Wednesday, February 25, 2015

According to a recent report,

U.S. health care spending grew by an estimated 5% in 2014, up from 3.6% in 2013.

Source: "Hospital Price Growth Drops Below 1% Even as Health Sector Employment Jumps," Altarum Institute Press Release, February 13, 2015, http://altarum.org/about/news-and-events/hospital-price-growth-drops-below-1-even-as-health-sector-employment-jumps

Today's Datapoint

Nearly 50% of people with prescriptions for diabetes, high blood pressure and high cholesterol do not take their medications as prescribed, according to a new analysis from the Seattle-based analytics company Healthentic.

Quote of the Day

"One of the things [lawsuits filed in response to the Anthem data breach] are claiming is that Anthem did not encrypt the data. Well, that is true, but I would say [if] it is stored data and it's not being processed, [encryption] is not going to happen. Whether you are talking to Experian or ... anybody in the industry, if [data are] actively being used, as long as you have it beyond a hard data center or something like that, it's not going to be encrypted...."

— Chris Apgar, president and CEO of Apgar & Associates, in Portland, Ore., told AIS's Health Plan Week.

Tuesday, February 24, 2015

HHS Brief: 87% of Healthcare.gov Enrollees Qualify For Premium Tax Credit

HHS recently released an ASPE Policy Brief regarding FFE Average Premiums After Advance Premium Tax Credits during this open enrollment season to date. Here's what they found:

87% of individuals enrolling qualify for an advance premium tax credit.
Almost 6.5 million individuals qualify for an average advance premium tax credit of $268 per month
The average advance premium tax credit covers about 72 percent of the gross premium
The average net premium is $105 per month for individuals qualifying for an advance premium tax credit
79% of individuals had a plan available for
53% of individuals enrolled in such plans

Source: HHS, February 9, 2015

According to a recent report, in 2013,

... the maximum annual contribution to a Health Saving Account (HSA ) was $3,250 for account owners with individual coverage and $6,450 for account owners with family coverage; persons who had reached age 55 and not yet enrolled in Medicare could make an additional $1,000 catch-up contribution

Overall, 15% of all accounts received the maximum contribution
16% of accounts belonging to men received the maximum contribution
10% of accounts belonging to women received the maximum contribution

Source: "Who Maxes Out on Health Savings Accounts," Employee Benefit Research Institute (EBRI) Press Release, January 29, 2015, http://www.ebri.org/pdf/PR1109.HSA-max.29Jan15.pdf

Playing the Numbers: Interpreting CMS’s Enrollment Data Is Exhausting, Revealing

By James Gutman - February 18, 2015

The full picture of how the 2015 Annual Election Period (AEP) was for Medicare Advantage (MA) plans finally emerged Feb. 11 when CMS posted the February enrollment data, and the answers in two words are “good” and “perplexing.”

The “good” stems from an approximately 342,000 gain in MA membership between CMS’s January and February data. That came on top of a 133,000 rise between last December and this January to bring the total to 475,000, a solid 3% gain albeit smaller than the 546,000 or 5.5% in the 2014 AEP. The difference from a year ago is logical, suggests consultant Eric Hammelman, a vice president at Avalere Health, LLC, when one considers that benefits in many MA plans are less “robust” for 2015, as plans responded to reduced payment rates from CMS by trimming benefits or raising copayments.

The “perplexing” relates not to the agency’s somewhat contra-intuitive two-step MA reporting — with the January data including all but the last three days of the AEP — since plans and analysts now are used to not reading too much into the January results. Instead it relates to some of the individual company and product results that don’t seem to make sense until you look at the underlying developments contributing to them.

Anthem, Inc., for instance, Hammelman notes, is down substantially in MA enrollment from the year-ago level, but up a healthy 5% in individual markets where it remained. The insurer had numerous service-area exits and lost a big employer account but fared well in the MA AEP otherwise. UnitedHealth Group is an example in the reverse direction. Its enrollment figures look pretty good because it picked up a couple of large employer pacts, but United was down for the second straight year in the individual MA market because of service-area pullouts, points out Hammelman.

And then there are the strange-seeming data showing that recent years’ hot MA product Special Needs Plans (SNPs) actually had nearly 90,000 fewer members on the Feb. 1 payment date, reflecting enrollments accepted through Jan. 9, than it did for the Dec. 1, 2014, payment date. Here there appear to be two culprits: the move of SNP members to the new CMS-backed demonstrations for Medicare-Medicaid dual eligibles and the exits of some lower-star-rated SNPs because they can’t garner enough revenues to cover their costs.

What do you think are the biggest takeaways from the February MA data other than that “there are lies, damn lies and statistics”? Are CMS star ratings now going to be the biggest determinants of which MA plans live and die? Was 2014 the last big year for MA growth because, even with the continuing help from large numbers of Medicare age-ins, plans are deciding some geographic markets no longer make sense for these products? And are the days of SNPs numbered if they don’t get stars relief?

http://aishealth.com/blog/medicare-advantage-and-part-d/playing-numbers-interpreting-cmss-enrollment-data-exhausting-reve?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=67761355

Obama Administration Disallows Plans Without Hospital Coverage

By Jay Hancock February 23, 2015

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The Obama administration has blocked health plans without hospital benefits that many large employers argued fulfilled their obligations under the Affordable Care Act.

Companies with millions of workers, mainly in lower-wage industries such as staffing, retailing, restaurants and hotels that had not offered health coverage previously, had been flocking toward such insurance for 2015.

Plans lacking substantial coverage of hospital and physician services do not qualify as “minimum value” coverage under the law and so do not shield employers from fines of $3,000 or more per worker, the Department of Health and Human Services said late Friday.

The move closes what many saw as a surprising loophole, first reported by Kaiser Health News in September, that let companies bypass the health law’s strictest standard for large-employer coverage while at the same time stranding workers in sub-par insurance. Employees offered such plans would have been ineligible for tax credits to buy more comprehensive coverage in the law’s online marketplaces.

The agency did decide to allow such plans for this year only if employers had signed contracts by Nov. 4.

However, it also granted relief to workers offered such coverage, saying they may receive tax credits according to their income to buy more comprehensive insurance in the online exchanges. Ordinarily, employees offered coverage qualifying as minimum value aren’t eligible for the subsidies.

Despite what Washington and Lee University law professor Timothy Jost called “a lot of pushback” from employers, HHS has now followed through on earlier guidance that it intended to disallow such coverage.

A plan without hospital benefits “is not a health plan in any meaningful sense,” the agency said in a large batch of regulations issued Friday. Scoring such a plan as minimum value “would adversely affect employees (particularly those with significant health risks) who understandably would find this coverage unacceptable. …”

The ruling ends a debate that erupted last summer over HHS’ official, online calculator for determining minimum value in a large-employer plan.

The Affordable Care Act does not specify “essential health benefits” in large-employer plans, such as hospitalization and drugs, as it does for individual and small-business insurance. Instead, the minimum-value test requires large companies to cover at least 60 percent of expected medical costs.

One way to certify a plan as minimum value is to plug its components — benefits, deductibles and so forth — into the official calculator. Many were shocked to learn that the calculator gave passing scores to plans with no inpatient hospital coverage.

Now HHS is saying: Ignore the calculator. Large-employer plans must pay for substantial amounts of hospital care no matter what.

“What remains a mystery is whether the calculator was at fault,” Alden Bianchi, a lawyer who advises many companies that were considering such plans for 2015, said via email. “The regulators don’t say. Rather, they take the [position] (not unreasonable or nutty, in my view at least) that a plan with these services is not real health insurance.”

Even with its allowance for companies that had signed contracts by Nov. 4, HHS stopped short of employer pleas for more flexibility. Industry groups wanted a green light to temporarily offer plans without hospital benefits if companies had made substantial preparations to do so but hadn’t signed a deal.

It’s unclear how many firms will offer such coverage for 2015. Nearly half of the 1,600 employer members of the American Staffing Association, which employ 3 million temporary employees on any given day, had committed to offer or were considering the plans last fall before KHN reported that regulators were moving against them.

While some members followed through and adopted such coverage, most did not, said Edward Lenz, senior counsel for the association, a trade group of temp and recruiting firms.

Calculator-approved plans lacking hospital benefits are comparatively rich in outpatient services such as doctor visits. Consultants selling the coverage had argued it was a good first step for lower-wage, high-turnover employers that had never offered major-medical insurance.

“I’ve had a couple discussions in the last several days with clients who were interested but disappointed they were too late to install them for 2015,” said Edward Fensholt, a benefits lawyer with brokers Lockton Companies. Other companies “leapt on them,” he said.

For employers that planned to offer such coverage but hadn’t pulled the trigger by Nov. 4, “this is very disruptive news,” Bianchi said. “Best I can recall, I have about a half dozen clients that are in this position.”

Anne Lennan is president of the Society of Professional Benefits Administrators, whose members process claims for self-insured employers.

“A very small number of non-hospital plans were implemented by my members — as a percentage of all the plans they administer,” she said via email.

http://kaiserhealthnews.org/news/obama-administration-disallows-plans-without-hospital-coverage/

65% of Integrators say they are in excellent health

According to research study by Klick Health, the more chronic patients manage their conditions online, the better they feel about their health. Below are some findings:

4% of Seekers say they are in excellent health.
2% of Traditionalists say that they are in excellent health.
18% go online daily or weekly to integrate digital technologies that help manage their health (Integrators).
47% use the Internet on a monthly basis to seek health information (Seekers).
35% don't go online for health reasons, saying they manage their health in non-digital, traditional ways (Traditionalists).

Source: Klick Health

Today's Datapoint

33 ... single-carrier private insurance exchanges are now being operated by 28 insurers (more than 10% of commercial carriers), with 70% of them targeting mid- to large-group businesses (51 to 1,000 employees), according to an analysis of commercial markets conducted by AIS.

Quote of the Day

"Manufacturers cannot continue the pattern of ratcheting up drug cost per course somewhat above the most recently launched drug in its class. While this has worked to date, the frog in the increasingly hot water is beginning to notice. Don't expect the frog to wait until it's almost boiled alive, when it can no longer jump."

— Elan Rubinstein, Pharm.D., founder and principal of EB Rubinstein Associates, told AIS's Specialty Pharmacy News.

According to a recent survey,

According to a recent survey, 48% of the approximately 30 million adults who remained uninsured at the end of 2014 were eligible for assistance under the Affordable Care Act, including 30% who were eligible for marketplace tax credits and 18% who were eligible for Medicaid.

Source: "New Kaiser Survey Finds Eleven Million Newly Insured Adults As of Mid-December, But Nearly Half Who Remained Uninsured One Year After Full Implementation of the Affordable Care Act Were Eligible for Medicaid or Marketplace Tax Credits," Kaiser Family Foundation, January 29, 2015, http://kff.org/health-reform/press-release/new-kaiser-survey-finds-eleven-million-newly-insured-adults-as-of-mid-december-but-nearly-half-who-remained-uninsured-one-year-after-full-implementation-of-the-affordable-care-act-were-eligible-for-m/

Today's Datapoint

13% of Medicaid enrollees also had some form of private insurance in 2012, according to a report from the Government Accountability Office.

Quote of the Day

"Unfortunately, as typically happens with folks from PBMs, health plans, payers, pharma manufacturers, wholesalers, etc., they each had their own agenda and long story short is they could not come to agreement [on a replacement for Average Wholesale Price]. AWP is still the predominant benchmark used in the marketplace for all things reimbursement.... In my mind [Average Manufacturer Price] is going to supplant AWP at some point. They use AMP in some government calculations right now for Medicare. But the problem with AMP is it is not a real-time benchmark, more of a retrospective look."

— Robert Ferraro, a principal in Buck Consultants' National Pharmacy Practice in Phoenix, told AIS's Health Plan Week.

Playing the Numbers: Interpreting CMS’s Enrollment Data Is Exhausting, Revealing

By James Gutman - February 18, 2015

http://aishealth.com/blog/medicare-advantage-and-part-d/playing-numbers-interpreting-cmss-enrollment-data-exhausting-reve?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=67761355

Friday, February 20, 2015

According to a recent report,

18% of the $263 billion spent on retail prescription drugs in the United States in 2012 was paid out of pocket.

Source: "Strategies Used by Adults to Reduce Their Prescription Drug Costs: United States, 2013," Centers for Disease Control and Prevention, NCHS Data Brief Number 184, January 2015, http://www.cdc.gov/nchs/data/databriefs/db184.htm

Basic Health Program Funding Methodology Final Notice

FACT SHEET

FOR IMMEDIATE RELEASE

February 19, 2015 Contact: CMS Media Relations

(202) 690-6145 | press@cms.hhs.gov

Basic Health Program Funding Methodology Final Notice

Fact Sheet

The Centers for Medicare & Medicaid Services (CMS) today issued a final notice establishing the methodology for determining federal funding for the Basic Health Program in program year 2016. The Basic Health Program provides states with the option to establish a health benefits coverage program for lower-income individuals as an alternative to Health Insurance Marketplace coverage under the Affordable Care Act. This voluntary program enables states to create a health benefits program for residents with incomes that are too high to qualify for Medicaid through Medicaid expansion in the Affordable Care Act, but are in the lower income bracket to be eligible to purchase coverage through the Marketplace. This final notice is substantially the same as the final notice for program year 2015.

Overview

Section 1331 of the Affordable Care Act provides states with a coverage option, the Basic Health Program, for individuals who are citizens or lawfully present non-citizens, who do not qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or other minimum essential coverage and generally have income between 133 percent and 200 percent of the federal poverty level.

Benefits include at least the 10 essential health benefits specified in the Affordable Care Act; states can add benefits at their option. The monthly premium and cost sharing charged to eligible individuals will not exceed what an eligible individual would have paid if he or she were to receive coverage from a qualified health plan through the Marketplace, including cost-sharing reductions and advance premium tax credits; a state can lower premiums and other out of pocket costs at its option. A state that operates a Basic Health Program will receive federal funding equal to 95 percent of the amount of the premium tax credit and the cost sharing reductions that would have otherwise been provided to (or on behalf of) eligible individuals if these individuals enrolled in qualified health plans through the Marketplace.

On March 12, 2014, CMS released the final rule for the Basic Health Program. CMS established standards for state and federal administration of the program, including provisions regarding eligibility and enrollment, benefits, cost-sharing requirements and oversight activities. Where possible, CMS aligned Basic Health Program rules with existing rules governing coverage through the Marketplace, Medicaid, or CHIP to simplify administration for states and promote coordination between the Basic Health Program and other health insurance programs.

The final notice issued today provides the methodology and data sources necessary to determine federal payment amounts made in program year 2016 to states that elect to use the Basic Health Program to offer health benefits to low-income individuals otherwise eligible to purchase coverage through the Marketplace. The final notice uses the same methodology as the final 2015 payment notice.

Key Provisions

CMS will use the same payment methodology for program year 2016 as established for 2015, along with updated values for several factors.

The methodology calculates monthly payment rates for each state for various rate cells, which are defined by age, geographic area (county), income, household size, and the number of persons in a household enrolled in the program. The methodology also makes adjustments for American Indians and Alaska Natives enrolled in the program.
The methodology calculates payment rates based on the premium tax credit amount and the cost-sharing reductions. The premium tax credit is calculated by estimating the average premium tax credit that persons would have received for each rate cell, which is the difference between the second lowest cost silver plan premium available and the amount of income that a household would be required to pay if the members of the household were enrolled in the second lowest cost silver plan in the Marketplace. Cost-sharing reductions are calculated by estimating the average advance cost-sharing reductions payment that would have been provided to persons for each rate cell.
The methodology gives states the option to use either the 2016 Marketplace premiums or the 2015 premiums projected forward by an estimated trend rate to calculate the Basic Health Program payment rates. States would also have the option to propose a methodology to calculate the difference in health status between the Basic Health Program population and persons enrolled in the individual Marketplace.
The methodology calculates payments quarterly. Payments will be based on the last quarter of enrollment (or estimated enrollment for states that implement a new Basic Health Program) and reconciled once enrollment data is submitted for each quarter.

This final notice is on display at http://www.ofr.gov/inspection.aspx and will be posted on https://www.federalregister.gov/articles/2015/02/24/2015-03662/federal-funding-methodology-for-program-year-2016-basic-health-program

CMS Announces Special Enrollment Period for Tax Season

CMS NEWS

FOR IMMEDIATE RELEASE

February 20, 2015 Contact: CMS Media Relations

(202) 690-6145 | press@cms.hhs.gov

CMS Announces Special Enrollment Period for Tax Season

Eligible consumers have from March 15 through April 30 to enroll in coverage

The Centers for Medicare & Medicaid Services (CMS) announced today a special enrollment period (SEP) for individuals and families who did not have health coverage in 2014 and are subject to the fee or “shared responsibility payment” when they file their 2014 taxes in states which use the Federally-facilitated Marketplaces (FFM). This special enrollment period will allow those individuals and families who were unaware or didn’t understand the implications of this new requirement to enroll in 2015 health insurance coverage through the FFM.

For those who were unaware or didn’t understand the implications of the fee for not enrolling in coverage, CMS will provide consumers with an opportunity to purchase health insurance coverage from March 15 to April 30. If consumers do not purchase coverage for 2015 during this special enrollment period, they may have to pay a fee when they file their 2015 income taxes.

Those eligible for this special enrollment period live in states with a Federally-facilitated Marketplace and:

Currently are not enrolled in coverage through the FFM for 2015,
Attest that when they filed their 2014 tax return they paid the fee for not having health coverage in 2014, and
Attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2015) in connection with preparing their 2014 taxes.

The special enrollment period announced today will begin on March 15, 2015 and end at 11:59 pm E.S.T. on April 30, 2015. If a consumer enrolls in coverage before the 15th of the month, coverage will be effective on the first day of the following month.

This year’s tax season is the first time individuals and families will be asked to provide basic information regarding their health coverage on their tax returns. Individuals who could not afford coverage or met other conditions may be eligible to receive an exemption for 2014. To help consumers who did not have insurance last year determine if they qualify for an exemption, CMS also launched a health coverage tax exemption tool today on HealthCare.gov and CuidadodeSalud.gov.

"We recognize that this is the first tax filing season where consumers may have to pay a fee or claim an exemption for not having health insurance coverage," said CMS Administrator Marilyn Tavenner. “Our priority is to make sure consumers understand the new requirement to enroll in health coverage and to provide those who were not aware or did not understand the requirement with an opportunity to enroll in affordable coverage this year.”

Most taxpayers, about three quarters, will only need to check a box when they file their taxes to indicate that they had health coverage in 2014 through their employer, Medicare, Medicaid, veterans care or other qualified health coverage that qualifies as “minimum essential coverage.” The remaining taxpayers - about one-quarter - will take different steps. It is expected that 10 to 20 percent of taxpayers who were uninsured for all or part of 2014 will qualify for an exemption from the requirement to have coverage. A much smaller fraction of taxpayers, an estimated 2 to 4 percent, will pay a fee because they made a choice to not obtain coverage and are not eligible for an exemption.

Americans who do not qualify for an exemption and went without health coverage in 2014 will have to pay a fee – $95 per adult or 1 percent of their income, whichever is greater – when they file their taxes this year. The fee increases to $325 per adult or 2% of income for 2015. Individuals taking advantage of this special enrollment period will still owe a fee for the months they were uninsured and did not receive an exemption in 2014 and 2015. This special enrollment period is designed to allow such individuals the opportunity to get covered for the remainder of the year and avoid additional fees for 2015.

The Administration is committed to providing the information and tools tax filers need to understand the new requirements. Part of this outreach effort involves coordinating efforts with nonprofit organizations and tax preparers who provide resources to consumers and offer on the ground support. If consumers have questions about their taxes, need to download forms, or want to learn more about the fee for not having insurance, they can find information and resources at www.HealthCare.gov/Taxes or www.IRS.gov. Consumers can also call the Marketplace Call Center at 1-800-318-2596. Consumers who need assistance filing their taxes can visit IRS.gov/VITA or IRS.gov/freefile

Consumers seeking to take advantage of the special enrollment period can find out if they are eligible by visiting https://www.healthcare.gov/get-coverage Consumers can find local help at: Localhelp.healthcare.gov or call the Federally-facilitated Marketplace Call Center at 1-800-318-2596. TTY users should call 1-855-889-4325. Assistance is available in 150 languages. The call is free.

For more information about Health Insurance Marketplaces, visit: www.healthcare.gov/marketplace

CMS Blog: http://blog.cms.gov/2015/02/20/what-consumers-need-to-know-about-corrected-form-1095-as/

Quote of the Day

"If you're repeatedly running into a brick wall, then going around the wall might make more sense. There are significant changes that could be made [to the ACA, if the Supreme Court rules against HHS] that would move a good chunk of the country in a different direction and yet potentially be seen by supporters of the ACA as consistent with their objectives of getting more people covered in an affordable way."

— Stuart Butler, who recently joined The Brookings Institution as a senior fellow after 35 years at the Heritage Foundation, told AIS's Inside Health Insurance Exchanges.

Today's Datapoint

More than 10 million people signed up for Medicaid between October 2013 and November 2014, a 17.5% increase over the norm, CMS announced on Feb. 2.

CMS issues thefinal HHS Notice of Benefit and Payment Parameters for 2016

CMS NEWS

FOR IMMEDIATE RELEASE

February 20, 2015 Contact: CMS Media Relations

(202) 690-6145 | press@cms.hhs.gov

CMS issues thefinal HHS Notice of Benefit and Payment Parameters for 2016

Stronger standards for issuers and Marketplaces

The Centers for Medicare & Medicaid Services (CMS) has issued the Final HHS Notice of Benefit and Payment Parameters for 2016. This rule seeks to improve consumers’ experience in the Health Insurance Marketplace and to ensure their coverage options are affordable and accessible. This rule builds on previously issued standards which seek to make high-quality health insurance available to all Americans. The final notice further strengthens transparency, accountability, and the availability of information for consumers about their health plans.

“We work every day to strengthen programs that deliver quality, affordable care to families across the country,” said CMS Administrator Marilyn Tavenner. “CMS is working to improve the consumer experience and promote accountability, uniformity, and transparency in private health insurance.”

The rule finalizes the annual open enrollment period for 2016 to begin on November 1, 2015 and run through January 31, 2016, giving consumers three full months to shop. To further aid consumers in finding a health plan that best suits their needs, the rule clarifies standards for qualified health plan (QHP) issuers to publish up-to-date, accurate, and complete provider directories and formularies. Issuers also must make this information available in standard, machine-readable formats.

To enhance the transparency of the rate-setting process, the final rule includes provisions to facilitate public access to information about rate increases in the individual and small group markets for both QHPs and non-QHPs using a uniform timeline. It also includes provisions to further protect consumers against unreasonable rate increases by ensuring more rates are subject to review.

To ensure consumers have access to high-quality, affordable health insurance, premium stabilization programs were put in place to promote price stability for health insurance in the individual and small group markets. This rule includes additional provisions and modifications related to the implementation of these programs, as well as the key payment parameters for the 2016 benefit year.

Additionally, the rule will help consumers access the medications they need by improving the process by which an enrollee can request access to medications not included on a plan’s formulary. The rule provides more detailed procedures for the standard exception process, and adds a requirement for an external review of an exception request if the health plan denies the initial request. It also clarifies that cost-sharing for drugs obtained through the exceptions process must count toward the annual limitation on cost sharing of a plan subject to the essential health benefits requirement. The rule also ensures that issuers’ formularies are developed based on expert recommendations.

The rule improves meaningful access standards by requiring that all Marketplaces, QHP issuers, and web brokers provide telephonic interpreter services in at least 150 languages in addition to the existing requirements regarding the provision of oral interpretation services, and strengthens other requirements related to language access.

To enhance the consumer experience for the Small Business Health Options Program (SHOP), the rule seeks to streamline the administration of group coverage provided through SHOP and to align SHOP regulations with existing market practices.

The final rule was placed on display at the Federal Register today, and can be found at:

https://www.federalregister.gov/public-inspection

CMS also released its final annual letter to issuer, which provides additional guidance on these and related standards for plans participating in the Federally-facilitated Marketplace. The letter is available here: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2016_Letter_to_Issuers_2_20_2015.pdf

Payment Parameters Fact sheet: http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/2016-PN-Fact-Sheet-final.pdf

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CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans

CMS NEWS & FACT SHEET

FOR IMMEDIATE RELEASE

February 20^th, 2015

Contact: CMS Media Relations

(202) 690-6145 | press@cms.hhs.gov

CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans

Proposed policies continue Secretary’s initiative tying Medicare payments to value and maintain stability of Medicare Advantage program

The Centers for Medicare and Medicaid Services (CMS) today released proposed changes for the coming year for the Medicare Advantage (MA) and Part D Prescription Drug Programs that will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.

“The proposed rates will enhance the stability of Medicare Advantage program and minimize disruption to seniors and care providers," said Andy Slavitt, CMS Principal Deputy Administrator. "The policies in the Notice and Call Letter will continue the movement to reward providers of high quality, consumer-friendly care for the Medicare Advantage and Part D programs."

The Medicare Advantage and the Part D Prescription Drug programs’ enrollments and quality continue to grow and improve since the Affordable Care Act. Medicare Advantage has reached record high enrollment each year since 2010, a trend continuing in 2015 with a total increase of more than 40 percent since passage of the Affordable Care Act, and premiums have fallen by nearly 6 percent from 2010 to 2015. And, more than 90 percent of Medicare beneficiaries have access to a $0 premium Medicare Advantage plan.

This continued popularity of the program reflects a clear signal that Medicare Advantage and the Prescription Drug Program are attractive to health plans and beneficiaries alike. Today’s proposal will continue this trend by providing fair payments to plans, rewarding high-quality care, and spending our health care dollars wisely. We believe these policies will minimize disruption and continue our commitment to high-quality plans, and create a stable and consistent policy environment.

The proposed changes reflect the commitment to a Medicare program that delivers better care, spends health care dollars more wisely and results in healthier people. In 2015, CMS estimates that 60 percent of Medicare Advantage enrollees will be in 4 or 5 star plans – an increase of 43 percent since 2009. In the Draft Call Letter, CMS is proposing to continue to refine the star rating system to so as to continue to encourage improved quality, including a proposal to modify the system to ensure plans are not unfairly penalized for enrolling dual eligible or low-income beneficiaries. In addition, the proposal enhances the value of in-home assessments so they are used to support care planning and care coordination and improve enrollee health outcomes.

The Advance Rate Notice proposes changes in payments that will affect plans differently depending on a variety of factors. On average, when combined with expected growth in plan risk scores due to coding, the expected revenue change would be positive growth of 1.05 percent. Plans that have shown quality improvement and have demonstrated a focus on customer satisfaction would see additional growth. Plan payment levels will continue to be somewhat higher than the equivalent payments in fee for service.

Finally, the proposed policies promise to provide enrollees with greater information to make informed decisions about their care and their coverage. The 2016 Draft Call Letter proposes steps to ensure that plans maintain accurate provider directories and make those directories widely available, helping enrollees better understand the providers available to them. In addition, CMS proposes to work with Part D sponsors that offer limited access to preferred cost sharing pharmacies in their networks to ensure all beneficiaries have access to affordable coverage.

The Advance Notice and draft Call Letter may be viewed through: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/ and selecting “Announcements and Documents.” Comments on the proposed Advance Notice and Draft Call Letter are invited from the industry and the public and must be submitted by March 6, 2015. The 2016 Final Rate Announcement and Call Letter will be published on Monday, April 6, 2015.

###

FACT SHEET

FOR IMMEDIATE RELEASE

February 20^th, 2015

Contact: CMS Media Relations

202) 690-6145 | press@cms.hhs.gov

Fact Sheet: Moving Medicare Advantage and Part D Forward

On February 20, CMS released proposed updates to the Medicare Advantage and Part D programs through the 2016 Advance Notice and Draft Call Letter. Through these proposed policies, CMS is continuing the work in moving the Medicare program toward paying providers based on the quality, rather than the quantity of care they give patients while spending taxpayer dollars wisely.

The Advance Notice and draft Call Letter may be viewed through: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/ and selecting “Announcements and Documents.” Comments on the proposed Advance Notice and Draft Call Letter are invited from the industry and the public and must be submitted by March 6, 2015. The final 2016 Rate Announcement and Call Letter, including the final Medicare Advantage and FFS growth percentage and final benchmarks will be published on Monday, April 6, 2015.

CMS will accept comments on all proposals before publishing final versions on April 6, 2015. Comments can be emailed to: AdvanceNotice2016@cms.hhs.gov.

Recent Trends in Medicare Advantage and Part D

In recent years, both the Medicare Advantage (MA) and Part D programs have continued to grow, quality of participating plans has continued to increase, and premiums have remained stable. In the MA program:

Enrollment continues to grow – MA enrollment has increased by 42 percent since passage of the Affordable Care Act to an all-time high of more than 16 million beneficiaries, with nearly 30 percent of Medicare beneficiaries enrolled in an MA plan.
Plan quality continues to improve – in 2015, CMS estimates that 60 percent of MA enrollees will be enrolled in a 4 or 5 star plan, compared to an estimated 17 percent back in 2009.
Premiums remain affordable – average premiums today are lower than before the Affordable Care Act went into effect, dropping 6 percent between 2010 and 2015.

Moving the Medicare Program Forward – Greater Value for the Programs

The 2016 Advance Notice and Draft Call letter supports broader efforts at the Department of Health and Human Services and CMS to move the Medicare Advantage and Part D programs toward value and quality. On January 26, Secretary Burwell announced a new initiative to move the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients. Through the proposed policies in the Advance Notice and Draft Call Letter, CMS is proposing to further align the Medicare Advantage and Part D programs with those goals.

Higher Quality of Care – The 2016 Draft Call Letter includes a number of updates to the star rating system used to assess the performance of plans in providing enrollees with high quality care. The proposed updates would strengthen the accuracy of the evaluation system, as well as to improve incentives for plans to provide care for dual eligible or low-income beneficiaries.
More Information for Enrollees – The 2016 Draft Call Letter proposes to improve the information available to beneficiaries regarding plan networks, including an emphasis on requirements for plans to maintain accurate provider directories for beneficiaries.
Payment reform – The 2016 Draft Call Letter announces CMS’s intention to work with plans to collect information on the adoption of valued-based payment models among health plans.

2016 Advance Notice

Through the 2016 Advance Notice, CMS is proposing updates to the methodologies used to pay MA plans and Part D sponsors. The proposed changes are intended to improve payment accuracy and incent quality, while continuing to protect beneficiaries from significant increases in premiums and out of pocket costs.

As in previous years, CMS continues to move payments towards aligning MA program payments with payments made for beneficiaries in Fee for Service Medicare, helping to ensure fairness in the program.

Net Payment Impact

The chart below shows the expected impact of the proposed policy changes on plan payments relative to last year.

Year-to-Year Percentage Change in Payment

Impact		2016 Advance Notice
MA Growth Rate		1.7%
Transition to ACA rules		-0.8%
Rebasing/Re-pricing		TBD¹
Improved star ratings		0.5%
Risk model revision		- 1.7%
MA coding intensity adjustment		- 0.25%
Normalization		- 0.4%
Expected Average Change in Revenue from Advance Notice Policies		-0.95%
Coding trend		2.0%
Expected Average Change in Revenue		1.05%

¹Rebasing/re-pricing impact is dependent on finalization of average geographic adjustment index and will be available with the publication of the Rate Announcement

Coding Pattern Adjustment

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between Medicare Advantage organizations and FFS providers. In CY 2016, CMS proposes to make an adjustment reflective of the statutory minimum.

Risk Adjustment Model

For CY 2015, CMS used the 2013 CMS-HCC and 2014 CMS-HCC models, blending the resulting risk scores from each model at 67 percent and 33 percent, respectively. In 2016, CMS proposes to end the blend and calculate risk scores based entirely on the 2014 CMS-HCC model.

The 2014 model differs from the 2013 model in that it excludes a few diagnoses, such as stage 1-3 chronic kidney disease, that have been coded very frequently by the MA plans that have been most aggressive in coding. For example, in 2012, 9.9 percent of FFS beneficiaries were coded as having ‘Renal Failure’ (HCC 131), 14.6 percent of all MA enrollees were coded with renal failure, and 38.8 percent of beneficiaries in the plans that were most aggressive in coding were coded with renal failure. Similarly, 6.5 percent of FFS beneficiaries were coded with Polyneuropathy (HCC 71), 10.1 percent of all MA beneficiaries, and 20.1 percent of beneficiaries in the MA plans that were most aggressive in coding. By excluding some diagnoses from the model, the 2014 CMS-HCC model makes the payment system fairer.

Using Encounter Data

Historically, CMS calculated risk scores using diagnoses submitted from FFS providers and diagnoses submitted by MA plans into CMS’ Risk Adjustment Processing System (RAPS). 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. For 2016, CMS proposes to use encounter data to calculate risk scores, by blending encounter data-based risk scores with RAPS-based risk scores.

Part D Risk Adjustment Model

For 2016, CMS is proposing an updated Part D risk adjustment model encompassing the following changes:

Update to reflect the 2016 benefit structure;
Updates to the data years used to calibrate the model;
Clinical update to the diagnoses included in some prescription drug hierarchical condition categories (RxHCCs);
Inclusion of Part D data for Medicare Advantage- Part D sponsors in the model calibration; and
An actuarial adjustment to the Chronic Viral Hepatitis C RxHCC.

This proposed Part D model is designed to improve predictive accuracy.

2016 Draft Call Letter

As with previous years, CMS is continuing to propose improvements to the Medicare Advantage and Part D programs through the Draft Call Letter. These updates are intended to drive quality improvement in the care enrollees receive, as well as to strengthen beneficiary protections within the program.

Value-Based Contracting

Last month, the Secretary announced her vision for moving the health care system toward paying providers based on quality rather than the quantity of care they provide. In the Draft Call Letter, CMS announces an intention to begin working with plans participating in Medicare Advantage to better understand, through a voluntary effort, the extent to which they use value-based payment models to compensate providers offering services to their enrollees.

Changes to Star Ratings

Last fall, CMS released a Request for Information (RFI) seeking research or analyses that could demonstrate a causal relationship between dual or Low-Income Subsidy (LIS) status of a plan’s enrollees and a plan’s ability to achieve high star ratings. After reviewing the results of this RFI, CMS is proposing to reduce by 50 percent the weight of seven targeted measures for 2016. By reducing the weight of these measures, CMS seeks to provide relief to plans serving a large number of duals or LIS beneficiaries while CMS conducts additional research on what is driving the association. Long-term adjustments would be based on further in-depth examination of the issue by CMS and its HHS partners in quality measurement, as well as external measure developers, to determine the driving factors for the difference that has been observed in the preliminary research and the RFI submissions.

In-Home Enrollee Risk Assessments

In recent years, CMS has observed an increase in home visits for enrollees. CMS encourages Medicare Advantage Organizations to adopt best practices for in-home assessments to enhance care planning and care coordination and signals its intention to track and analyze care provided to enrollees following in-home visits.

Accuracy of Provider Directories

Under current program rules, Medicare Advantage Organizations are required to maintain accurate provider network directories for the benefit of enrollees. CMS proposes to reiterate existing rules regarding the accuracy of these directories to make certain plans are aware of their responsibility to maintain accurate directories.

Preferred Cost Sharing Pharmacies (PCSP)

Part D plans have the ability to form networks of pharmacies that offer “preferred cost sharing;” or lower cost sharing arrangements for beneficiaries than those offered by other network pharmacies. Part D plans must maintain network adequacy standards for all network pharmacies, though there are no comparable standards for access to preferred cost sharing pharmacies. CMS is not seeking to establish such standards; however, based on recent research, CMS is concerned about beneficiary access to preferred cost sharing pharmacies and about the transparency of preferred cost sharing pharmacy network access. CMS therefore proposes to publish information on PCSP access levels for each plan offering a preferred cost sharing benefit structure. CMS also proposes to work with plans who are outliers with respect to access to preferred cost sharing networks to either improve access or prevent plans from marketing themselves as offering preferred cost sharing in areas where the benefit is not meaningfully available.

Total Beneficiary Cost

Through the bid process, CMS tracks Total Beneficiary Cost, which assesses the collective impact on plan enrollees of changes in premiums, benefits, and other factors on plan enrollees. By statute, CMS has authority to deny bids that propose too significant an increase in costs or decrease in benefits. As with last year, CMS intends to keep the level of acceptable increase to $32 per member per month. To support continued quality improvement, this year, CMS will modify the TBC evaluation methodology for plans experiencing large overall adjustments resulting from quality increases and decreases.

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