By Kerry Young, CQ Roll Call
March 22, 2016 -- The insurance industry soon will learn how it fared in its most recent skirmish with Medicare officials over payments. Each side sees billions at stake in a final decision about how extra money should be provided for covering elderly and disabled people who suffer from poor health.
Medicare will by April 4 issue the final version of policies for next year for the so-called Advantage plans, in which insurance companies are paid to manage the health benefits of people enrolled in the program. Medicare paid insurers about $170 billion last year for Advantage plans, one of the program's biggest expenses. About 17 million people are enrolled in Advantage plans.
The America's Health Insurance Plans (AHIP) trade group contends that the Centers for Medicare and Medicaid Services (CMS) has underestimated how much a change in risk adjustment payments, which provide additional funds for plans whose customers are sicker than average, will cost its members. In a proposal on Medicare Advantage payments, known as a call letter, CMS had estimated a reduction of 0.6 percent, or about $1 billion, to risk adjustment payments in 2017, AHIP said in a March 4 letter to CMS. AHIP contended the planned changes could actually be a reduction of 2.1 percent.
The cut could harm the people who enrolled in Advantage plans instead of sticking with traditional fee-for-service Medicare, AHIP officials wrote in the letter.
The group urged CMS to issue a Medicare Advantage final notice that "maintains a strong and stable program and ensures plans can continue to provide innovative, high quality care for current and future beneficiaries."
Whatever decision CMS makes in the 2017 call letter is unlikely to be its last word on risk-coding for the Medicare Advantage program. The insurer-run plans have been credited with more aggressively seeking to document health problems in their members, which can be a boon in terms of getting earlier treatment for chronic diseases. There's clearly a concern, though, that the insurer-run plans also are looking to raise their revenue from the Advantage plans, which have been the target of budget cuts in several recent laws.
"The higher level of reported diagnoses can arise for a variety of reasons including plans seeking to better understand the health status of their enrollees so they can provide better care to plans reporting more diagnoses for enrollees to generate higher revenue," CMS said in the draft released in February.
Enrollment in Medicare Advantage has been surprisingly robust even as Congress took steps in recent laws including the 2010 health law to make it less profitable for insurers. Medicare's board of federal trustees said in their 2015 report that growth in the Advantage plans had defied their earlier estimates, which predicted slowing due to the reduced incentives for insurers.
Instead, payments to Advantage plans proved to be more than the trustees had anticipated due in part to the way that the plans documented illnesses in their customers, which drew additional Medicare dollars.
In the February draft, CMS signaled that continued enrollment growth in the Advantage plans will keep the risk-based payments a front-burner issue. Coding-related payment increases "threaten the solvency" of Medicare's hospital trust fund and can trigger higher premiums for all people covered by the federal health program, CMS said.
"For this reason, CMS will continue to monitor coding intensity closely and will utilize its authority to increase the coding intensity offset as appropriate," CMS wrote.