Policy & Health Reform | GHG Advisors

Government Shutdown Deadline Nears

Less than a week remains for Congress to agree on a $1.1 trillion funding bill in order to avert the threat of yet another government shutdown. The deadline to pass this bill is December 11, 2015, although Congress could technically use a stopgap measure to buy an extra week, pushing the deadline to December 18. As previously reported, a shutdown would have significant consequences for all government agencies, including the Department of Health & Human Services (HHS). Although most Medicare and Medicaid services are considered necessary to the public welfare and would thus escape much of the repercussions of a shutdown, operations at the Centers for Medicare & Medicaid Services (CMS) would nonetheless be affected.

So what is the likelihood of a shutdown occurring?

The House Democrats rejected the Republican's offered funding bill on Monday and are planning an alternative package in response. The Democrats cite more than 30 policy riders making the package unacceptable to their side. The aggressive response from the left wing suggests they won't easily back down this go-round, however, the possibility of a shutdown is less likely than estimated during the stand-off a few months ago.

For one, unlike a few months ago, Planned Parenthood funding has not been as much of a battle this month. This time, the Syrian refugee crisis, terrorist attacks, and immigration policies bear the brunt of the debate. Congressman McCarthy also hinted on Monday he did not predict the Planned Parenthood tension to hinder the passage of a funding bill this year. The new Speaker, Paul Ryan, also has a lot riding on averting a government shutdown, as such an event six weeks into the job would be disconcerting to the party. And, unlike earlier in the year, with key members of both parties unwilling to use the threat of a shutdown to further their agendas, the likelihood a funding bill will pass is very good.

Resources

Registration for the GHG 2016 Forum is now open! This year we are offering a tiered pricing schedule. Register between now and February 14 to receive the $1095 price. Come February 15, the price increases to $1,295.Register today >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

2016 Readiness Review Smaller Size, Bigger Punch.

The Centers for Medicare & Medicaid Services (CMS) released the 2016 Readiness Checklist on Monday, November 9, 2015. The 20-page checklist is full of items CMS is expecting plan sponsors to review and validate it will be compliant for the 2016 calendar year. While CMS won't have an official website for plan sponsors to attest to the readiness this year, they will use other methods to validate compliance. No matter the validation method, CMS' expectations are clear: Part C and Part D plan sponsors should review and validate compliance for each item.

In reviewing the 2016 Readiness Checklist, there are some new and modified requirements as well as other areas of CMS concern. Regardless of whether or not the items are new to the readiness checklist party, they should all be known to you. If they aren't familiar, you may want to check your Health Plan Management System (HPMS) and regulatory guidance distribution process. CMS indicates at the end of almost every requirement where the guidance for that item came fromâ€•what Medicare manual or HPMS memo provides the supporting information for that item. CMS makes it convenient to validate what you are asked to validate and attest.

If you have waited until now to implement or validate new guidance from 2015, it will be a stressful few weeks in what is already a very busy time of year. Several items are heavy-hitters and get into the nitty gritty of processes. As in past years, any items which won't be in compliance are to be reported to your CMS Account Manager. No one likes to be on that list.

Many sections of the Readiness Checklist are smaller but have more potential process changes. "By no means should plans see an abbreviated Compliance and Fraud, Waste, and Abuse (FWA) section and start resting on laurels," said Regan Pennypacker, Senior Vice President of Compliance Solutions at Gorman Health Group (GHG). Regan went on to say, "In this year's checklist, CMS issues another reminder about the May 24, 2014, regulation change which requires mandates on Medicare Advantage (MA) organizations to require all of their first tier, downstream, and related entities (FDRs) to take the CMS training and accept the certificate of completion of the CMS training as satisfaction of this requirement."

Another change highlighted in the readiness assessment is plan sponsor's appropriate use of extensions for organization and coverage determinations and appeals. In audits, we often see plan sponsors who have failed samples due to extensions granted for contracted providers or when extensions are used early in the process and on a routine basis rather than as an exception. CMS is expecting plan sponsors to review their process for exceptions and ensure they are in compliance.

One change Regan called out is CMS included a recommendation that plan sponsors making pharmacy network changes provide both those pharmacies whose network status is changing and enrollees using those pharmacies with notices of changes specific to their situation. "This is almost certainly a result of CMS' close work with one plan sponsor on effective notification strategies as part of pharmacy network changes. While the plan sponsor had indeed sent letters to supplement the Annual Notice of Changes' (ANOC's) notification of changes, the recommendation is to move to a more personalized notification approach," indicated Regan. "This will allow beneficiaries to make a more informed decision and will also aid pharmacies in understanding their network status."

A senior consultant of Pharmacy & Clinical Solutions at GHG, stated, "The Readiness Checklist is always an excellent method of making sure you have the bases covered for new guidance which takes effect in the new plan year (2016)." Deb went on to indicate there are three items plan sponsors must pay particular attention to in the 2016 Readiness Checklist for Part D. They are as follows:

The long-delayed requirement "physicians and other eligible professionals who write prescriptions for Part D drugs are required to be enrolled in Medicare in an approved status or to have a valid opt-out affidavit on file for their prescriptions to be coverable under Part D, unless the prescriber is an â€˜Other Authorized Prescriber'." This takes effect on June 1, 2016, and, therefore, plans must confirm their contracted providers, including dentists, are eligible to furnish Part D prescriptions.
Also, providers must have a valid prescriber National Provider Identifier (NPI) number for Part D claims to be valid. Specifically, "for plan year 2016 and thereafter, claims for covered Part D drugs must include a valid prescriber NPI. Part D sponsors must submit to CMS only prescription drug event (PDE) records containing an active and valid individual prescriber NPI."
Starting on January 1, 2016, it is CMS' expectation Medicare Advantage Prescription Drug (MA-PD) plan members will not leave a network pharmacy without their prescription for a medication(s) where coverage may available under either Part D, Part A, or Part B. Plan sponsors and/or their PBMs must have processes in place so the network pharmacist can exchange information with the plan sponsor or PBM about the member to make the determination about which arm of Medicare will pay.

Parting words from Regan, "CMS makes it clear these are key requirements, and the checklist is not an exhaustive list. Consider these items to be hot topics CMS will hang their hat on in the coming year." The key to successful MA and Part D programs is to know your business better than anyone, including CMS. The Readiness Checklist is one additional tool to do just that.

Resources

If you need assistance in assessing your organization against the Readiness Checklist or in strengthening your MA or Part D program, GHG's knowledgeable team is here to help you. We've been in your shoes and know the pain points and how to move through them. We can help you prevent that punch from being a knock out. Contact me directly at jbillman@ghgadvisors.com.

Registration for the GHG 2016 Forum is now open! This year we are offering a tiered pricing schedule. Register between now and November 30 to receive the biggest savings at $795. Come December 1, the price increases to $1,095.Register today >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

Is This Payment Real? CMS Launches Policy-based FFM payments Through the HIX 820 in 2016

If you think your organization has been working from a fire hose these past few years since the launch of the Health Insurance Marketplace, wait until the Centers for Medicare & Medicaid Services (CMS) rolls out policy-based payments to Federally-facilitated Marketplace (FFM) Issuers beginning in 2016. It's not as if the accuracy of member data wasn't significant before, but now with a direct payment from CMS to the Issuer, your enrollment discrepancy rate will be transparent in real dollars.

For the first time, Issuers will be able to quantify the financial impact of enrollment discrepancies simply because CMS will be making payments directly to Plans through Advanced Premium Tax Credits (APTCs), Cost Sharing Reductions (CSRs), and User Fee (UF) charges based on effectuated subscribers within the federal system, not the Issuer system. This ups the ante for synchronization of data between the Issuer and the Marketplace.

In January 2016, CMS will begin paying Issuers at a policy-based level through a transaction called the HIX 820 complimented by the Preliminary Payment Report, or PPR. Aside from the typical challenges and workarounds Issuers are confronted with during open enrollment season, the timing of policy-based payments creates somewhat of a twist or a renewed focus on the financial impact of enrollment data being out of synch with the government.

Issuers are anticipating more work ahead in 2016 with a long list of inherited issues and newfound challenges such as 2016 renewals, ongoing Health Insurance Case System (HICS) activity, continued FFM lags with system updates, and continued interim processes. Yet, one can view the implementation of the HIX 820 as a new opportunity to review and build upon your operations and reconciliation practices simply based on your Chief Financial Officer's (CFO's) perspective.

If your CFO hasn't asked you before, he/she will.

If we have an expected payment of $100 million based on effectuated members on our books, why is our payment $120 million this month?
Is this a real payment or an overpayment based on lags with the FFM applying member updates such as cancels and terminations?
Aside from timing and adjustment activity, what should the prospective payment for next month be? Let's review and find out why your estimate differs once the HIX 820 arrives.
What does this high volume of adjustment activity in May 2016 applied to January and February 2016 coverage months represent? How do we build an expected adjustment each payment cycle so there are no surprises?
How many monthly cycles will it take to be paid accurately for January 2016?

With the goal of measuring the overall financial impact of your enrollment and payment discrepancies, you will be able to build a strategy around successful reconciliation. Some key drivers are fundamental and important to highlight. Your organization can simply calculate your expected payment to your actual payment by comparing your PPR/820 monthly payment files to your plan data (RCNI) as a first step. At the end of the day, your CFO will not be interested in a partial picture — he/she will want to understand if the payment is real and whether it will change retroactively. Understanding the complete financial impact of all discrepancies should be your first step. The operations surrounding the resolution of discrepancies should be secondary, albeit a huge undertaking. So, how do you get there?

Recommendations for Issuer's HIX 820 Strategy:

Be audit ready.
- Understanding CMS will pay you based on the FFM system signifies your daily enrollment processing oversight and the audit of those processes in the form of reconciliation practices go hand in hand. In an audit, you never want CMS to identify you are being paid for non-members or not paid for members consuming the benefit and everything in between.
See the big picture.
- On a weekly or monthly basis, your organization needs to understand its discrepancy rate and the formula the rate represents. Is it 2%, 8%, 12%? Measure it, and work that rate downward.
- If you have a 5% FFM orphan discrepancy rate in January 2016, what is your January discrepancy rate in April 2016? Monitoring by coverage month each report month is critical to being paid accurately and other downstream issues impacting revenue.
Put your CFO hat on.
- Institute a monthly review of your organization's discrepancy rate with your CFO.
- Be able to tell a story on the difference between expected and actual payment along with your retroactivity predictions. Now that the 820 will be paying prospectively and retroactively back to 1/2016, Issuers will be able to measure the swings in payment activity.
- Track discrepancy drivers within your organization and look for process improvement opportunities you can operationalize along with aligning resources more effectively.
Track CMS-defined payment issues and submit timely through the Payment Dispute template. Remember, these are discrepancies sourced to an FFM system issue since your Issuer data matches the FFM data (Pre-Audit File).
Summarize, work, and measure success of the FFM Recon Outbound File (RCNO).
- Update your enrollment system or dispute Issuer action flags.
- Track and monitor the FFM action flags as well as ensure CMS is applying corrections to the FFM database in conjunction with Issuer corrections. This is a two-pronged approach.
Track orphan discrepancies (both Issuer and FFM) by coverage month through the FFM Pre-Audit file and resolve each subscriber case.
- Categorize the causal such as FFM BAR error, missing 834, Issuer processing error.
- When you know your data, you are able to answer every audit question that arises.
At a maximum, when monthly orphan identification is working well, move to weekly discrepancy tracking by comparing the authoritative Pre-Audit file to your Issuer data. This allows you to detect internal issues more timely before interfacing with the government.

While none of this is new for government programs as history always repeats itself, it is clear you can apply the same guiding principles. Positioning your organization to succeed in this new environment is directly tied to an optimal reconciliation approach so you can answer the question, "Is this payment real?"

To learn more about Gorman Health Group's reconciliation solution, Valencia™, and how it supports enrollment and payment reconciliation for Issuers, please contact ghg@ghgadvisors.com or Diane Fischer at dfischer@ghgadvisors.com.

Resources

Gorman Health Grouop's Valencia™ creates the workflows organizations like yours need for critical operational functions. With Valencia™, you'll always know where your membership and premium-related data is out of sync, thus eliminating missed revenue and inappropriate claims payments. Contact us today to set up a demo >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

Mergers Pave Way for Good Opportunity to Enter Medicare Advantage Market

While the largest insurance companies await their fate at the hands of federal regulators, other plans and investors should pay close attention to the opportunity to acquire divested plans from the two deals.

With the shareholders overwhelmingly approving the merger between Aetna and Humana, all eyes are on what the Department of Justice (DOJ) and the Federal Trade Commission (FTC) will make of the proposal for the two largest health insurers to consolidate. Anthem and CIGNA also await federal scrutiny. The mild grilling of the healthcare executives on the hill has led many to believe these deals will receive federal approval. And while hospital associations warn of lack of competition in programs such as Medicare Advantage (MA), it is widely recognized these companies will face significant divestitures in markets which will become highly concentrated due to the mergers. Aetna already announced it took a conservative look at the amount of business it would need to divest in order to make this deal go through.

Humana and Aetna would need to divest their plans anywhere the two plans have too much of the market combined — financial analysts estimate this to be any county where the market share is over 40% to 50%. One example of such state is Kansas, where Humana and Aetna combined hold 90% of the MA business. Other major states include West Virginia, Iowa and Missouri, and Ohio, where the two insurers would control an overwhelming amount of MA business. While, according to the Kaiser Family Foundation, Aetna currently only controls 7% of the MA business nationwide, Humana has the largest enrollment in 11 states.

These divestures present a great opportunity for investors and existing plans to enter or increase their presence in the MA market. MA enrollment currently sees no end to the growth spurt it is experiencing. In fact, the National Committee for Quality Assurance (NCQA) recently praised MA plans for their success in increasing quality for seniors, for the first time ever outpacing commercial plans on some quality measures. These existing MA plans are also attractive because of their existing infrastructure already in place, as the investment in creating a new MA plan is very burdensome and can take a long time to reap the benefits.

With both deals expected to close mid to late 2016, investors should really consider looking at states and counties where divestitures will be particularly significant and entering the ever-growing MA market.

Interested in entering or increasing your presence in the MA market?

Gorman Health Group's integrated team of experts can provide strategic analysis in evaluating market conditions across the country to identify MA opportunities and high potential target areas for expansion. Contact us today >>

Resources

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

MA-VBID Request for Applications Released

The Centers for Medicare & Medicaid Services (CMS) has released the Request for Applications for the Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model, which is an opportunity for MA plans to offer supplemental benefits or reduced cost sharing to enrollees with CMS-specified chronic conditions, focused on the services that are of highest clinical value to them. Applications are due by January 8, 2016.

CMS will tentatively select plans by April 2016. The application document repeats most of the information CMS released in the original announcement and webinar. However, the application will be submitted via a web portal which will be released in the near future. The process is much like the MA contract application process. CMS does provide information about the questions which will appear in the template.

Applicants will be required to present narrative explanations about their proposed interventions. First, there is the general overview of the proposed interventions describing the overall approach and understanding. This section must convey specific enough information tracking to details about interventions in later sections of the template. It will act to set the stage of an application.

Next, applicants must describe each separate VBID intervention. This will include each combination of plan and enrollee group so every target population is described with repetitive plan information and interventions. CMS describes the target population according to the eight qualifying diseases/conditions listed in the VBID demonstration.

Applicants must list specific benefits for each target population. CMS lists the various combinations of benefits:

Reduction or Elimination of Cost Sharing (not conditional)
Reduction or Elimination of Cost Sharing for High Value Provider
Reduction or Elimination of Cost Sharing Conditioned on Participation
Supplemental Non-Covered Benefits

CMS asks for "clear descriptions" in each of the four options and provides a number of elements applicants must discuss in their narratives.

While applicants must upload actuarial and financial documentation in this template, there are no specifications about the types of information for which CMS will ask. Notably, there is a statement that such information may not be required.

Health plans must also discuss their compliance history extending to January 1, 2010. Finally, an official of the applicant must certify their applications, their understanding about the conditions including marketing limitations, and bid requirements.

Data analysis is the key first step to identifying target populations and subsequent benefits which will become the focus of the demonstration. A team of subject matter experts from Gorman Health Group will deliver actionable results, driven by data analysis of current capabilities and benefit designs, to achieve quality care for the target populations. Contact us to learn more >>

Resources

Download a copy of the recording from the October 5 webinar titled "Medicare Advantage Value-Based Insurance Design Model (MA-VBID)", hosted by John Gorman.

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

Healthcare Trends: ICD-10, Mergers, Part B Premiums & MA-VBID

ICD-10

We are into our third week of ICD-10, and so far, reviews of implementation woes have been mixed. Some reports tout a smooth rollout process, with few problems — at least from the side of payers and clearinghouses. However, providers have noted several issues they are encountering from the transition, such as not being able to complete referrals, long wait times with insurance company calls, and possible delays in payment.

Merger Updates

Both the House and Senate held hearings on the pending health insurer mergers, with light grilling of the executives and less than anticipated contention during the Senate hearing. There is a suggestion that the less than rigorous questioning of the executives meant a "win" for the CEOs. Only Senators Franken and Blumenthal seemed to show any serious concern over the consumer impact of the mergers. However, it is important to note that until the DOJ weighs in on the matter, the status of these mergers is still unclear, and the questions posed during both hearings were just the tip of the iceberg. These insurance giants will face much more scrutiny within the near future, with a careful analysis and rigorous review of potential market impacts from the deals.

HHS' Updated Shutdown Plan

HHS finally released its most updated contingency staffing plan, likely preparing for the possibility of a government shutdown in December. HHS estimates that 51% of staff would be on furlough. CMS would continue large portions of Affordable Care Act (ACA) activities, and the Medicare program will largely continue without disruption. CMS fraud and abuse activities will be curtailed, and fewer recertification and initial surveys for Medicare and Medicaid providers would be completed. The 2016 Contingency Staffing Plan is available here: http://www.hhs.gov/about/budget/fy-2016-hhs-contingency-staffing-plan/index.html

Reconciliation

The House of Representatives has moved forward with its reconciliation package that would repeal major provisions of the ACA — including the individual and employer mandate, Cadillac tax, medical device tax, IPAB — effectively dismantling the law. The package would also deny funding to Planned Parenthood. It is still unclear whether the Senate will vote on this legislation, and it is all but guaranteed to be vetoed by President Obama.

Part B Premiums

The 2015 Medicare Trustees Report estimates that Part B premiums will increase by 52% next year, from $104.90 to $159.30. Although beneficiaries purchasing Part B through Social Security deductions will be shielded from this increase, due to a likely no cost of living adjustment (COLA) in 2016, the remaining 30% will face a significant rate hike. This is because a "hold harmless" provision shields Social Security recipients from Part B premium increases which outweigh the Social Security COLAs. However, this means the 30% not qualifying under the hold-harmless provision will be on the hook for the entire increase in 2016.

Medicare Advantage Value-Based Insurance Design Model

The Centers for Medicare & Medicaid Services (CMS) has released the Request for Applications (RFA) for the Medicare Advantage Value-Based Insurance Design model. Applications are due on January 8, 2016. Interested organizations should begin conducting in-depth data analyses now in order propose a benefit plan in the RFA.

Resources

Download a copy of the recording from the October 5 webinar titled "Medicare Advantage Value-Based Insurance Design Model (MA-VBID)", hosted by John Gorman.

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

The 2016 Star Ratings: Finding Calm in the Chaos

All great changes are preceded by chaos, and the Centers for Medicare & Medicaid Services (CMS) release last week of the 2016 Star Ratings certainly introduced a great deal of chaos for Star Ratings teams throughout the industry. With approximately 5% of additional reimbursement tied to â‰¥4-Star performance, health plan leaders are either taking a deep breath this week (if they earned â‰¥4 Stars and qualified for Quality Bonus Payments) or doing their best to quell the inevitable panic if the 4^th Star eluded them.

CMS continues to leverage Star Ratings to support improvements in member perceptions and longer-term, sustainable improvements in health plan performance and health outcomes. CMS continues to make rapid, continuous changes among measures, cut points, and program criteria. The speed and extent of change reinforces the need for a seasoned, dedicated Star Ratings leadership team which embraces and manages Star Ratings as a holistic, silo-busting program. It's vital for health plans to simultaneously excel not only in their clinical and pharmacy quality functions but also in every other health plan function. This includes everything from care coordination, network operations, member experience, risk adjustment, appeals and grievances, and compliance, to claims and encounter data and analytics, marketing, and every other department in the organization.

As we adapt to the first Star Ratings cycle with no predetermined thresholds, it's clear there is very little low-hanging fruit left in the Star Ratings program. It's time for us to climb the tree.

With budget season upon us, it is an ideal time to evaluate Star Ratings strategies and work plans to ensure 2017 investments are wisely made. Now that the 2016 Star Ratings are out, take an objective look at your Star Ratings programs to ask:

Are we investing adequately in the areas where we need the most Star Ratings lift?
Will our Star Ratings initiatives achieve our goals?
Are we conducting the right interventions, with the right members, at the right time?
Are we adequately integrating medication management and behavioral health into our Star Ratings programs?
Are we adequately coordinating provider and member engagement activities?
Are our provider contracts and pay-for-quality programs designed adequately to sustain success in the new Star Ratings environment?

If your plan achieved 4 Stars this year, this is no time to rest. The 178 plans at 3 or 3.5 Stars in 2016 are working hard to achieve 4 Stars this year, and with CMS' bell curve, this means some of the current 4-Star plans will drop in 2017. And don't forget — there are another 188 Medicare Advantage plans not rated in 2016. This huge group of plans will impact the bell curve as they receive their first ratings.

If your plan missed a 4-Star Rating this year, now is not the time to panic. There is still time to influence your 2017 Star Ratings, particularly since the Consumer Assessment of Healthcare Providers and Systems (CAHPS^®) and Health Outcomes Survey (HOS) surveys will not be fielded until early 2017. But since time is definitely of the essence, it is important to invest time and resources wisely into the areas with the greatest opportunity for short-term improvements.

We can help. Gorman Health Group understands the complexities and nuances of the Star Ratings program and measures. We know how to design programs, initiatives, and tactics to improve Star Ratings performance. From evaluating organizational strategy to developing and optimizing tactical Star Ratings work plans, our team of experts has a long history of success helping health plans achieve Star Ratings success.

With time waning to influence the 2017 Star Ratings, find calm amidst the chaos and prepare for the great changes to come.

Resources

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

2016 Star Ratings are Working, and the Bar is Rising

The Centers for Medicare & Medicaid Services (CMS) released the 2016 Medicare Advantage (MA) Star Ratings early this year, on Thursday morning. The usual practice is to wait until Friday after the close. It was a shift designed to move markets, and the news was mixed. Overall, Star Ratings are working to improve quality in many areas of health plan performance, but insurers and their provider and pharmacy benefit partners are struggling on a similar number of metrics. What is clear is that Star Ratings are now the fulcrum of competition in government health programs — and man, this stuff is hard and getting tougher.

There are clear winners and losers in this release. There is a "Divine Dozen" of 5-Star-rated plans, including a couple of new arrivals to the 5-Star world. CIGNA traded its 5 Stars in FL (the legacy HealthSpring plan at the legendary Leon Clinic) for its Arizona plan. Sierra (9 states), Tufts (MA), Group Health of MN, and Essence (IL and MO) made it into the Pantheon. Repeat 5-Star rock stars include Kaiser in 8 states, Martin's Point (ME and NH and will soon own Medicare in Northern New England), and Gunderson in IA and WI.

The half-dozen "walking dead" — plans scoring below 3 Stars for 3 consecutive years —included Wellcare of LA, Sierra Health, Touchstone, Cuatro, Windsor, and GHS (owned by HCSC). Three will be terminated by CMS at the end of 2016.

Star Ratings are proving to be tremendously effective in moving markets and forcing industry investments in population health and the member experience and are driving big improvements in Medicare quality. Roughly half of MA plans (179 contracts) earned 4 Stars or higher for their 2016 overall rating, a nearly 9% increase in a year and the first time a majority scored over 4. On an enrollment-weighted basis, over 70% of MA enrollees are in contracts with 4+ Stars, a nearly 11% increase year over year.

But below the water line, at the metric level, the news was mixed and cautionary:

The good news: Average Star Ratings increased for 10 Part C measures and 5 Part D measures. We saw significant improvements in several challenging, longitudinal Health Outcomes Survey (HOS) measures: Improving/Maintaining Mental Health, Monitoring Physical Activity, Part D Appeals Autoforwards, and High Risk Medications. There were smaller improvements on many other measures, where removal of the 4-Star thresholds helped plans improve ratings.
The bad news: Average Star Ratings DROPPED for 16 Part C measures and 6 Part D measures. We saw significant decreases in several screening measures (colorectal cancer screening, diabetes kidney disease monitoring) and the HOS measure of improving/maintaining physical health. And there was a big drop on the Medicare Plan Finder (MPF) Price Accuracy measure, where the cut points have gotten so small that 97% accuracy only gets 3 Stars, 99% results in 4 Stars, and it literally takes a perfect 100% to earn 5 Stars.

We knew the removal of the 4-Star thresholds would produce a tremendous amount of fluctuation in the measure cut points, and that's exactly what happened. It's like playing "Pin the Tail on the Donkey" during an earthquake, making it really hard for health plan leaders to predict where their ratings will ultimately land while they still have time to influence them. For example:

The average rating on the Diabetic A1c Control measure increased from 3.3 in 2015 to 3.9 in 2016. But there was no change whatsoever in the average performance rate for this measure — in both 2015 and 2016, the average compliance rate was 76%. The improvement on this measure can be entirely attributed to CMS relaxing the cut points once the predetermined threshold was removed.
In contrast, the Controlling Blood Pressure measure rating dropped from 3.7 in 2015 to 3.4 in 2016. The compliance rate actually increased from 65% in 2015 to 71% in 2016. This is an example of where the removal of the predetermined thresholds tightened the pressure on this measure — in fact, the 4-Star threshold increased 12% upon removal of the predetermined thresholds.

The Star Ratings data for 2016 pretty much emasculated industry arguments for relaxing metrics for Special Needs Plans (SNPs). SNPs saw improvement in their quality scores roughly equal to that of HMOs and PPOs: MA plans operating SNPs averaged a 3.61 rating in 2016 (up from 3.47 in 2015), while plans with HMO/PPO-only contracts averaged 3.87 in 2016 (up from 3.79 in 2015).

Non-profit MA plans are pounding for-profits into the sidewalk on quality. About 70% of non-profit MA plans received 4+ Stars vs. 39% of the for-profits. Much of that discrepancy is due to culture. Non-profits tend to be far more focused on the all-important member experience measures and are more collaborative with their provider networks.

Methodological changes by CMS ensure the Star Ratings bar will continue to rise. 2016 is the first year plans with 500-999 members were rated. Only 369 Medicare Advantage Prescription Drug Plans (MA-PDs) were rated in 2016. 188 more plans weren't rated, but may be in 2017 — and this dilution will warp the bell curve plans are graded on, especially when considering most of those 188 are provider-sponsored, and strong performers will emerge. 4+-Star plans have the most to lose in this environment, and no one can afford to get comfortable.

Some takeaways:

Stars must be managed as a program and a corporate priority, not as a group of measures. The effort must be directed by dedicated executive leadership and support. No plan improves Star Ratings doing it off the side of their desks.
The removal of the remaining predetermined thresholds means there is no way for plans to "pick and choose" a subset of measures to focus on. It has to be improvement across the board.
The bar continues to rise fast among Part C Star Ratings measures. The "low hanging fruit" has been eaten. Part C Star Ratings success is no longer easily influenced by slick reports provided to physicians. Plans need to help providers execute on gaps in care plans and eliminate barriers to care for the vulnerable. There's a reason the 5-Star plans are mostly provider-sponsored, vertically integrated, collaborative, and member-centric by nature.
Star Ratings measures need to be woven into every department's work streams. This includes not only quality, care management, health services, and pharmacy, but also risk adjustment, network operations, and compliance.
Lagging SNPs need to work harder and smarter and assume no CMS help on the measures for the low-income and disabled. To the contrary, recent draft measures for dual eligibles from the National Quality Forum focus on mental and behavioral health and will prove an enormous challenge.

If you achieved 4+ Stars this year, congratulations, it's an increasingly impressive accomplishment. Now get back to work. There are 178 plans at 3-3.5 Stars who are close on your heels and feeling the urgency. Now add the 188 unrated plans who will smash the bell curve in 2017. A 4-Star plan's equal effort in 2016 only guarantees a score that starts with a 3 the next year. Keep. Moving. Forward.

If you missed your 4^th Star this year, panic a little, but then get it together. Fast. In a competitive market, you're circling the toilet bowl but aren't flushed yet. You still have time to influence your 2017 Star Ratings and must make improvement the focus of your benefit, formulary, and network designs in the months ahead. You have big decisions to make and must invest time and resources wisely and with a sense of urgency.

Once again, the 2016 Star Ratings prove the world's biggest experiment in performance-based payment is working and forcing insurer evolution. And evolution isn't about size, it's about continuous adaptation.

Resources

Whether your plan missed the overall 4-Star Rating necessary to earn Quality Bonus Payments, or whether the new 4-Star cut points have introduced new risks of maintaining your overall 4-Star rating, we can help. Our team of experts understands the Star Ratings program and knows how to influence performance. Contact us to learn more >>

Join us on Friday, October 9, from 1-2 pm ET, as John Gorman, Founder & Executive Chairman at Gorman Health Group (GHG), examines the state of government healthcare programs and outlines proven tactics market leaders are implementing to cut costs, increase member satisfaction, and drive sustainable growth. Register now >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

ACO vs. Value-Based

Earlier this year, the U.S. Department of Health & Human Services (HHS) set a goal of moving 30 percent of payment for traditional Medicare benefits to value-based payment models by the end of 2016 and 50 percent by the end of 2018. The Center for Medicare & Medicaid Innovation's (CMMI's) Accountable Care Organizations (ACOs) have been the largest movement toward that goal to date, yet the most recent financial results highlight some flaws, and organizations should carefully analyze whether an ACO or a Medicare Advantage (MA) structure is a better fit for them.

The results show these ACOs are important building blocks for many organizations and will continue to generate success coupled with tweaks made by the Centers for Medicare & Medicaid Services (CMS) to generate more positive numbers. Organizations having already proven their success in generating savings could easily graduate to MA and be successful. Plans not as successful, or plans not currently possessing the infrastructure needed to succeed in MA, should look to CMS' Next Generation model to alleviate some of the concerns of the previous demonstrations.

CMS applauded the most recent financial and quality results, stating Medicare ACOs continue to improve quality of care while slowing down healthcare costs. Ninety-seven ACOs qualified to share in savings by meeting quality and cost benchmarks. CMS stated the ACOs generated net savings of $411 million in 2014 and improved in most quality measures. CMS also noted additional ACOs are inquiring about participating next year.

Yet these numbers represent one in four generating enough savings to qualify for bonuses. Only 11 Pioneer ACOs earned savings payments of $82 million. Five generated losses, with three owing CMS shared losses of $9 million. Despite CMS reporting Pioneer ACOs improving an average of 3.6 percent compared to 2013 on 28 of the 33 quality measures, most did not see any rewards. Only 27 percent of Medicare Shared Savings Program (MSSP) ACOs earned shared savings payments.

The results indicate ACOs need time to adjust to the model and show improvement over time. Thirty-seven percent of the MSSP ACOs launching in 2012 generated savings in the third performance year, compared to 27 percent of MSSPs beginning in 2013 and 19 percent beginning in 2014. However, these numbers do not account for the ACOs dropping out of the program, potentially skewing the earlier success rates. The results also highlight the complexity of participating in CMS' alternative payment models. Many ACOs not as successful initially likely lacked or underestimated the investment needed for new infrastructure and systems. Plans and providers need to understand the need to set up more sophisticated information technology (IT) infrastructure and how to successfully utilize data. As potential ACOs evaluate whether to participate, they should consider how much of an investment is needed in order to succeed.

The major concern over CMS' use of benchmarks is also still evident. In order for an ACO to qualify for shared savings, the ACO must beat a benchmark calculated by CMS. The year-to-year trend in this benchmark is a mix of the national percentage growth rate in Medicare and the absolute dollar value of the annual per member per month (PMPM) increase in the average Fee-for-Service (FFS) per capita costs. Because of this, ACOs in high-cost areas consistently achieving lower costs are not rewarded because their improvements in financial and quality performance are not accurately captured. The current program also lacks a full and up-to-date risk adjustment to accurately account for beneficiaries' health status. Thus, ACOs that may generate savings for CMS still miss the benchmark.

Despite concerns with methodology, there are now approximately 7 million beneficiaries served by more than 400 ACOs. At the same time, CMS has shown it is focused on issues that develop and is working on options which will tweak the program to better fit future participants (the Next Generation ACO, for example). Despite the challenges, ACOs are currently the biggest initiative succeeding in enticing and exposing large numbers of providers and beneficiaries in its effort to coordinate services. The program is still receiving strong interest from both new applicants and existing ACOs seeking to continue the program, and CMS plans to announce new and retiring ACOs by the end of the year.

Resources

We understand Medicare ACOs: We have helped launch eight over the past two years. But we also understand that this is just a first step toward taking greater control over the Medicare revenue stream by "moving up the food chain." Our team of veteran executives can help your ACO evaluate the options, manage the workflow to achieve either a Medicare Advantage contract with CMS or a risk contract with an existing MA plan, and continue to achieve improved outcomes. Visit our website to learn more >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors

New Part D Medication Therapy Management Model: Is It Right For you?

Drum roll, pleaseâ€¦beginning January 1, 2017, the Centers for Medicare & Medicaid Services (CMS) will pay Medicare Prescription Drug Plans (PDPs) to play in Medication Therapy Management (MTM)â€”and it's all about the money. Where before MTM costs were administrative, there will be two additional payments for plans approved for participation in the model program. The "model test performance period" will actually span seven total years (2017-2023) because payments will be made for two additional years after the five-year model performance period. There will be a prospective payment for "more extensive MTM interventions to members and providers" and a performance payment "in the form of an increased direct premium subsidy for plans that successfully achieve a certain level of reduction in fee-for-service expenditures and fulfill quality and other data reporting requirements through the model." The final approved prospective payment will be on a per member per month (PMPM) basis and will be paid per enrollee in the plan regardless of how many enrollees are receiving enhanced MTM services.

As of August 2015, there are 24 million enrollees in Medicare PDPs. Enrollees sign up because the PDP premiums are usually less expensive than MAPD plan premiums. However, these plans usually provide minimal MTM services meant to meet the letter of CMS compliance, not the intent. For example, provider interventions may have no feedback loop to ascertain whether or not the provider agreed or disagreed with or accepted the recommendations. And, therefore, any cost avoidance or actual cost savings data are missing or suspect.

This new enhanced MTM performance model has the potential to move the needle, but PDPs in the eligible regions will have to complete an accurate risk analysis for their members to determine what a viable program consists of and how new and innovative MTM endeavors will positively impact the CMS MTM goals of "optimized therapeutic outcomes through improved medication use, and reduced risk of adverse events, including adverse drug interactionsâ€”while reducing net Medicare expenditures."

"Gorman Health Group is ready to help work with PDP plans in identifying the cohort populations that would benefit from this demonstration," explained a Senior Consultant in Risk Adjustment & Healthcare Analytics at Gorman Health Group. "The successful MTM programs will leverage pharmacy costs and utilization to achieve savings in medical costs. CMS is looking for this savings, and participating plans need to monitor their effectiveness with new MTM programs."

Resources

Click here to download Gorman Health Group's whitepaper on the Part D Enhanced Medication Therapy Management (MTM) Model, written by Celia Girard, Director of Policy & Training and Caron Wingerchuck, Senior Director of Pharmacy Solutions.

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>

by GHG Advisors