Radar on Medicare Advantage

Under Medicare law, Medicare Advantage organizations must assume full financial risk on a prospective basis for the provision of basic benefits provided to enrollees. But certain exceptions exist that allow MAOs to purchase reinsurance, such as excess of loss reinsurance limiting the primary carrier’s liability in excess of a specified dollar “attachment point.” As MAOs seek permissible reinsurance arrangements to manage new risk associated with the coronavirus (see story, above), plans and their actuaries are hopeful that CMS will provide much-needed clarity around the use of quota share reinsurance in a soon-to-be finalized rule, one industry expert tells AIS Health.

Through a proposed rule issued in February (85 Fed. Reg. 9002, Feb. 18, 2020), CMS sought to codify previous policy changes, extend new flexibilities to MAOs and make some major changes to the MA star quality ratings (RMA 2/20/20, p. 1). The rule also included a provision that would define the purchase of reinsurance in a way that CMS hasn’t before. To remove some legal ambiguity mentioned in previous stakeholder comments, CMS said it planned to implement a new exception and “establish in regulation options to use reinsurance for costs beyond a specified threshold.”

As efforts to contain the outbreak of COVID-19 continue to evolve, the Trump administration on March 30 issued a series of new flexibilities aimed at increasing hospital and provider capacity. At the same time, CMS provided some respite to Medicare Advantage and Part D plans dealing with the crisis by suspending audit and quality reporting activities so that plans and states can focus on providing care to the increasing number of beneficiaries affected by the new coronavirus. While those changes will enable CMS to issue star quality ratings for 2021, the potential impact of COVID-19 on payment rates for next year remained unclear.

COVID-19, declared a pandemic last month, has had more than 200,000 documented cases in the U.S. — with the most cases and deaths confirmed in New York state — according to the latest figures from the Johns Hopkins University & Medicine Coronavirus Resource Center. President Donald Trump on March 13 declared a national emergency as a result of the pandemic, allowing for waivers of certain Medicare and Medicaid requirements to address the outbreak that have been rolled out over the past few weeks.

✦ CMS’s 2019 Medicare Parts C and D program audits resulted in civil monetary penalties amounting to nearly $1.2 million imposed on six organizations, according to CMP notices posted at www.cms.gov. The agency in a memo dated Feb. 28 released the audit scores of the 13 organizations that underwent 2019 program audits, with scores ranging from 0 to 1.74 (the lower the score, the better the performance). Outside of the program audit process, CMS barred Medicare Advantage and Prescription Drug Plan operator Delaware Life Insurance Co. from marketing and enrollment activities and imposed a CMP on Miami-based Solis Health Plans, Inc. for failing to ensure that its agents and brokers followed Medicare marketing rules during the 2019 Annual Election Period. View all the notices at https://go.cms.gov/2x1Q7vP.

✦ After two cycles of marketing Medicare Advantage plans during the Annual Election Period, Mutual of Omaha has decided to sell its MA businesses to Essence Healthcare, sister company of Lumeris. According to a Feb. 24 press release from Essence and Lumeris, Essence will acquire the two Mutual of Omaha subsidiaries that offer MA plans in the Cincinnati, Dallas, Denver, El Paso and San Antonio markets. Lumeris has served as an operating partner to Mutual of Omaha since 2018 and operates MA plans under the Essence Healthcare brand (RMA 4/5/18, p. 1). The companies did not disclose financial terms of the deal, which is expected to close by mid-2020, and declined to provide additional details when queried by AIS Health. According to AIS’s Directory of Health Plans, Mutual of Omaha had 2,416 total enrollees in MA plans in Colorado, Kentucky, Ohio and Texas as of February, compared with 920 members this time last year, when it served just the Cincinnati and San Antonio markets. Contact Lumeris spokesperson Marcus Gordon at mgordon@lumeris.com.

✦ Chicago-based Medicaid managed care organization CountyCare owes physicians about $350 million in overdue claims payments, according to Becker’s Hospital Review. The subsidiary of Cook County Health was more than 90 days late with its scheduled claims payments as of late February, even though state law says they must be paid within 30 days, says the report, which summarized an article from Crain’s Chicago Business. The health plan’s CEO attributed the delay to a “byproduct of funding” in Illinois’ managed Medicaid system and not a “byproduct of plan operations,” according to the summary. Visit https://bit.ly/3cvpL5A.

Of the 13 Medicare Advantage and Part D organizations that were subject to 2019 program audits, nearly half received a civil monetary penalty (CMP), with noncompliance in the audit area of Part D formulary and benefit administration (FA) driving fines.

CMS via the Health Plan Management System released the audit scores of the 13 organizations that underwent 2019 Medicare Parts C and D program audits, with scores ranging from 0 to 1.74 (the lower the score, the better the performance). The results included Health Care Service Corp. (HCSC), which was audited in 2018 and 2019 but received a CMP only for 2018.

Under the backdrop of a public health emergency and the White House pressuring Congress to pass drug pricing legislation, CMS on March 11 unveiled a new Innovation Center model that it expects will lower out-of-pocket (OOP) insulin costs by roughly 65% for enrollees of participating Part D plans. Nevertheless, health policy experts say the model is rather limited and likely won’t drive a fundamental shift in Part D drug pricing.

Under the five-year Part D Senior Savings Model, CMS will test a change to the Manufacturer Coverage Gap Discount Program by waiving current rules for supplemental benefits used to reduce cost sharing in the coverage gap and enabling Part D sponsors to offer enhanced alternative plan benefit packages (PBPs) that feature “standard, predictable” copayments through all phases of the Part D benefit up to catastrophic coverage. Participation from manufacturers and plans is voluntary. Innovation Center head Amy Bassano, during a March 12 webinar, said CMS recognizes that plans and other stakeholders are busy addressing the coronavirus outbreak (see story, above), but the agency is hoping for “robust participation and interest…given how critical it is to ensure that our seniors have access to insulin.”