Issues That Will Define Government Health Programs in 2016
The new year brings a slew of issues that will define government-sponsored health programs. Here’s what we’re watching closely, not necessarily in this order. Opportunities have never been greater in Medicare, Medicaid, and ObamaCare, but execution risk is rising fast. If this was an easy business, we’d be out of business.
Drug Pricing: Prospects for a legal fix in Congress is questionable, and this will be a leading issue in the Presidential campaign. Expect administrative action, demonstration project solicitations from the Centers for Medicare & Medicaid Services (CMS), “comparative effectiveness research” by federal agencies on specialty drugs, and “collaborative pricing” initiatives between pharma manufacturers and payers on high-profile therapeutic classes. Health plan CEOs expect higher specialty drug cost trends to be the biggest driver of medical cost trend in 2016.
Medication Therapy Management (MTM): 2016 is the year MTM gets real. CMS will begin conducting widespread audits of Medicare Advantage (MA) and Part D plan medication reviews, and there is tremendous emphasis on MTM in the Star Ratings system. Making MTM real for your members will require extensive vendor contracting and Pharmacy Benefit Manager (PBM) coordination, so turn your plan’s attention to this fast.
Antitrust/Mergers: Sometime in Q3 or Q4 of 2016, the Federal Trade Commission and the Department of Justice Antitrust Division will rule on proposed mergers for Aetna/Humana, Anthem/CIGNA, Walgreens/Rite-Aid, and Pfizer/Allergan. We expect all four deals to be approved but with strings attached; e.g., we expect Aetna/Humana will have to divest 250,000-450,000 lives to get a green light.
Star Ratings: Must be a central focus of all payers and providers in government programs. Star Ratings has transcended MA and Part D. Star Ratings data is already being collected by ObamaCare plans, and over a dozen state Medicaid programs are using CAHPS® and Star Ratings data in contracting with plans for dual-eligible and managed long-term care (LTC) initiatives. And while there aren’t major changes to Star Ratings measures in 2016, scoring is the game-changer: 50% more plans will be scored for the first time this year, guaranteeing a shift right in the ratings bell curve and that many of 2015’s 4-Star plans will go off the cliff. To maintain progress, plans must run Star Ratings as a program with dedicated leadership and execution spelled out at the workflow level.
Risk Adjustment: 2016 will usher in increased efforts to ensure payment accuracy through more stringent and expansive Risk Adjustment Data Validation (RADV) reviews, and so providers delegated for risk and sharing in a percent of premium will be in the spotlight. CMS is seeking to contract with third-party auditors on RADV, and risk adjustment is a top concern in the Department of Health and Human Services (HHS) Office of Inspector General (OIG) work plan.
Providers and Care Delivery: 2016 will be a transformative year with contracted providers in government programs. Narrow/preferred networks and value-based risk contracting will go mainstream this year, whether providers are ready or not. Huge penalties start this month on network adequacy and accuracy of provider directories, and NAIC’s model guidance on provider networks will be a central document governing the issue. Star Ratings measures on access to care and the member experience put new heft and revenue behind network requirements. Provider-sponsored entities will provide a mini-surge of dozens of new plans into MA and Medicaid in 2016 and 2017, especially among Medicare Accountable Care Organizations (ACOs), so keep your friends close and your enemies closer. Home- and community-based services and alternatives to nursing homes will go mainstream in 2016. Retail pharmacies will become the second-most-important provider type for health plans. With crushing burdens of ICD-10 and meaningful use, small and mid-size practices will become overwhelmed and will underperform. Plans will need aggressive oversight, quality improvement, and directory management activities to stay ahead.
Exchange Payment: For the first time in two years, CMS is going to begin paying plans HIX 820s at the member level, which will shine a spotlight on enrollment reconciliation issues that have been lingering. The plans’ readiness transition period is from January to March, then it gets real in April.
Medicaid and Dual Eligibles: Unexpected states like LA, SD, and IA are now considering Medicaid expansion. CMS is focusing on new Medicaid quality measures and will be depending heavily on NCQA quality measures to gauge health plans. This will impact payment and future membership for some lower-rated plans. Beneficiary opt-outs in excess of 75% are plaguing early dual-eligible demos, but many states remain in fiscal crisis and need to move ahead to balance budgets.
Compliance: 2015 was a near-record year in CMS enforcement actions, and scores always get settled with insurers in the second term of a Democratic administration. There will be a slew of rules coming from CMS this year as well as expanded audits from OIG. Both agencies’ approaches indicate how critical documentation remains: CMS added a number of items to documentation requests for Compliance Program Effectiveness; Medicaid, dual-eligible, and LTC demos are still very documentation-heavy, and CMS found that approximately two-thirds of CMS-reviewed FFM issuer plan policies and procedures (P&Ps) were incomplete or had operational findings with their vendor contracts. So even though there is focus on data monitoring and passed/failed samples, P&Ps and documents are still the cornerstone.
There is no question that 2016 will be a banner year in government programs enrollment, and the long walk in the desert on payment rates in MA and Medicaid appears to be over. But execution risk and the enforcement environment have never been tougher. This year will be a “Darwinian moment:” it’s not about being the biggest or even the smartest but being the most adaptable.
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