Going From Difficult to Almost Impossible: Preparing Bids for 2013

By James Gutman - June 1, 2012

As Medicare Advantage and stand-alone Prescription Drug Plan sponsors head into the weekend before the Monday due date for their bids to CMS for 2013, they face far more major uncertainties than they did a year ago. It's enough to make an actuary want to tear his hair out — if he could find the time to do that.

Let's review just some of the unknowns that could have a major impact on product, service area, price and benefit decisions that need to be reflected in the bids. First, there are the 2% payment cuts plans stand to experience if the "sequestration" resulting from congressional failure to agree on budget cuts goes into effect in 2013. But Congress still could block those cuts in a "lame duck" session after the November elections. CMS has not provided any guidance on how plans should reflect this in bids, pointing out that there are statutory limits on what it can do. Then there are the huge new Medicare-Medicaid dual-eligible demonstration plans that could draw away enrollees from PDPs starting in 2013 — if the Supreme Court does not overthrow the whole health reform law on which those demos are based. Again, plans won't have any more info on this by the June 4 bid due date.

Next we have had delays, which are understandable given everything on CMS's plate, in getting plans data on such bid-affecting factors as low-income subsidy beneficiaries. And CMS on May 24 reissued the tool plans need to use in calculating out-of-pocket costs (OOPC) for beneficiaries because the tool, which is used to assess whether plans would be charging beneficiaries too much, wasn't calculating deductibles correctly. Moreover, plans will have to decide which areas they wish to serve for 2013 more than three months before they get their 2013 star ratings that can help determine whether certain service areas and products are even feasible next year.

How do you make these decisions with all of those uncertainties — not to mention the perennial one regarding what Congress will do on the big physician fee cuts slated to occur Jan. 1? Do you rely on the sage doctrine of John Maynard Keynes, who said that "in the long run, we're all dead," and just go ahead and plan for the short run, assuming nothing dramatic will change? Is ignorance bliss here? Have a good weekend!