In its proposed rules and payment rates, federal officials double down on efforts to wring value out of the Medicare Advantage program.
It's all part of the plan.
Proposed Medicare Advantage payment rates and rules for 2016 released Friday feature an average proposed revenue impact on health plans pegged at -0.95%. When risk-adjusted to reflect costs associated with treating elderly populations, such as chronically ill patients, MA health plans should post modest 1.05% revenue growth in 2016, federal officials say.
In a conference call with reporters Friday afternoon, Sean Cavanaugh, director of the Center for Medicare, said the proposed payment level and rule changes for 2016 represent "stable rate policies" that embrace a drive started last month to boost value-based contracting in Medicare.
He said the proposed payment rates and rules, which include down-weighting six MA quality star ratings to reflect the impact of socio-economic status (SES), exemplify the shift to value-based payment models in Medicare. "The principles and goals [of value-based contracting] apply to Medicare Advantage and Part D as well," Cavanaugh said, referring to Medicare's prescription drug program.
Calculations resulting in the proposed average payment rate cut of -0.95% were based on a number of assumptions:
- MA Growth Rate: +1.7%. The ranks of MA beneficiaries have grown 42% since the passage of the Patient Protection and Affordable Care Act in 2010, according to the Centers for Medicare & Medicaid Services. More growth is forecast in MA enrollment, which CMS tallied at 16 million last year, or about one third of all Medicare enrollees.
- Quality star rating changes: +0.5%. This figure includes anticipated revenue gains from the positive trend in the MA quality star ratings program combined with proposed rule changes such as down-weighting several MA star ratings measures to reflect SES impact.
- Risk model revision: -1.7%. In an ongoing effort to scrap fee-for-service payment models, CMS is moving away from risk modeling the MA beneficiary population based on medical diagnoses, favoring actual-cost measures such as episodes of care. "In recent years, CMS began collecting encounter data from MA plans to develop more accurate payment models. In 2015, CMS added encounter data as an additional source of diagnostic data used to calculate risk scores," according to a fact sheet released with the proposed MA payment rate and rule changes.
- Transition to PPACA rules: -0.8%. This figure includes services required for MA health plans being phased in over several years.
Cavanaugh said a "coding trend," which reflects the percentage of beneficiaries with risk-adjusted health coverage factors such as affliction with chronic illness, should put most MA health plans in the black for 2016. "The industry has historically been able to achieve a 2% increase," he said, noting that most MA plans should anticipate a 1.05% revenue impact from the proposed payment rate and rule changes.
The 2016 MA payment rate and rules are set to be finalized April 6. The public may submit comments to CMS until March 6.
Chilly Response from Health Plan Association
Mirroring its criticism of MA payment rate cuts last winter, the industry group America's Health Insurance Plans says CMS is putting a valuable value-based program at risk.
"There's wide recognition that providing stability to the Medicare Advantage program is critically important for the more than 16 million seniors enrolled," AHIP President and CEO Karen Ignagni said in a statement released by her office Friday. "CMS is now proposing additional cuts to Medicare Advantage at a time when healthcare costs are projected to increase. Protecting the millions who rely on this program should mean no further cuts. "
On Monday, AHIP circulated a letter signed by more than three dozen business groups. "Annual cuts to the MA program continue to jeopardize employers, employees, providers, and patients' choices in coverage under Medicare," the letter states. It was sent to CMS on Feb. 18.
Poverty Weighs on MA Star Rating Program
In a tentative step toward weighting MA quality stars ratings more heavily for SES, federal officials are proposing to down-weight six star rating measures in 2016.
In the proposed MA star ratings rules released last week, CMS officials say there is enough evidence showing the impact of SES on MA star ratings performance to start reforms. "Our preliminary analyses have revealed both practical and statistically significant evidence of differential outcomes for [low-income] beneficiaries," the proposed 2016 rules state.
Six MA quality star ratings are slated for down-weighting under the proposed 2016 rules:
- Breast cancer screening
- Colorectal cancer screening
- Blood-sugar-controlled diabetes care
- Osteoporosis management in women who had a fracture
- Rheumatoid arthritis management
- Reducing fall risks
CMS proposes reducing the weight of these star ratings measures by 50%.
In its review of MA star ratings for SES impact, CMS focused on 19 of the 46 star measures in the MA and Part D programs, according to the proposed 2016 rules. Several of the excluded star-rating measures are already risk-adjusted for SES, the proposed rules state.
Research on the impact of SES on MA quality star ratings suggests that several SES characteristics affect star rating performance, CMS says, including educational attainment, dual eligibility for Medicare and Medicaid, self-rated general health status, and age.
'It Could Have Been Worse'
Ashraf Shehata, US advisory leader for health plans at KPMG, says the annual ritualistic pushing and pulling over the MA payment rate is off to a relatively mild start.
"It could have been worse," he said Monday, noting the down-weighting of some MA star ratings for SES impact is a significant concession to health plans. "They're trying to encourage plans to welcome all beneficiaries… CMS wants to see the Medicare Advantage program continue."
Shehata says KPMG industry polling shows commercial insurance carriers have reached an MA plateau, with participation in the value-base program falling from 35% of carriers polled in 2012 to 24% in 2013.
"This is really for the plans with good care management and strong provider networks," he said, noting that the MA market includes payers ranging from well-established "Blues" to innovative healthcare providers. "Even some hospitals are opening MA plans because that's what their patients are asking for."
The proposed 2016 MA payment rate and rules reflect an "underlying theme" guiding Medicare officials, he says.
A pledge from CMS to enforce MA provider directory rules that are designed to boost transparency for patients indicates that the agency "is going to be much more watchful over risk-based payments. They're tightening up on areas that haven't been too tight," Shehata says.
Christopher Cheney is the CMO editor at HealthLeaders.