Greetings from Washington,
While temperatures are dropping here in D.C., the Administration and some members of Congress are doing their best to heat it right back up by putting Medicare Advantage (MA) plans on blast. However, the Medicare Payment Advisory Commission (MedPAC) must’ve thought those changes weren’t enough as they thoroughly fanned the flames during their meeting earlier this month.
MedPAC & MACPAC
During the second day of its November Meeting, MedPAC held two sessions related to MA. During these sessions, MedPAC staff shared findings that show MA payments being consistently higher than expected because of coding and favorable selection. Specifically, in September, MedPAC estimated that coding differences alone led to more than eight percent higher MA plans than fee-for-service (FFS) plans in 2021, even after accounting for CMS’s 5.9 percent adjustment. In June, MedPAC estimated that favorable selection alone led to eleven percent higher payments than FFS in 2019. MedPAC staff also shared that a large collection of research points to MA plans experiencing favorable selection, both indirectly and directly.
Furthermore, staff shared updates they made to the analysis from the 2023 MedPAC June Report to Congress. Two of these updates increased the selection effect by less than one percent and one of them decreased the selection effect by two to three percent. The estimated cumulative selection effect in this analysis went from 5.9 percent in 2017 to 12.8 percent in 2021. Based on this analysis, MedPAC staff estimates the combined effects of selection and coding to have caused $50.8 billion in increased payments to MA Plans in 2021. MedPAC plans to continue looking at the effects of selection into MA and will include estimates in the annual March MA status report. When it comes to networks in MA, MedPAC staff has found that choice of provider is important for beneficiaries and that many beneficiaries are willing to trade choice for reduced cost sharing, out-of-pocket spending caps, and additional benefits. When it comes to prior authorization in MA plans, MedPAC has found most MA PA determinations and reconsiderations were eventually approved.
Commissioners raised many concerns about the Advantage plans including how plans are reimbursed, how the plans use rebates they are issued, and how CMS ensures network directories are accurate. They also expressed concerns about the potential barriers to care and burdens to providers caused by prior authorization requirements.
Likewise, the November meeting of the Medicaid and CHIP Payment and Access Commission (MACPAC) included a session on the use of State Medicaid agency contracts (SMACs). MACPAC staff concluded that states are using contracted strategies in their SMACs to improve integration with varying frequency. Additionally, they found certain provisions are more widely used while others had relatively limited use. As for next steps, MACPAC will start conducting interviews with state and federal officials and health plans representatives to explore challenges to optimizing SMACs.
Overall, commissioners were disappointed with the use of SMACs. Chair, Melanie Bella, MBA, underscored a gap exists between what they might see on paper and how these tools are used to ensure everyone who needs it, has access to integrated care. Commissioners expressed a desire to see researchers investigate what prevents states that have D-SNPs and SMACs from effectively using SMACs. MACPAC staff said they could look into this subject.
On The Hill
Democratic leaders on the Energy and Commerce Committee have called for increased oversight of the MA program. On the Senate side, Finance Committee Chair Ron Wyden (D-OR) held a hearing on MA marketing and enrollment practices and has commented on the need to address some of those practices.
CMS Proposed Rule
The Centers for Medicare and Medicaid Services (CMS) tried to stabilize the climate and keep our lawmakers’ heads cool by publishing a proposed rule to revise the MA program. They outline this ruling in a 2,500-word fact sheet, but we’ll try to give you all an overview in fewer words. Regarding broker/agent compensation, this rule would change the cap so it combines the additional fees at a flat rate (the new cap would be $632/beneficiary instead of $601/beneficiary). The rule would also require plans to provide enrollees with a mid-year notification about supplemental benefits to ensure they are taking advantage of the benefits. CMS also decided to address concerns about the use of prior authorization within MA. To improve the experiences and outcomes for dually eligible individuals the proposed rule would increase the frequency of special enrollment periods for enrollees eligible for both Medicare and Medicaid. And lastly, the ruling would limit out-of-network cost-sharing for dual eligible special needs plans (D-SNP) preferred provider organizations (PPOs) beginning in 2026.
In accordance with federal law, this proposed rule will be published and subject to a public comment period. To ensure consideration, comments must be submitted by no later than 5 PM on January 5, 2024.
Between the Administration, Congress, MedPAC, and MACPAC, it seems as though everyone has been trying to cook over the fire that are Medicare Advantage plans. We expect the oversight to continue, and you can be sure we will be watching the thermometer to ensure our clients’ voices are heard in Washington.