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AHIP’s Comments On Proposed Changes To Medicare Advantage

posted by Clare Krusing

on March 4, 2016

For Immediate Release

Washington, D.C. – In response to CMS’ proposed changes to Medicare Advantage, America’s Health Insurance Plans (AHIP) challenged several policies that would lead to cuts in beneficiaries’ benefits and coverage next year. Highlights of those comments are included below:

  • “A strong and stable Medicare Advantage program is critical to achieving national policy goals for an improved healthcare delivery system that includes expanded use of quality-based payments, continued innovation, and enhanced care coordination and disease management. Yet proposals from the Centers for Medicare & Medicaid Services (CMS) in the Advance Notice are inconsistent with those goals.”
  • “A new report by Oliver Wyman concludes that the Advance Notice would cut funds from this high performing program by an average of 0.5 – 3.9%. Enrollees in some plans would see significantly greater cuts.  Proposals of significant concern include:
    • A new risk adjustment model that would have larger negative impacts than CMS has estimated and exacerbate cuts CMS implemented last year that target health plans’ efforts to transform the healthcare system through early detection and prevention of chronic conditions;
    • An increased use of diagnoses for risk adjustment via an unstable and untested encounter data system; and
    • Lower payments for employer and union-sponsored retiree health coverage.
  • “The cuts would add to Affordable Care Act (ACA) funding reductions that continue to be phased-in for 2017 in one-third of the country.  Moreover, the proposals build additional layers of complexity, uncertainty and unpredictability into Medicare Advantage.”
  • “…The significant cuts in the Advance Notice will threaten the stability of benefits for over 17 million seniors and individuals with disabilities, many of whom are low-income and have high healthcare needs.  We urge you to issue a Final Notice on April 4 that maintains a strong and stable program and ensures plans can continue to provide innovative, high quality care for current and future beneficiaries.”

Risk Adjustment

  • “For several years AHIP and its members have highlighted that the new Medicare Advantage risk adjustment system fully phased-in for 2016 — including changes that eliminated recognition of early stages of certain conditions — does not accurately predict costs for beneficiaries with chronic conditions and harms efforts to detect and treat chronic diseases at their earliest stages.  A recent Avalere study confirms that the 2014 model under-predicts costs for individuals with multiple chronic conditions by $2.6 billion on an annual basis, and under-predicts costs for a number of specific chronic conditions. The new model would worsen this situation by lowering coefficients assigned to conditions such as diabetes, congestive heart failure, and chronic obstructive pulmonary disease.”
  • “…We believe CMS cannot move forward with the 2017 model as is currently constructed.  The Agency must ensure that the risk adjustment model does not penalize beneficiaries enrolled in plans that provide valuable services that research shows improves quality and beneficiary outcomes, or create additional costs, complexities and uncertainties for the Medicare Advantage program.”

Encounter Data

  • “We have very serious concerns with CMS’s proposal to increase — from 10% to 50% — the percentage of the risk score calculation based on encounter data. …Our members note numerous unresolved operational, technical and other issues continue to limit the ability of the encounter data system to capture the full stream of diagnoses and establish a data stream that is sufficiently reliable.”
  • “While CMS did not include an estimate of this impact, Oliver Wyman suggests this could reduce funding to Medicare Advantage plan programs that promote better beneficiary outcomes by up to 3%.  Given this impact and the fact CMS is under no statutory obligation to increase the use of encounter data, we strongly urge CMS to not adopt this proposal.”
  • “CMS must not increase reliance on an unstable system that could have adverse impacts on a program relied on by so many vulnerable beneficiaries.  No increase in the percentage of risk score determined by encounter data should take place until this logic has been vetted and tested by Medicare Advantage plans; its impacts are fully understood; and the system is stable and operational issues are resolved.”

Employer Group Waiver Plans (EGWPs)

  • “Employers, including state and local governments along with union sponsors, use customized EGWP products to finance retiree coverage for almost 3.2 million beneficiaries, or more than 18% of all Medicare Advantage enrollees.  AHIP is extremely concerned about the proposal in the Advance Notice to reduce EGWP rates beginning in 2017 by eliminating bids and paying plans based on payments to non-EGWP plans.”
  • “…CMS did not provide an estimated impact of this proposal in its fact sheet.  A new Oliver Wyman analysis projects the proposal could reduce funding to EGWPs by 2.5 – 4.5%.”
  • “CMS’s proposal also raises serious operational issues.  Payments to EGWPs are used by the employers and unions offering EGWPs to finance retiree coverage. However, under the proposal, employers and unions would not know the cost of offering coverage until after CMS calculates the weighted average bids of non-EGWPs, which the Agency recently indicated may not be until August prior to the payment year. This uncertainty could create significant disruptions for employer and union sponsors that would have long ago budgeted for health costs for the 2017 year and that need to know costs for purposes including establishing premium and cost sharing and developing beneficiary communications.”

To view the full comment letter, click here.

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