Insurers offering Medicare Advantage plans got a bit of a reprieve this week when the Centers for Medicare & Medicaid Services gave them a rate increase instead of the expected cut. CMS' 2015 rate announcement also addressed concerns over provider terminations and beneficiary cost sharing.
In February, CMS proposed a range of Medicare Advantage provisions that by the agency's estimates would have translated into a rate decline of just under 2 percent for the average MA plan. But in the agency's final rule, released Monday, CMS is projecting that average rates will rise by 0.4 percent. The rate revision is based on calibrations of risk models and a decision to phase in new, more selective risk adjustments.
While the total beneficiary cost benchmark of $32 per-member per-month remains from the proposal and the agency's actuarial estimates of cost growth trends were reduced from negative 1.9 percent to negative 3.4 percent, it is really three other factors that the agency is revising that contribute to the net increase of 0.4 percent, said Jonathan Blum, CMS deputy principal administrator, during a press call on Monday.
One is a recalibration from 3.2 percent to 4.3 percent of demographics in the risk models, with a "baby boomer adjustment" that accounts for healthier seniors entering the Medicare program (and many choosing MA plans). Another is a decision not to go forward with a proposal to exclude data collected during home risk assessment from enrollee risk calculations. The third is an easing in of a new hierarchical condition category (HCC) risk adjustment, using a blend of 67 percent of 2013 scores and 33 percent of 2014 scores.
The new risk model that began in the 2014 plan year and is being phased in at the 33 percent proportion will eventually increase, CMS wrote in its final rule. Likewise, the withdrawn proposal to exclude home risk assessments (the second time it has been proposed and retracted) may return.
America's Health Insurance Plans has not weighed in with estimates on the average impact, as the trade group's leaders take time to digest the 154-page final rule, but others are weighing in and many believe that the average MA plan will probably see a rate reduction rather than the increase CMS estimates.
"All-in, we estimate Medicare Advantage rates will drop around 3.0-3.5 percent in 2015, which might be slightly worse than the consensus expectation," wrote Carl McDonald, a managed care analyst for Citi Research, in a briefing.
Others noted that the many provisions in the annually-updated regulations – including new standards for provider network changes, the phasing out of a quality bonus demonstration and revised templates for beneficiary coverage notices – will have a range of impacts on insurers.
"There is a significant extent to which the effect of any one particular policy will vary by an MA plan," said Anne Hance, a McDermott Will & Emery lawyer specializing in payer issues.
In addition to the rate information, CMS used the final rule to address concerns raised by providers in recent months regarding an insurer's ability to terminate providers from their MA plans. Those concerns were brought to national attention when an estimated 2,200 Connecticut physicians were terminated by UnitedHealthcare last year. Connecticut medical associations sued on behalf of the physicians, claiming the insurer broke its contractual obligation to the physicians by terminating them from the network without cause and proper written notice. That suit is currently under mediation.
While CMS did not extend the 30-day minimum amount of time Medicare Advantage insurers need to follow to notify providers of termination, the agency is going to require insurers to notify regional CMS account managers of significant provider terminations at least 90 days ahead of time and, upon request, submit plans detailing how beneficiaries will locate new providers.
As a best practice, but not a requirement, CMS is suggesting that MA plans making significant network changes should provide enrollees more than the required 30 days advance notice, and offer them information on in-network providers and instructions for requesting continuation of ongoing medical treatment or therapies with current providers.
CMS regulators were considering lengthening the required 30 days notice via new regulations, but administrators are holding off on that. They are, however, letting beneficiaries enroll in a new plan mid-year if one of their treating doctors or hospitals is removed from their plan's network.
The agency is also revising its explanation of benefits templates for beneficiary cost sharing, following some reports of inconsistencies between Medicare fee-for-service cost sharing and Medicare Advantage.
"(W)e have become aware that some MA plans' representation of cost sharing for inpatient services is not as transparent as it should be," CMS regulators wrote.
The revised templates will have language that shows each plan's inpatient cost sharing structure and clearly identifies all cost sharing for inpatient stays.