Among policy gripes for insurers was the expanded use of unreliable encounter data to calculate risk scores.


April 3—Medicare Advantage (MA) plans received an unexpected pay boost and generally beneficial policies in the final call letter and rules issued this week for 2019.

MA plans and Part D sponsors on average will receive a 3.4 percent revenue increase, according to the Centers for Medicare & Medicaid Services (CMS). That increase was more than the 1.84 percent that was initially proposed and the 0.34 percent average increase for 2018.

“Generally, from a health insurance provider perspective, this was really positive,” said Cathryn Donaldson, director of communications for America’s Health Insurance Plans (AHIP). “We saw a lot of great policy included that we think will benefit Medicare beneficiaries moving forward.”

CMS noted in a fact sheet that the increase stemmed from greater per capita cost growth in Medicare fee for service (FFS), to which MA growth rates are linked.

Risk Adjustment Changes

CMS updated the HCC Risk Adjustment model, which is used to increase payment for plans with large numbers of sicker enrollees, by adding mental health, substance use disorder, and chronic kidney disease conditions.

However, at the urging of insurers, CMS did not finalize a proposal to take into account the total number of conditions that enrollees may have. Instead the agency plans to give stakeholders more time to understand the implications of the proposal, then implement the “Payment Condition Count Model” in 2020.

Industry experts were relieved that the change was not finalized after an Oliver Wyman analysis found it would increase payments for enrollees with no health conditions and cut payments for enrollees with one to three conditions.

“These unintended consequences of how the model is specified may undermine the apparent intent of the new model to increase plan reimbursement for members with more clinical conditions,” the Oliver Wyman analysts wrote.

Industry watchers also hailed the inclusion in the final call letter of provisions allowing MA plans to expand the scope of the “supplemental benefits” they offer. Instead of limiting supplemental benefits to those with a primary purpose of daily maintenance, CMS will allow supplemental benefits that are used to “diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization.”

“CMS is providing Medicare Advantage plans additional flexibility to offer services such as potentially non-skilled in-home care services that increase a plan’s affinity with members and keep members healthy and out of the hospital,” said Andrew Kadar, managing director in the Healthcare Services practice of L.E.K. Consulting.

Policy Denials

Insurers did not get every policy change they sought in the final MA rules.

For instance, CMS went ahead with its proposal to increase the use of encounter to calculate risk scores. Encounter data will comprise 25 percent of the score in 2019, up from 15 percent this year. Insurers have said that such data, which includes diagnostic data, is flawed.

“Plans feel that the use of encounter data is a work in progress where some continued refinements might be necessary before such data can be seen as accurate and complete,” the Blue Cross and Blue Shield Association wrote to CMS.

Insurer concerns stemmed in part from a January white paper by Milliman that found that risk scores would drop by a median of 4 percent under the switch to the encounter data-based approach.

CMS responded that the encounter data will be used merely to supplement FFS data.

“We believe the use of MA encounter data to inform utilization scenarios is reasonable as we are using it in conjunction with Medicare FFS data, which mitigates concerns about the completeness and quality of the MA encounter data,” CMS officials wrote in the final rule.

The agency also rejected insurer calls to reconsider its use of FFS data to calculate the benchmark against which MA plans bid. CMS includes data from Medicare enrollees with only Part A or Part B coverage to calculate the benchmark, along with those who have both types of coverage. Including all three categories unfairly lowers the benchmark, say insurers, who also view the CMS approach as counter to statutory language in the Social Security Act.

The insurers’ objection has been backed up by the Medicare Payment Advisory Commission (MedPAC), which recommended that CMS limit the calculation to Medicare enrollees in both Part A and Part B.

“This [proposed] change to the calculation should result in greater payment equity among MA plans and between MA and FFS Medicare,” MedPAC wrote in its 2017 report to Congress.

The CMS benchmark approach has had a significant impact on plans in certain parts of the country with large concentrations of Part A-only enrollees, such as those who still have employer coverage for other types of care, industry experts say.

“To the extent that we have concerns about some of the policies that CMS is moving forward with, we’re encouraged by the agency’s commitment to collaborating with the industry on continuing to improve and transform the Medicare Advantage and Part D program to improve coverage for beneficiaries,” said Greg Berger, an executive director with AHIP.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, April 04, 2018