As seen during a recent virtual conference, the accelerating expansion of Medicare Advantage (MA) has been accompanied by tension over growing pains such as regulatory issues.
“I think MA was set up really well, but like anything else there’s sort of a moment where you have to look at the program and say: How do we improve it? I think we’re at that point where it’s time for some improvement,” Seema Verma, MPH, the leader of CMS during the Trump administration, said during the online National Medicare Advantage Summit in late April.
MA is gaining more attention from policymakers as it grows. For 2023, enrollment reached 50% of all Medicare beneficiaries, at nearly 30.2 million. In 2013, MA’s share of Medicare enrollment was 29%.
Sachin Jain, MD, MBA, who helped lead the formation of the Center for Medicare & Medicaid Innovation in the early 2010s, said MA’s growth over the past decade may have caught CMS off guard.
“MA was largely an afterthought at the time I was there,” said Jain, now president and CEO of SCAN Group and SCAN Health Plan.
Recent regulations bring big changes
For health plans, the immediate apprehension about MA stems in large part from CMS’s release during the spring of the rate notice for 2024. While the final rates represent an improvement over the preliminary notice from the health plan perspective, key provisions can be interpreted as an effort to curb federal spending and overpayments to plans.
For MA plans collectively, the projected change in revenue is 3.32% — or $13.8 billion — a substantial jump from 1.03% in the advance notice. The difference is thanks to stakeholder feedback that persuaded CMS to phase in a new risk adjustment model and a change to the medical education expense adjustment over three years.
But plans are nervous about the ramifications once the new risk model takes full effect. Big changes include:
- An update to using 2019 Medicare fee-for-service cost data to establish payment benchmarks, as opposed to 2015 data under the previous model
- A shift from ICD-9 to ICD-10 diagnostic codes
- The removal of more than 2,000 discretionary codes as part of a reclassification of hierarchical condition categories (HCCs)
The last point addressed scenarios “where we see a much higher coding level in MA than [in Medicare] fee-for-service,” Molly Turco, senior advisor with CMS’s Center for Medicare, said during a Summit discussion.
The evaluation focused on whether condition categories in MA were higher than in traditional Medicare because of coding choices rather than legitimate differences in morbidity. The resulting reclassification of several HCCs, including those for diabetes and heart failure, will limit the extent to which a health plan member can be assigned a higher risk score based on a provider’s interpretation of condition severity.
Reaction to the new model
Health plans appreciate the importance of MA coding integrity, George Renaudin, JD, president of Medicare and Medicaid for Humana, said during a Summit discussion. They are conscientious about submitting inaccurate codes for removal and working with their provider partners to do the same.
But an issue to sort out with the new model, he said, is “the deletion of codes [for] conditions that are real.” Ideally, he added, CMS will be open to making tweaks before the revamped model takes full effect in 2026.
“We need to work together in the spirit of the public-private partnership that we’ve had in place,” he said.
Verma, who presided over the rate-setting process as CMS administrator, said methodology updates that go beyond coding would be appropriate. For example, the benchmarking approach may need to be overhauled.
“It made zero sense to me that this is an unmanaged population [in Medicare FFS], and you’re comparing it to a managed population, and that is the basis,” she said.
Mark McClellan, MD, PhD, director of the Robert J. Margolis Center for Health Policy at Duke University, called for conceptual changes to risk adjustment in MA: “It’s time to update the underlying data that’s used for payment, make it the same kind of data that’s used for care delivery, the same kind of data that’s used for quality incentives.”
From a hospital and health system perspective, “There’s no question that providers would be very much behind both improving and standardizing the risk adjustment methodology and the quality measurement question,” said Tom Priselac, president and CEO of Los Angeles-based Cedars-Sinai Health System.
Risk adjustment also should incorporate a greater focus on health equity measures and the social determinants of health, he added.
Big-picture improvements to consider
Lessons from successful MA models to date, Priselac said, include “the value of primary care as a core category both to achieve the [optimal] clinical model and [as] a major contributor to the right financial and quality outcomes.”
An increased role for primary care could be part of a reimagined approach not only for MA but for the entire Medicare program, Jain said.
Medicare should be organized “around the moments that matter most to older adults — when you become Medicare-eligible, when you’re first diagnosed with a new chronic disease, when you have a new malignancy, when you have a first fall, when you have the death of a spouse, when you transition from palliative care to hospice,” he said. “These are all moments where older adults need more support, where they need bespoke care models, where they need anticipatory guidance from the healthcare system.
“Today, on all sides of it — Medicare Advantage and fee-for-service Medicare — we provide none of [that]. It’s because we have a financing model. We don’t necessarily have a clinical model.”
Substantive improvement will “require an unprecedented level of collaboration and interaction among government and regulation, the provider community and the plans,” Priselac said, citing pressing issues such as surging expenses from advances in technology and pharmaceuticals.
“If the cost of that is dumped on the physician groups or health systems that are dealing with that, as opposed to having some of that being absorbed as part of the insurance risk at the health plan,” he said, “then you’re going to undermine what it is we’re trying to establish.”