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Medicare Advantage Update

RADV update

In a previous issue we told you about increased scrutiny around risk score (HCC) reporting by Medicare Advantage (MA) plans and the expected increase in risk adjustment data validation (RADV) audits by CMS. CMS has given more details on the approach and methodology on how it will validate the accuracy of payments based on the HCC codes.

The next audits will be done on the 2011 plan year and about 30 contracts will be audited. It appears CMS will not look back from there. Although yet to be specified, to address concerns by plans, adjustments will be made for the difference in payment vs. audit standards. Also, CMS will allow plans to submit multiple documentation rather than the single best record. Still, CMS expects hundreds of millions in recoupments from health plans.

MA fraud and abuse

The federal government is also increasingly looking at fraud and abuse and asking MA plans to do more. CMS is sure to increase oversight in this area as well.

A recent report has found a wide disparity in how individual plans attack and root out fraud. The HHS OIG audit reviewed 2009 data from almost all the MA plans. A handful of plans reported 95% of the identified fraud incidents. About one in five plans reported no instances. Plans sent only 2,656 referrals of potential fraud and abuse for further investigation. Whether a plan was large or small did not dictate their thoroughness in reporting potential fraud or abuse. In fact, some small plans were high performing in this area.

CMS is expected to issue guidelines to ensure reporting and consistency. The poor overall results caused Democrats to call for hearings on fraud and abuse in Medicare Advantage programs.

More focus on MA quality

As predicted, CMS is further extending and refining its carrot and stick approach on quality performance in the MA program. Only 3 Star and better plans will get bonuses through 2014 and only 4 Star and better thereafter. CMS also denotes high and low performing plans on its Medicare Plan Finder enrollment website and in other arenas. It allows 5 Star plans to enroll year-round and will close down plans who poorly perform over multiple years. Now, in its draft

2013 Call Letter, CMS is endorsing a ban on allowing those plans below 3 Stars from enrolling on the Medicare Plan Finder. CMS is also proposing new star-rating measurements for care coordination.

MedHOK will have a detailed overview of the proposed Call Letter in an upcoming Compliance Insider.

MA finance outlook

CMS also released its 45-Day Advance Notice for rates and MA plans are expected to receive a 2.47 percent hike in Medicare Advantage pay rates in 2013. The true increase to plans will depend on several factors, including:

  • How much overall rates are being reduced and on what schedule for the counties the plans cover
  • Actual Star ratings for plans and whether they receive a bonus
  • Additional changes that occur behind the scenes, including coding intensity changes, phaseout of IME in certain counties, etc.

Even if rates are near zero, it is expected to mean overall continued growth in premium and enrollment for plans.

Exchange delays; states look to small group market as essential benefit benchmark

Since most state legislative sessions fall in the first half of the year, state legislatures have finally discovered that they have to pass laws now in order to fulfill the 2014 health reform mandates, including setting up state exchanges and settling on essential benefits. A lack of progress toward setting up the exchange rules in any state by early 2013 could lead the federal government to step in and plan its own exchange in those states — that is, if the Supreme Court upholds the constitutionality of the law overall and especially the individual mandate.

States are increasingly looking to benchmark their essential benefit packages against the small group market. In most cases, this is the least generous package of those prescribed by the federal government. Using the small group package will tend to reduce the overall actuarial value of the benefit, from which the bronze to platinum versions will be built. Some more generous states may look to the federal employee health plan benchmark or the state employee health plan benchmark.

The reality is that states are slow to implement both exchanges and essential benefits. As a result, the national launch in 2014 is likely very much in jeopardy.

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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