The annual benefit and payment parameter notice was released early to ‘provide more certainty’ to marketplace.


Sept. 2—New standards proposed for the government-run health insurance marketplace reflect how the Centers for Medicare & Medicaid Services (CMS) is responding to provider calls for stabilization amid industry turmoil and the withdrawal of large insurance companies.

The marketplace’s annual Notice of Benefit and Payment Parameters is usually released in November and this year’s August release date was seen by some as evidence that CMS is responding to insurer requests.

The earlier release was timed to “provide more certainty” to the marketplace, and the proposed changes are aimed at strengthening the marketplace’s risk-adjustment program and making it more effective at pooling risk, said a CMS release.

Specific proposals include: Incorporating into the risk-adjustment formula factors that better recognize how late-enrolling adults skew costs (starting in 2017); using prescription drug data to fill in missing diagnosis information (starting in 2018); and creating a high-risk pool to cover 60 percent of the costs for individuals whose medical expenses are more than $2 million (also starting in 2018).

Listening & Adapting

The proposals are a vast improvement over what CMS included in a white paper on marketplace risk adjustment released in March, Gabriel McGlamery, a senior healthcare policy consultant for the Florida Blue Center for Health Policy in Jacksonville, said in an interview.

One obvious change McGlamery noted was that CMS split the risk severity category for chronic Hepatitis in two, creating one category for Hepatitis A and B and another for Hepatitis C in an attempt to account for the high-cost medications associated with treating the latter condition.

McGlamery, who will be a presenter in an Oct. 13 HFMA webinar on risk-adjustment, described how an arthritis patient’s medication history could be used by CMS to lower risk severity for individuals who can be treated with over-the-counter remedies or to increase it for those taking expensive biologic drugs.

“This is pretty narrow, pretty nerdy stuff, but it’s important,” McGlamery said.

Since payments would be affected by drug utilization, CMS acknowledged in its proposal that it was concerned about incentivizing overprescribing and sought to “strike a reasonable balance” between improving its formula’s predictive accuracy and reducing the incentive to overprescribe.

But Harold Miller, president and CEO for the Pittsburgh-based Center for Healthcare Quality and Payment Reform, downplayed the risk and said that payment policies inadvertently incentivizing overprescribing is more of a concern on the provider end than on the health plan side.

In an interview, Miller described the proposal to use prescription history to fill in gaps caused by missing diagnosis data as a “tweak” that had advantages and disadvantages. The advantage is that it helps provide a better assessment of a plan member’s health. However, it may introduce a bias against health plans whose members may have an undiagnosed or untreated condition.

As an example, Miller cited how there can be two individuals with diabetes enrolled in different marketplace plans. Neither has seen a physician for a while. But one has in the past, was prescribed medication for the condition, and continues to take it. While the other has never received a prescription.

Under the proposal, the first plan would be given a higher risk score, Miller said. While the diabetic taking the medication may boost the plan’s overall drug expenses, theoretically, they should have fewer health problems and, therefore, should lower the plan’s risk score.

“It might be taking more from health plan that actually has a more challenging population,” Miller said.

Fundamental Problem

Miller added that the proposal exposes a “fundamental problem” with current risk-adjustment methodology.

“You don’t know the patients,” Miller said. “There needs to be a better mechanism to understand what their problems are.”

Miller said he favors a risk stratification based on a physician’s assessment of a patient rather than reliance on imperfect formulas that deflect attention from healthcare’s mission.

“There is a big problem with trying to document what a patient has--but not treating what they have--in order to show you have a higher-risk population,” Miller said.

The CMS notice also discussed how it was reassessing “guaranteed renewability regulations” that may interpret certain business maneuvers as a plan’s withdrawal from a market and “inadvertently trigger” the law’s five-year ban on that plan from a marketplace.

McGlamery noted that the regulation doesn’t have much effect on Florida Blue’s plans, but a reassessment makes sense given that a lot of guesswork went into the original marketplace products.

“If you pull all your products and replace them, that is considered a market withdrawal,” McGlamery said. He compared it to banning a car manufacturer for updating its different models.

“It’s like saying: ‘You have to offer the same old cars or you can’t sell cars here for five years,’” McGlamery said.

Miller agreed, and said plans shouldn’t be penalized for leaving a market if they did so “for sensible business reasons.”

A large plan may come in and underprice its competitors, for example, causing smaller operations to abandon the market, Miller said. Then the large plan may decide a market wasn’t profitable enough and also leave, leading the smaller plans to want to return.

“If there’s a dramatic change in an overall market, that’s a good reason for dropping out and a good reason for coming back,” Miller said.

The proposals don’t appear like they will lead to dramatic improvements and show how CMS really has only “limited tools and levers they can turn” to address complex issues, Miller said.

McGlamery was skeptical of the proposed high-cost risk pool and noted that he had concerns that it still has “opportunities for gaming” the system but, overall, he was pleased with what CMS presented.

“It acknowledges some of the things that have driven insurers out of the marketplace,” McGlamery said.

Less Choice, More Expense

Consumers are facing fewer and more expensive choices, according to research by the McKinsey Center for U.S Health System Reform.

Fifty-one percent of U.S. counties had five or more insurance carriers participating in the marketplace in 2016, while only 2 percent of counties were limited to one carrier, according to a recent McKinsey study. For 2017, the researcher predicts only 33 percent of counties will have five or more carriers and 12 percent will have only one.

CMS noted in its press release that the proposals to strengthen the marketplace build upon other recent efforts such as an investigation into whether providers are “steering” Medicare- and Medicaid-eligible individuals toward enrolling in higher-reimbursing marketplace plans and a pilot a program allowing consumers to make more meaningful comparisons about the size of a plan’s provider network.


Andis Robeznieks is a freelance writer based in Chicago. Follow Andis on Twitter at @AndisRobeznieks.

Publication Date: Friday, September 02, 2016