In 2015 a Slap on the Wrist Can Be the Kiss of Death

It is truth that in the second term of Democratic administrations, scores get settled between Washington regulators and business partners of the Federal government.  2015 will be no different for our favorite agency, the Centers for Medicare & Medicaid Services (CMS).  It’s already on a pace for 2015 to be the toughest year ever in enforcement actions against Medicare Advantage plans.  And generally speaking, the regulatory bar is rising faster than anyone imagined.  Consider:

• So far in 2015 CMS has issued significant new Medicare Advantage and Part D regulations, and this year’s Advance Notice for 2016 rates and rules for Medicare and Part D health plans is the most anticipated I can remember in more than 20 years.
• 2015 is the toughest year in benchmark payment rates thanks to the approximately $200 billion in cuts from the Affordable Care Act.
• 2015’s technical corrections for Star Ratings are almost bewildering in their complexity in raising the clinical bar. Indeed, in 2014, an election year, CMS famously told Medicare Advantage plans below 3 Stars for 3 consecutive years that a stay of execution was granted. In the fall, many of those low performers were quietly shown the door and were non-renewed. In 2015, however, the agency is handing out live ammunition to its firing squad.  Now an intermediate sanction freezing marketing and enrollment automatically knocks the plan down to 2.5 Stars, often meaning loss of millions in bonus payments and rebate dollars. In competitive markets now, the first plan sanctioned is the first hunk of roadkill.
• The HHS Office of Inspector General, the guys with the badges and guns in Medicare, have made data validation audits for Medicare Advantage risk adjustment one of its top priorities in its 2015 workplan.   And the President’s budget includes over a half-billion dollars in recoveries from these RADV audits.
• But nowhere is there better evidence that the paper tiger is growing its claws back than in CMS’ track record in enforcement actions against MA plans.  In January, the agency levied the highest monthly toll of civil monetary penalties ever — and if it keeps up the pace, 2015 will be nastiest enforcement environment in Medicare history.

*January 2015

Granted, CMPs don’t typically amount to much, usually no more than a couple hundred grand, rarely 7 figures plus.  But the damage is actually far greater, when considering damage in the local and national press; the chatter factor among beneficiaries; lost membership, and damage to the Star Rating and the relationship with CMS, which for many plans is or is becoming its biggest customer.  A slap on the wrist is now the kiss of death in this environment.

Last week, my colleague conducted a webinar on the “Top 10 Things Killing Your MA Plan.” CMS’ top infractions, in order, are coverage determinations and grievances, and formulary administration, or performance of your pharmacy benefits management vendor.  Those findings are driven by these 10 root causes: