Radar on Medicare Advantage
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In Latest Report to Congress, MedPAC Maintains MA Plans Are Overpaid
Serving as a timely companion to its comment letter on the 2023 Advance Notice for Medicare Advantage and Part D plans, the Medicare Payment Advisory Commission (MedPAC) on March 15 released its 2022 March Report to the Congress: Medicare Payment Policy. The first of two annual reports containing policy recommendations, it echoed many of MedPAC’s prior points regarding MA plan reimbursement, namely that plans are overpaid for delivering services at below the cost of fee-for-service (FFS) Medicare.
MedPAC observed that MA plan bids continue to trail FFS, with the average plan bid coming in at 15% below FFS Medicare costs for 2022. When accounting for coding intensity, Medicare payments to MA plans this year will average 104% of FFS spending, like 2021, MedPAC estimated. In other words, “Medicare currently pays 4% more to MA plans for the average enrollee than it would have had that enrollee remained in traditional fee for service,” explained MedPAC Executive Director Jim Mathews, Ph.D., during a March 15 press briefing on the new report.
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MedPAC Urges CMS to Take Action on Coding Intensity Overpayments
CMS’s coding intensity adjustment, which is used to account for the estimated difference between risk scores that hypothetical beneficiaries would receive if enrolled in Medicare Advantage vs. fee-for-service (FFS) Medicare, has led to more than $91 billion in payments to MA plans between 2007 and 2022, asserted a March 3 letter from the Medicare Payment Advisory Commission (MedPAC) to CMS Administrator Chiquita Brooks-LaSure. The agency in its 2023 Advance Notice proposed to use the statutory minimum adjustment of 5.9%, which MedPAC estimated will lead to an inflated $16.2 billion in payments — and that’s on the conservative end, the commission noted. MedPAC first raised this issue in 2016, when it urged CMS to consider a new model that would use two years of FFS and MA diagnostic data, exclude diagnoses documented only on health risk assessments from either MA or FFS, and then apply an adjustment that fully accounts for the remaining coding differences. The commission in its March letter reiterated its support for this approach.
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News Briefs: City of New York Appeals Court Decision on Retiree Switch to Group Medicare Advantage
New York City is appealing a recent ruling by the New York Supreme Court that bars the city from imposing a premium on public sector retirees who opt out of group Medicare Advantage coverage that starts April 1. Anthem, Inc. was initially contracted to provide MA coverage to an estimated 200,000 retirees and dependents for a Jan. 1 effective date. Manhattan Supreme Court Justice Lyle Frank on March 3 ruled that automatic enrollment of beneficiaries cannot start until April 1, retirees must be able to opt out of the new coverage up to three months after the effective date, and they do not have to pay a fee to retain their traditional Medicare coverage. The city’s attempt to charge $191 monthly is in violation of New York City law, which requires the municipal employer to “pay the entire cost of health insurance coverage for city employees, city retirees and their dependents,” Frank ruled. The city’s Office of Labor Relations on March 4 filed an appeal; the NYC Organization of Public Service Retirees at press time had filed a cross-appeal and was gathering signatures for a petition urging Mayor Eric Adams (D) not to pursue the appeal.
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Revamped Direct Contracting Model Still Holds Promise for MAOs
After progressive Democratic lawmakers urged CMS to shut down a fee-for-service Medicare model aimed at fostering more value-based care arrangements, the agency’s Center for Medicare and Medicaid Innovation (CMMI) on Feb. 24 unveiled a revamped version that it said more closely aligns with its “vision of creating a health system that achieves equitable outcomes through high quality, affordable, person-centered care.” While the three types of Accountable Care Organizations (ACOs) that may participate starting next year appear to largely mirror the Direct Contracting Entities (DCEs) of the current Global and Professional Direct Contracting (GPDC) Model, CMS aims to ensure that participants in the new model operate as provider-led organizations, have a proven track record of providing care in underserved communities and will not be shifting any enrollees into Medicare Advantage — a key concern expressed by lawmakers and advocates.
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Geographic Expansions Assisted 2022 AEP Winners’ Major Gains
Medicare Advantage membership has grown by 8.5% since February 2021 to top 28.6 million lives, according to AIS Health’s analysis of data that included enrollment during the 2022 Annual Election Period (AEP). While nearly two-thirds of all new enrollees selected a plan from market leaders UnitedHealthcare, Humana Inc. or CVS Health Corp.’s Aetna, several regional insurers performed well above average, driven largely by service area expansions, provider pacts and benefit enhancements. (Per AIS’s research methodology, the following figures do not include lives enrolled in CMS’s Financial Alignment Initiative demonstration plans serving about 451,000 Medicare-Medicaid dual eligibles or participants in Programs of All-Inclusive Care for the Elderly.)
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