Little Good News for Medicare Advantage in Senate Finance Hearing
The Senate Finance Committee held a hearing on Medicare yesterday and received testimony by CMS Medicare chief Jon Blum. Almost a week after the shocking 45-day Notice for Medicare Advantage (MA) and Part D was released, Blum offered little in the way of good news on the 2014 rates.
Blum said CMS is committed to ensuring seniors have strong choices and accuracy in payments. He briefly addressed the draconian 45-day Notice and said that one reason 2014 proposed rates to MA plans are lower is because Medicare spending is lower, and that’s good news for the program. He also said it’s longstanding CMS policy not to assume a Sustainable Growth Rate (SGR or the “doc pay cut”) fix until it is current law, and said the best way to stabilize both traditional Medicare and MA is with a long-term fix to the SGR. He’s certainly right about that, but with a $130 Billion price tag, may not be feasible while the budget debate rages here in DC.
Blum admitted that CMS does have discretion with respect to the risk adjustment model, and that could be good news for MA plans — changes to the HCC model drove a significant portion of the cuts in the 45-day Notice. He suggested — obliquely — that CMS’s proposal to refine the HCCs “to exclude certain conditions that are most commonly coded by Medicare Advantage plans” could be reconsidered.
Finance Committee Chairman Max Baucus (D-MT) said there is a need to address the 45-day Notice cuts, but did not offer any specific proposal, and neither did Blum. CMS has lowered the overpayments to MA plans relative to FFS from 14% in 2009 to just 4% in 2013 (before the proposed 45-day Notice cuts to 2014 rates), with the difference to be “phased down further.” Blum stated on several occasions that the Medicare Advantage rates were proposed, not final. He said the payment reductions over the past few years coupled with membership growth in the program is evidence that CMS can reduce payments and yet the program can grow.
Blum later suggested that CMS’s goal was to ensure that seniors have opportunities to enroll in 4 and 5 star plans, and pointed out that those plans not achieving 4 stars on the CMS rating system would face significant additional payment challenges.
So the brutal proposed 2014 payment rates for MA have Congress’ attention, but a solution is far from clear with the sequester looming on March 1. The probability of a legislative SGR fix by June — when MA bids for 2014 are due — is virtually nonexistent, and that’s tragic as an SGR fix of two or more years would bump up MA rates by about 5%, offsetting much of the shortfall in payments. Fixing the risk adjustment proposals won’t impact benchmarks, so are only of limited value. Relief on other proposed payment changes like the Total Benefit Cost limits would be helpful but wouldn’t significantly change the rate cuts.
So we got a few rays of daylight in the gloom of the 45-day Notice, but no clear path to fixing its worst features. AHIP is on the Hill with a massive lobbying campaign, and there’s a steady stream of visitors to CMS seeking relief, but no evidence yet that we might duck the 9-10% cuts in the proposal with 30 days before it’s final.
Resources
Listen in to John Gorman’s take on the draft call letter and his thoughts on the implications for Medicare Advantage health plans — and their providers.
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.