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Healthcare Round Up 2017

Healthcare Round Up 2017

Healthcare Trends Slowed But Still Marching On

costs_final.jpgRecently, the Centers for Medicare and Medicaid Services (CMS) Actuary announced 2016 healthcare cost statistics. It is a bit of a mixed bag for the United States.

On the positive side:

  • The 2016 trend was low compared to 2014 and 2015. Health spending was up 4.3 percent in 2016. In 2014 and 2015, spending increased 5.1 percent and 5.8 percent, respectively. However, this was due, in part, to the major cost trends in 2014 and 2015 resulting from the introduction of the Medicaid expansion and Exchanges under the Affordable Care Act (ACA).
  • Demand for drugs was down and the trend relatively low in 2016, largely because blockbuster drug introductions slowed. Drug costs rose about 5 percent in 2016, compared with about 12 percent in 2014 and about 9 percent in 2015.
  • Hospital demand, the top of the healthcare spending pyramid, also was relatively low in 2016.

On the negative side:

  • U.S. health spending (aka national healthcare expenditures) rose to $3.36 trillion in 2016. That means about 18.1% of the nation’s gross domestic product (GDP) is dedicated to healthcare spending. So the march to 20% continues. That is bad news as higher healthcare spending crowds out other investments that are critical to long-term economic growth. As we have noted often in the past, most developed nations spend 10% to 12% of GDP on healthcare and have much better health outcomes on the whole. More is not always better.
  • Healthcare spending continues to outpace GDP growth and income growth.
  • National health expenditures are projected to grow at an average annual rate of 5.6 percent through 2025, falling just short of 20% of gross domestic product – 19.9%.

Medicare Advantage (MA) plans may get hefty increase in 2019

CMS recently announced the 2018 Part A and B premiums as well as projected Medicare cost increases for 2019. The announcement shows that 2019 Part A and B growth rates are projected to be between 4.3 and 5.1 percent. Ultimately, this will be factored into the MA plan rates in the future. Now, a lot will happen before final 2019 rates, including negative reductions written into the law for coding intensity, normalization and more. But the announcement continues the trend over the last several years giving plans reasonable and sometimes healthy increases.

CMS releases major new regulation for Medicare Advantage

CMS recently posted a 700-plus page regulation impacting Medicare Part C and D for 2019. We will review the regulation thoroughly and discuss the major changes in the near future.

One major note: CMS will expand the Value-Based Insurance Design (VBID) Model in 2019 to 25 states. (VBID started in 2017 with 7 states; Ten states will have VBID in 2018.) We love this model because it essentially extends the philosophy of Model of Care in some form to those with co-morbidities in mainstream MA plans. The program allows plans to fashion different benefits, cost-sharing, care management services and other incentives to members with chronic conditions. We know these populations drive Medicare expenditures and reforming the one-size-fits-all concept for benefits in mainstream MA makes sense. The proposed 2019 rule provides additional flexibility in who is covered by the VBID, what the benefits and services look like, and which plans can offer them.

All plans should study VBID as all states will probably see it on the horizon, if not in 2019, then soon after. It is the darling of CMS right now and may even become mandatory in the future. As well, the VBID takes us further down the road to a National Model of Care for Everyone – see our graphic below.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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