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Medicare Advantage Making Headlines – But is it Too Much Attention?

Medicare Advantage (MA) plans are enjoying continued success despite some major changes in recent years. That could portend further reforms and reductions down the road.

The Department of Health and Human Services (HHS) announced this week that Medicare Advantage premiums have fallen by 7 percent and enrollment has risen 10 percent in the last year. Average premiums have fallen from almost $34 in 2011 to about $31.50 this year. Enrollment has risen from 11.7 million in 2011 to 12.8 million in 2012.

It is an election year, so HHS Secretary Kathleen Sebelius is ballyhooing the fact that MA has not suffered even as the Patient Protection and Affordable Care Act (PPACA) instituted steep reductions in payment rates to the tune of $150 billion over the next decade and rigorous new performance standards. Those cuts have just started rolling out and the quality rigor has yet to come into force, but the truth is that the program seems to remain on solid footing even with the changes. With the exception of some geographic areas (rural) and products (Private FFS), plans see the program as an ongoing and profitable cost center and members are reaping the rewards of better benefits and lower costs than traditional Medicare fee-for-service (FFS). Arguing the case is difficult since almost 100% of people have access to the program and on average seniors and the disabled have dozens of plans in each county to choose from.

The sterling MA performance could change over time as the changes continue to roll out (including the 85% minimum medical loss ratio requirement in 2014), but especially if the ongoing deficit troubles mean MA is a target yet again for savings. A recent report points in that direction. Democrats are pointing to a new Government Accountability Office (GAO) report that points to the ongoing presence of higher risk scores in the MA program than in FFS. They argue that this amounts to billions in ongoing overpayments.

CMS has long been concerned about the difference in scores in the FFS and MA programs (called coding intensity), so much so that it administratively implemented a blanket ongoing reduction to plans’ scores several years back. This reduction was included in PPACA as savings. It is now by law being ramped up from 3.41 to 5.7 percent over time, which means more savings will come out of the program anyway. Plans argue that the risk scores are accurate and that plans simply do a better job of reporting on and reflecting the relative risk of their populations. It makes sense because providers have no incentive to code properly while capitated plans do.

Democrats say the GAO report indicates that the adjustment now really should be more than double what it is and could grow over time. The President and Democrats would love to use this “savings” elsewhere, but Republicans are less likely to embrace further changes.

Nonetheless, the GAO report points to more scrutiny by CMS on the risk adjustment system. Plans can and should find the gaps in the system that mean members do not have accurate risk scores. At the same time plans will need to do a better job of validating all risk scores to CMS. CMS is in the process of ramping up Risk Adjustment Data Validation (RADV) audits and may penalize plans if chart documentation is not present for diagnoses reported. Data suggest that 30 to 40 percent of claims based submissions do not have adequate documentation for scores. Thus, reasonable revenue maximization efforts now need to be coupled with comprehensive data validation efforts that focus on chart abstraction and mock audits.

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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