The Medicare Payment Advisory Commission voted Thursday to pass recommendations that would change how Medicare Advantage plans are paid, potentially saving the CMS $5 billion.
MedPAC members unanimously voted to request that Congress pass legislation allowing the HHS secretary to eliminate benchmark caps and the “double bonuses” now given to Advantage plans.
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, rewarding top-performing plans.
Under a cap, benchmarks cannot exceed the amount calculated under the 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MedPAC principal policy analyst Scott Harrison has said the current formula uses outdated spending calculations from 2010, and that means some counties have lower benchmarks.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 voted 15-1 on a proposal that would change the CMS' risk-adjustment model to not factor in diagnosis from health-risk assessments. HRAs identify patients who have a chronic disease or disability. In Advantage plans, most HRAs are done during a visit to an enrollee's home. The risk model takes into account those assessments when calculating reimbursement. The more chronically ill or disabled people, the higher the plan's risk score and Medicare payment.
That proposal comes after 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 2012, MedPAC found that 1.4 million health-risk assessments were administered to 1.2 million Advantage enrollees. From these assessments, it identified nearly 200,000 cases where there was no evidence of follow-up care despite a diagnosis or chronic care or disability. Still, Medicare paid $602 million for these beneficiaries. By 2013, MedPac noted a 17% increase assessment-only diagnoses.
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. The change could save between $1 to $5 billion over five years, according to MedPac.
However, panel member Warner Thomas, president and CEO of the Ochsner Health System in New Orleans, voted against the proposal as he felt it would discourage health-risk assessments from being performed.
“The tone is pretty negative in these type of assessments,” Thomas said of the recommendation language.
When initially outlined last month, plans slammed the elimination of the double bonuses. “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 present its recommendations to Congress in its annual March report.