suspending providers when fraud has been alleged. The rule leaves some rulemaking to the states, however, states will need to submit a plan to CMS on how they intend to recover discovered fraud, waste, and abuse.

As previously noted, the final regulation makes changes to virtually every part of Medicaid Managed Care regulations and makes many more updates than we have gone into here. However, the big takeaway is many of these new regulations bring the Medicaid program up to date by borrowing from the successes and lessons learned from the MA and Exchange spaces. Plans would be well served to educate themselves on successful MA and Exchange plan compliance strategies and operations going forward in order to prepare themselves for the upcoming changes.

Resources

Let the team of experts at Gorman Health Group (GHG) help you prepare for the upcoming changes that could impact your organization. GHG's risk adjustment experts can help analyze the financial impact, develop feasibility models to help with meeting the new MLR requirements, and provide guidance on streamlining operations. GHG's Compliance Solutions can assist in the development and monitoring of these new contract requirements, and our clinical team can assist with reviewing and developing integrated care models to provide quality initiatives that are effective and efficiently managed to get optimal results.

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by GHG Advisors

The ABCs of Member Satisfaction

Member satisfaction. Customer centricity. Member retention. Consumer experience. Regardless of the term used, the Consumer Assessment of Healthcare Providers and Systems (CAHPS^®) survey measures continue to be the common denominator by which the Centers for Medicare & Medicaid Services (CMS) measures a health plan's success, creating a positive member experience. CAHPS^® survey responses now represent 16% of a Medicare Advantage (MA) plan's overall Star Rating, and an additional 33% is comprised of member-reported health outcomes and administrative measurements of member access and experience. With approximately 50% of the overall Star Rating now driven by some element of the member's experience, many health plan leaders now better appreciate the value of consistently providing members with excellent service and a positive experience.

I recently had the pleasure of listening to a group of members from a variety of MA plans share their health plan experiences with industry leaders. Though health plan discussions regarding member experience are often abstract and very general in nature, listening to the experiences of actual members is always a refreshing way to remind ourselves not only what a privilege it is to service the healthcare needs of Medicare beneficiaries but also how emotionally our "routine hiccups" impact members. Not surprisingly, this group of MA members shared stories that illustrate we've still got room for improvement in our quest to create a 5-star customer experience. The experiences of these members spotlight some of the ABCs for a successful member experience:

Access — When members discover providers with closed panels, struggle to make timely appointments with physicians, experience arduous referral or service authorization requirements, or are unable (even if only temporarily) to obtain medications at the retail pharmacy, we reduce the likelihood of the member reporting positive experiences with our plan on their CAHPS^® survey. Because many problems have multiple and/or multi-layered root causes, use of a technique such as the "5 Whys" can efficiently and effectively support root cause analysis of issues so impactful improvements can be rapidly deployed.

Better Communication — Many plans struggle to effectively communicate with members and often compensate by over-communicating to members, particularly via low-cost channels such as mail and IVR. By carefully crafting outreach strategies, letters, mailings, and scripts and using each member's preferred communication channel(s), plans can improve the effectiveness of their communications and demonstrate customer-centricity to members.

Coordination and Clinical Context — During the early years of Star Ratings, many plans deployed measure-specific tactics and interventions which were often conducted by disparate teams. In many cases, such tactics were implemented without anyone "connecting the dots" to ensure such strategies passed the "common sense" test from the member's perspective or that such tactics were appropriate within the clinical context of the member's overall health status. By strategically planning and developing outreach scripts and workflows, leveraging Health Risk Assessment (HRA) and claims data, and developing effective business rules through which to identify member interventions, plans can identify the right intervention for the right member at the right time.

Determination and Decision-making — Organizations with a sustained, strong customer experience are intensely focused on consistently making decisions that deliver value to their customers and meet customer expectations. This requires persistent determination, particularly as problems arise which necessitate process improvements or additional resources to resolve. Transforming a health plan into a consumer-focused organization with strong CAHPS^® measure performance often requires a new or refreshed consumer focus within each operational area (from benefit design to care management to customer service to sales/marketing) supported by an effective customer experience leader and customer experience governance structure.

The member experience will continue to be a necessary core competency as the industry evolves over the next few years. Gorman Health Group (GHG) understands this can be challenging, both logistically and politically.

Whether your plan needs help establishing an effective member experience or member communication strategy, cataloging and evaluating existing member communications, or identifying opportunities to streamline and strengthen the return on investment from existing materials, tactics, or interventions, we can help. For additional questions and inquiries about how GHG can support your organization's member experience efforts, please contact me directly at msmith@ghgadvisors.com.

Resources

Today you need to identify opportunities to increase your score for next year, implement an enterprise-level strategy, and carefully monitor your progress over the next plan year. We can help you every step of the way with our full portfolio of GHG practices, products and services.Visit our website to learn more >>

Our distinguished team of experts collaborated to provide our interpretation of this announcement and the key features that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Download our full Summary & Analysis of the Final Rate Announcement & Final Call Letter >>

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by GHG Advisors

Where is Healthcare Now? The Long March to Value-Based Care.

"Why won't the Centers for Medicare & Medicaid Services (CMS) let health plans gather some health information at the point of sale?

How is CMS going to use the data they are collecting?

What is CMS going to do when the first round of Accountable Care Organizations (ACOs) comes to an end?"

At the Gorman Health Group 2016 Forum in Fort Worth, these and other questions were on the minds of our clients. It can be challenging to guess what the agency will do going forward in an election year when the water is choppy. But that forecast is a critical factor in your planning.

In "The March to Value-Based Payment," I described something that is a long march indeed. The Republican-driven Medicare Modernization Act of 2003 ushered in the attenuation of payments to hospitals, first for quality reporting and soon after for quality results. Then, the Affordable Care Act driven by the Democratic Obama Administration doubled down on this "good government" approach. The program was extended to more provider types, outcomes and efficiency were added to the measures, and we began to see downside risk associated with less-than-average performance.

Under the provisions of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), physicians and other practitioners will face a Hobson's choice: live with a more aggressive risk-based adjustment to payments or join forces with an alternative delivery model, like an Accountable Care Organization (ACO), that is taking risk. The goal moving forward is to render unto Caesar what is Caesar's: the government is willing to bear the risk associated with each patient's demographic characteristics and health history. They will render unto providers the risks of inefficiency and poor performance. This could encourage more doctors to choose alternative payment models like ACOs or to affiliate with Medicare plans. Are you ready?

Resources

The Gorman Health Group 2016 Forum concluded last week with over 200 of our closest clients and partners. There was great news and rough news, so here are a few takeaways >>

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by GHG Advisors

Takeaways from the Gorman Health Group 2016 Client Forum

The Gorman Health Group 2016 Forum concluded last week with over 200 of our closest clients and partners. There was great news and rough news, so here are a few takeaways:

The playing field of government programs continues to expand rapidly, with improving revenue outlook across the board:
We're sticking by our projections of over 29 million Medicare Advantage (MA) enrollees by 2023, driven by more positive rate trends and a plan-friendly baby boomer tsunami underway.
Six to eight more states expand Medicaid — once President Obama leaves office.
Significant enrollment gains for dual eligibles as home and community-based services (HCBS) waivers and managed long-term services and supports (MLTSS) initiatives become the new normal. We expect dual eligible special needs plan (D-SNP) enrollment to double and exceed 4 million by 2019.
Rising ObamaCare enrollment, albeit slowing and below projections, as more difficult-to-reach populations remain outside coverage.
During the Forum, United announced its departures from most ObamaCare Marketplaces. We characterized the news as a nothingburger in terms of enrollment or market impact but huge symbolically and politically. We expect another two to three messy years sorting out the pricing and finances of the Marketplace business, with membership reconciliation and cleanup of membership discrepancies front of mind for issuers.
Risk Adjustment Data Validation (RADV) audits will begin to be conducted in MA — 2016-2018 will be the first time we see plans prosecuted under the False Claims Act and hundreds of millions clawed back by the Centers for Medicare & Medicaid Services (CMS) for unsubstantiated codes submitted for higher payments.
Clinical and pharmacy data integration and strong provider partnerships around person-centered care were clear priorities in medical management, Star Ratings improvement, and Pharmacy Benefit Manager (PBM) oversight.
The Star Ratings system of performance-based payment drives the payer and provider markets. This year will be the first year where plans below 3 stars are terminated. It's also when another 180+ MA plans will be scored for the first time, diluting ratings for existing plans, especially those at 4+ stars and denying many their bonuses and rebates in what promises to be an ugly "October Surprise."
The turbulent Presidential elections will likely be won by Hillary Clinton, promising continued gridlock with a likely weakened and more polarized Congress. This means CMS will increasingly fight out policy changes "below the waterline" in subregulatory guidance and enforcement, where politicians are less likely to intervene. That means more surprises for plans not paying attention.
Appeals and grievances and pharmacy benefit management vendor performance remain the #1, 2, and 3 regulatory infractions in MA and integration of long-term care and supports and services the leading challenge facing Medicaid health plans.
CMS is on pace for its most aggressive enforcement year ever, with over a dozen actions taken against plans this year already.

As we've said since the passage of the Affordable Care Act, we are now in the Golden Age of government-sponsored health programs, and the opportunities and challenges that come with this shift have never been greater. Our clients went home with a clear grasp of both, and we are thrilled so many joined us this year.

Resources

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by GHG Advisors

Issues to Watch in Government Health Programs in the Next Few Months

Last week was an exciting time for the policy world with the release of the Final Medicare Advantage (MA) Payment Rate and Call Letter. Here are some other notable stories we are watching develop in the next few weeks:

Part B Payment Model: On March 8, 2016, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule which aims to test a new alternative payment design to pay for drugs covered under Medicare Part B. While we will not see a final rule until end of May or June, CMS did already note they are considering certain exemptions to the model, such as practices already participating in the Oncology Model Demo. This proposal has already received a lot of criticism, with stakeholders arguing the model would decrease patient access to treatment while focusing too heavily on the financial picture.

MACRA: The proposed Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) Rule, a provision of the Medicare Access and CHIP Reauthorization Act (MACRA), is now at the Office of Management and Budget (OMB). MACRA repealed the Sustainable Growth Rate (SGR) formula and directed the Department of Health and Human Services (HHS) to create MIPS to replace existing physician quality programs such as the Physician Quality Reporting System (PQRS) and the Value-Based Modifier (VBM) beginning January 1, 2019. The rule will also lay out the definition of the types of APMs that will be considered bonus eligible. We should expect this regulation late April or May.

Covered California: California recently released major changes to its regulations by imposing new quality and cost standards in their contracts with insurers. The new plan will adopt a payment system for hospitals, similar to the one used by CMS, which will put 6% of reimbursement at risk or subject to a bonus payment based on quality over the next several years. Plans will also be required to identify providers and hospitals who are outliers in regards to cost or quality with these plans up for termination from the networks as early as 2019. While California is the first to issue this type of regulation, as John Gorman noted, "As goes California, so goes the world," and we can easily see similar efforts implemented across the nation.

UnitedHealthcare: In other Affordable Care Act (ACA) news, UnitedHealthcare is seemingly making good on its threat to exit the Marketplace by pulling out of markets in Arkansas and Georgia. As we previously noted, this move should not really come as a surprise and is not an effective measure of the health of the ACA program, as UnitedHealthcare is not a strong market participant in the ACA business and only cautiously dipped its toes in the water for the first time in 2014.

Mergers: The Anthem-CIGNA merger is currently undergoing some serious scrutiny in California. The California Department of Insurance (CDI) grilled the insurers last month, and there is potential for the merger to fail to receive approval from the state. If it is to pass, we will likely see significant divestment requirements and additional scrutiny from the Federal Trade Commission and Department of Justice in Quarter 3 or Quarter 4 of 2016.

Medicaid: The final Medicaid regulation is still under review at OMB, and we should expect to see its release any day now. Touted as "the mega-rule," this regulation will alter every part of the current Medicaid program. Most of the proposed changes by CMS align the Medicaid program with other programs such as MA and Qualified Health Plans (QHPs).

Resources

We are proud to announce a new session at the Gorman Health Group 2016 Forum featuring David Sayen, a former Centers for Medicare & Medicaid Services (CMS) Regional Administrator, who will provide a CMS update on "The March to Value-Based Payment." Register now to reserve your seat for next week!

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by GHG Advisors

What's Good for Obamacare Is Good for Medicare Advantage, and Vice Versa

I'm really excited to join Gorman Health Group (GHG) after more than 30 years at the Centers for Medicare & Medicaid Services (CMS), and I'm especially excited about the GHG Forum next week in Fort Worth. If you are sitting on the fence, now is a great time to jump in. Make no mistake — we are at the tipping point where public finance at the federal level is quickly becoming the dominant driver of change in the whole system. In 1966, Medicare was erected on the 30-year-old chassis that was the Blue Cross model. Now the tables are turned: Obamacare is determining the shape of new market entrants, often in a push-pull with Medicare Advantage (MA), and nowhere is that more evident than in my adopted homeland of the People's Republic of California.

Covered California is making the call about which hospitals health plans should work with. In the CMS world, the drive toward value-based purchasing and quality reporting is going precisely in the same direction across the spectrum of care. It used to be acceptable to have a provider who was within 30 miles or 30 minutes away. That's your father's MA model. The insistent drumbeat toward quality reporting and performance across the spectrum of services is only going to become more strident. You need to deliver consistent value across the whole supply chain that touches your member or attributed beneficiary.

What is a health plan or Accountable Care Organization (ACO) to do? The path is clear to me. Years ago I took the Deming seminar and drank the Kool Aid about developing long-term relationships with a small group of high-quality suppliers that could integrate and commit to your production model. Jumping up to 2017, I believe that is what MA plans and ACOs must do: orchestrate the players in their ecosphere to get great outcomes and kudos from patients and caregivers. When the stars are in alignment, we can all party like it's 1999.

Looking forward to working with our clients to achieve great things, and it starts in Fort Worth, so come on down!

Resources

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by GHG Advisors

Reconciliation just got more complicated

The time has arrived when health plans will start receiving a monthly automated Health Insurance Exchange (HIX) 820. For most health plans, this will occur in April 2016; others, who aren't fully ready yet, will transition in June 2016.

So all of the Finance departments throughout the U.S. should be rejoicing they do not have to populate an Excel spreadsheet on a monthly basis in order to receive payments from the Marketplace, right? Well, don't count your chickens before they hatch, because the reconciliation processes just got even more complicated than before.

For the health plans that were part of the Marketplace from the beginning, take a step back in time with me and reflect on the exorbitant amount of issues you experienced receiving accurate membership information via the 834. Now, introduce the HIX 820 into the mix. Granted, the membership issues have slowed down a bit, however, they are still quite evident and require constant attention and documentation to ensure they don't slip through the cracks. The HIX 820 impacts health plans that are part of the Federally-Facilitated Marketplace (FFM) and the State-Based Marketplace (SBM) since the HIX 820 handles payments for the Advance Premium Tax Credit (APTC), Cost Share Reduction (CSR), Risk Adjustment, Reinsurance, and Risk Corridor. Financial stability of organizations now relies on the accuracy of the reconciliations for the HIX 820 to make the member's payment whole.

What health plans should be prepared to handle:

Technology issues when translating the file to a usable format.
Health plans that are a part of the FFM will need to conduct reconciliation between the 834, HIX 820, and the member.
Health plans that are a part of an SBM will need to conduct reconciliation between the state enrollment information, HIX 820, and the member.

With changes in the front-end systems and operational processes, it's important not to lose sight of the impact this data has on downstream processes. It is imperative all adjustments, updates, discrepancies, and relative information are easily tracked and accessible for the reconciliation and reporting of APTC, CSR, medical loss ratio (MLR), and risk adjustment. Membership and their corresponding payments are the backbone of a health plan. You want to ensure accurate information is reflected to prevent erroneous materials from being sent to members or to the Centers for Medicare & Medicaid Services (CMS).

How can Gorman Health Group help?

With a best practice approach, the Gorman Health Group Reconciliation team can supplement your current staffing model with a focus on reducing your discrepancy volume enabling timely and accurate policy-based payment from the FFM and other positive, downstream impacts.
Review and build efficiencies with your current reconciliation process
Identify key gaps with enrollment processing and assess opportunities to reduce the volume of discrepancies (both enrollment and payment)
Bring transparency into key measurements Issuers must pay attention to.

Valencia™

Our premier reconciliation tool, Valencia™ is the tool of choice with approximately 11M lives under management. Specific to the Marketplace, Valencia™ reconciles 4M or 31% of the 12.7M members enrolled in the FFM and SBM marketplace.

The Gorman Health Group Reconciliation team utilizes the Valencia™ application to better understand a client's reconciliation health. The team will load the required files for comparison and summarize the discrepancy landscape. Valencia™ allows the team to work, resolve and measure productivity thereby reducing the volume of errors.

Resources

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by GHG Advisors