The Medicare Payment Advisory Commission on Thursday unanimously backed recommendations that would reduce Medicare Advantage plan reimbursement by at least $200 million.
MedPAC supports having Congress pass legislation that allows the HHS secretary to eliminate benchmark caps and the “double bonuses” now received by Advantage plans.
A formal vote was not taken during MedPAC's meeting Thursday, but the commission's chair requested panelists voice their opinion. They all said they supported the policy.
Advantage payments are determined by comparing the plan's estimated cost when bidding to serve a specific region with the maximum Medicare will pay, known as the benchmark. In 2012, the CMS also tied payment to star ratings, allowing top-performing plans to obtain quality incentive payments.
Under a cap, benchmarks cannot exceed the amount calculated under its projection. Regions and plans most likely to be affected by caps are those that have spending that's grown faster than the national average. The benchmark caps create inequities across counties, MedPAC members said.
MedPAC principal policy analyst Scott Harrison has previously said that the current formula uses outdated spending calculations from 2010, and that means some counties have lower benchmarks.
Another source of inequity is the double quality bonus now received by some plans. The Affordable Care Act allows some counties to receive double quality bonuses if they are located in metropolitan areas with at least 250,000 people. Medicare Advantage also needed to cover 25% or more of the population as of December 2009.
It's estimated that in 2016, there will be 236 double-bonus counties. MedPAC argues that double bonuses are tied to old geographic spending patterns rather than additional quality performance.
It's estimated that 19% of Advantage enrollees are in double-bonus counties and 19% are in capped counties. Getting rid of both would not only simplify the Medicare Advantage payment system but would result in a savings of $197 million for 2016, MedPAC research shows.
Panel members also voiced unanimous support to alter the CMS' risk-adjustment model to not factor in diagnosis from health-risk assessments. HRAs help plans identify patients who have a chronic disease or disability. In Advantage plans, most health-risk assessments are administered during a visit to an enrollee's home. The risk model factors takes into account those assessments when calculating reimbursement. The more diagnoses, the higher the plan's risk score and Medicare payment.
The commissioners felt chronic conditions found during health-risk assessments should be excluded from Advantage plans' risk scores in the instances that there is no evidence that the beneficiaries was actually treated for the illness.
That proposal was in part due to a series of federal whistle-blower cases filed under the False Claims Act. The lawsuits allege that providers and Advantage plans, some operated by the nation's largest insurers, defrauded the Medicare program by manipulating Advantage members' medical data to make the members appear sicker than they were to get higher capitation payments.
In one analysis, MedPAC found that 1.4 million health-risk assessments were administered to 1.2 million Advantage enrollees in 2012. From these assessments, it identified nearly 200,000 cases where no subsequent medical encounter data could be found. These assessment-only diagnoses were associated with Medicare payments of $602 million in payments.
MedPAC feels that plans should not receive higher risk scores based on diagnosis where there is no evidence that a person ultimately gets care. No financial estimate was provided on what would occur should the recommendation be adopted.
The proposals were immediately criticized by industry stakeholders.
“This change would substantially cut funding for benefits for MA enrollees, and the way it plays out it would have a severely disproportionately impact on not-for-profit smaller regional plans,” said Howard Shapiro, director of public policy at the Alliance of Community Health Plans.
MedPAC will formally vote on these recommendations in January and present their findings to Congress by March.