Latest CMS rulemaking indicates administration is all-in on Medicare Advantage has been added to your bookmarks.
Latest CMS rulemaking indicates administration is all-in on Medicare Advantage
Health Care Current | April 24, 2018
This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory, and legislative changes.
Latest CMS rulemaking indicates administration is all-in on Medicare Advantage
By Anne Phelps, principal, US Health Care Regulatory Leader, Deloitte & Touche LLP
The administration opened the doors for notably greater flexibility in Medicare Advantage (MA) in the final rule released this month by the US Centers for Medicare and Medicaid Services (CMS). Recent policy changes are opening new strategic avenues for health plan offerings in 2019 and beyond.
The administration and Congress view MA as having a structure that could be leveraged to alter the scope and purpose of health insurance in meaningful ways. Special needs plans (SNPs) and value-based insurance design demonstrations (VBID), for example, are part of the same idea—they take advantage of the inherent flexibilities of a private health plan paid on a capitated basis. Consider this:
- SNPs that allow for benefits structures tailored to specific health conditions are now a permanent federal program and are growing. Medicaid recipients in a SNP could be automatically enrolled in a corresponding MA plan when they become eligible.
- VBID demonstrations are moving ahead at full steam. Half of states are eligible in 2019, and the remaining states are eligible for the model in 2020. The Bipartisan Budget Act of 2018 made this 2020 expansion permanent under statutory law.
Under the latest rule, CMS also will allow MA plans to offer a wide range of supplemental benefits beginning in 2019. By expanding the definition of what is considered “medically beneficial,” MA plans will be able to supplement the cost of benefits—ranging from healthier food to transportation services—if it might help keep a member out of the hospital. This is part of an overall shift in health care that recognizes the social determinants of health where a holistic approach is taken to treat illnesses and injuries. This approach could help create a sustainable support system to keep people healthier, and could subsequently lower medical expenses in the long-run.
MA framework allows for flexibility
The administration and Republican lawmakers have a demonstrated preference for private-sector solutions. MA was outlined in the Medicare reform legislation enacted by President George W. Bush in 2003, and has generally had bipartisan support in recent years. Transitioning more Medicare members to commercial carriers gives CMS additional levers for innovation, for controlling costs, and for offering unique insurance products.
Here are two more changes included in this month’s final rule that I think could have a significant impact on MA plans:
- CMS will give MA health plans more money beginning in 2019. MA plans will receive a 3.4 percent average increase in their payment rates—nearly double the proposed 1.84 percent increase. This is in addition to a potential increase of 3.1 percent due to changes to risk scoring for MA plans.1 One of the unique things about MA is that CMS considers the claims experience of the member, and pays the carrier based on the member’s risk score. This reduces the financial incentive for health plans to cherry pick the healthiest consumers. It also helps to lay the groundwork for tailoring benefits for members. A diabetic, for example, might be able to enroll in an MA plan that has lower copayments for care associated with diabetes. The ability to tailor benefits isn’t available in traditional Medicare.
- Providers and prescribers no longer need to sign up for traditional Medicare in order to participate in an MA provider network. This means the two Medicare programs will essentially run parallel to, and independent of, one another. It could lead to a system that functions without traditional Medicare. Depending on how carefully health plans work with providers, they could create a captive audience for MA if providers don’t have to abide by the rules of traditional Medicare. A provider could become 100 percent affiliated with one health plan—providing care to both commercial and Medicare members. The continuity of care could be attractive to patients as they retire and lose commercial coverage. That could lead to further integration of payers and providers in some unpredictable ways.
MA is becoming more aligned with MACRA
The administration also seems eager to integrate MA into the Medicare Access and CHIP Reauthorization Act (MACRA) Quality Payment Program (QPP). This could help increase the number of clinicians who are able to use payment methods in MA plans that are certified as an Other Payer Alternative Payment Model (APM), as part of their book of business. This could help them meet the necessary payment and/or patient-count thresholds required to avoid exposure to the Merit-based Incentive System (MIPS).
In the MACRA QPP final rule for 2018, CMS stated that MA plans will be able to submit payment arrangements for consideration as Other Payer APMs as soon as 2019, and will be part of the MA bid process for 2019.
MA now covers more than one-third of seniors
The gap between benefits available in traditional Medicare and MA is likely to widen in the coming years. What members get with traditional Medicare is a straightforward benefit structure and coast-to-coast coverage. Add a supplemental plan on top of that, and the member has pretty solid coverage. MA plans, by contrast, have smaller provider networks and more tightly controlled benefits. But retiring baby boomers, who are more accustomed to managed care than their parents, are likely to see MA as an attractive option. These plans are more comprehensive than traditional Medicare, and don’t require 20 percent coinsurance. Many MA plans also include a prescription drug benefit. Health plans can seamlessly move a member from a commercial plan to an MA plan. This reduces the chance of losing someone’s business when they retire.
About 21 million seniors—or 34 percent of the Medicare-eligible population—are enrolled in an MA plan, according to the latest analysis from CMS. That’s up from 19.6 million a year ago.2 At some point, we could see a huge expansion with MA capturing a majority of the Medicare market. For many people, MA has been below the radar, but that seems to be changing. And CMS has just provided health plans with some attractive new options to consider this year.
1 CMS: 2019 Medicare Advantage and Part D Rate Announcement and Call Letter
2 CMS data based on MA enrollment through Dec. 8, 2017
In the news
ACA employer mandate is still in effect and enforceable, IRS official says
Despite an executive order from the White House, the employer mandate provision of the Affordable Care Act is the law and must be enforced by the Internal Revenue Service (IRS), Acting IRS Commissioner David Kautter explained at an April 17 House Oversight Committee hearing. Under the provision, certain employers with more than 50 employees must offer affordable ACA-compliant health coverage to their full-time workers. Companies that do not comply must pay a penalty. Last November, the IRS began mailing about 10,000 letters to employers that might not have offered coverage that complies with the law during the 2015 tax year. The IRS is expected to continue enforcement for the 2016 tax year.
Rep. Jody Hice (R-Ga.) noted that this was the first time since the enactment of the ACA that the agency had notified employers about potential violations of the mandate. He also brought up the president’s executive order, which broadly directs federal agencies to ease the “unwarranted economic and regulatory burdens” of the ACA. While Kautter acknowledged the IRS is an agency subject to the executive order, he also explained that the agency is required to follow the law. Kautter noted that more than 80 percent of the cases have already been resolved with no penalty. In many instances, forms were filled out incorrectly by the employer, he added.
FDA looks to reorganize medical device center, target cybersecurity
The US Food and Drug Administration (FDA) is working to enhance and modernize its approach toward approving and regulating medical devices.
FDA Commissioner Scott Gottlieb outlined this plan on April 17. He said the agency wants to help patients access new advances in technology and novel devices that address unmet needs while assuring safety. FDA may increase its regulatory oversight of the highest-risk devices. It will also seek to fill gaps in quality data for certain devices, including many in women’s health.
FDA will also increase its focus on cyber security because medical devices, like other technologies, can be vulnerable to cyber-attacks. Gottlieb said FDA will request additional funding from Congress for this purpose, and to create an expert advisory board with the private sector.
RELATED: At the Pharmaceutical Care Management Association's annual meeting on Thursday, Commissioner Gottlieb discussed other ways the agency is working to innovate and modernize, specifically mentioning ways to help companies make value-based contracting easier.
He said that the agency is working to finalize a draft guidance issued in early 2017 that outlined how drug companies can communicate with payers about certain economic information without going against marketing regulations. The final guidance would provide a broad safe harbor to develop value-based contracts around off-label use.
OIG: Medicare improperly billed $3.7 million for telehealth services
Nearly a third of telehealth claims submitted to Medicare do not comply with its requirements, says the Office of the Inspector General (OIG) at the Department of Health and Human Services.
OIG sampled 100 telehealth claims from 2014 and 2015. Of these, it found 31 that should not have been paid. The majority of those incorrectly paid claims (24) were for services received at non-rural originating sites. Medicare only pays for telehealth when it is provided outside of metropolitan statistical areas, or in rural health professional shortage areas.
A smaller number of claims included services performed by ineligible providers, used “an unallowable means of communication,” or were not covered by Medicare.
OIG estimates incorrectly-paid claims cost Medicare $3.7 million during the audited period. It recommends that CMS conduct periodic post-payment reviews, implement the telehealth claim modifications listed in the Medicare Claims Processing Manual, and train providers on telehealth requirements for Medicare.
22 million people are enrolled in HSA-compatible health plans
About 22 million Americans are enrolled in a high-deductible health plan (HDHP) that has been paired with a health savings account (HSA), according to a report from the trade group America’s Health Insurance Plans (AHIP). The number is up about 9 percent from last year’s enrollment figures. The report is based on data from 36 health insurers that submitted data about their HDHP/HSA enrollees. The findings agree with HSA data released early this year by the consulting firm Devenir Group, LLC. That survey, which was conducted in January, is based on data from the top 100 organizations that administer HSAs, which are typically banks and credit unions. At the end of 2017, the accounts collectively held $45.2 billion in assets, a year-over-year increase of 22 percent.
HSAs were created in 2003 as part of the Medicare reform law. They allow individuals to use pre-tax dollars to fund a savings account that can be used to pay for eligible medical expenses. Other findings form the AHIP report include:
- More than 85 percent of health plans offer tools to help members manage their health and finances, including online access to their accounts, as well as cost and quality data.
- A majority of health plans (64 percent) offer broker consultations to enrollees.
- Nearly 60 percent of responding health plans employed a health advocate who consults with their HDHP/HSA enrollees.
Maryland to create reinsurance program for state-run exchange
On April 16, the board of trustees of the Maryland Health Benefit Exchange (MHBE), which operates the state’s health insurance exchange, voted to move forward with a federal application to create a reinsurance program. This program is expected to help hold down health insurance costs in the individual market. Maryland Governor Larry Hogan (R) and the state legislature have already approved the measure, which is aimed at the 2019 and 2020 plan years.
About 250,000 Marylanders have purchased individual coverage on or off of the exchange. The vote authorizes MHBE to request CMS’s approval for a §1332 innovation waiver.
OIG: Idaho incorrectly received $3.1 million in children’s Medicaid bonus payments
CMS provided Idaho with more than $3 million in unallowable bonus payments between fiscal year 2010 and FY 2013, according to a recent audit by HHS’s Office of the Inspector General (OIG). OIG conducted the review because the state reported a higher number of children enrolled in its Medicaid program than CMS had in its records. The bonus program was approved by Congress in 2009 to help cover the cost of children in Medicaid.
While OIG acknowledged that Idaho had used the correct dataset to determine the number of children enrolled in its Medicaid program, it said the number of children was overstated.
In a February 26 letter, Idaho Department of Health and Welfare Director Russell S. Barron disagreed with OIG’s findings. He said the state determined the enrollment based on the federal Medicaid statue’s definition of “qualifying children,” not CMS’s guidance. Barron wrote that CMS guidance directs states to use this definition as well. He acknowledged that some payments were unallowable, but not the majority, as OIG stated.
OIG recommended that Idaho refund the payments to the federal government.
AI could help patients who urgently need care
Viz.ai is a start-up company focused on artificial intelligence (AI). The company started out focusing on games, and then moved on to developing algorithms that aim to save the brain cells of stroke patients by alerting providers of a potential stroke in patients. In February, the US Food and Drug Administration (FDA) gave the company permission to market its clinical decision-support software to physicians and hospitals.
Stroke is serious and common. It is the fifth leading cause of death in the US, according to the Centers for Disease Control and Prevention (CDC). Every second counts when trying to avoid disability or death. The longer treatment is delayed, the more brain tissue dies.
In a traditional scenario, if an ER care team thinks a patient is having a stroke, it directs a team of radiologists to conduct and interpret a computed tomography (CT) scan to determine next steps. Viz.ai’s software is designed to help in the race against time by automating this analysis. The company has trained machine-learning algorithms to detect blockages in major brain blood vessels. When the software detects a blockage that indicates the most common form of stroke, it sends an alert to a brain specialist’s smartphone asking for a review of the images. The software also flags the specific images it deems most important. The radiology team is still important to the process, but the automation helps streamline the workflow and can identify stroke patients faster.
Analysis: FDA recently created a new regulatory classification for triage tools that can analyze images and send alerts to a specialist. The agency is developing a regulatory framework for these types of products to encourage developers to create, adapt, and expand software to improve diagnosis and treatment.
FDA reviewed this product’s application through the De Novo premarket review pathway. This is a regulatory pathway for some new types of medical devices that have low-to-moderate risk and do not have a predicate device (an already legally marketed device) on which to base a determination of substantial equivalence. Having FDA approval for this product will likely make it easier for future triage tools, which use similar types of algorithms, to reach the market.
Viz.ai is also working to train systems to triage images with signs of other health problems, such as brain aneurysms. Other companies are working on ways to have AI address various diseases. For example, innovators are studying how machine-learning software can help identify skin cancer or eye disease with the same precision as human experts. FDA has approved Arterys to market its machine-learning software for cancer care. Algorithms trained by Arterys can automatically highlight lung nodules and liver lesions, and track them over time to see how they grow or respond to treatment.
(Source: Tom Simonite, Using AI to Help Stroke Victims When 'Time Is Brain,' Wired, February 2018)