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Data-Exchange Problems Cost Medicare Advantage Plans 'Millions,' Executives Say

By John Reichard, CQ HealthBeat Editor
September 13, 2006 -- Complications in the process of reconciling state and federal data to establish who qualifies for the higher rates Medicare pays for poor people in managed care plans are costing those plans millions of dollars, industry executives said this week.

At issue are the higher rates the Centers for Medicare and Medicaid Services pays Medicare managed care plans—known as Medicare Advantage plans—for so-called dual eligibles. The term refers to Medicare beneficiaries who also qualify for Medicaid because of their low incomes or disabilities and who typically are sicker and more costly to treat.

"If you are a Medicare Advantage plan, the Centers for Medicare and Medicaid Services is not properly identifying 100 percent of the dual eligibles enrolled in your plan. End of story," an executive in the managed care industry said Monday.

Adjusting CMS payment systems to reflect a Medicare Advantage enrollee's status as a dual eligible involves matching federal data on Medicare eligibility with state data on Medicaid eligibility.

Because of imperfections in that process, health plans in some cases must follow up with state agencies to provide CMS with additional data confirming dual-eligible status. Because state agencies have other priorities or lack resources, obtaining the data can take months or years, the executive said.

Even if data exchange is smooth, shorter lags between the time a dual eligible starts getting care through a Medicare Advantage plan and the time the beneficiary is paid for as a dual eligible occur as a routine part of the enrollment process.

The result: Medicare Advantage plans must seek retroactive payment adjustments from CMS to collect the difference between dual-eligible rates and standard payment rates. But under a policy announced in July 2005, CMS is making it harder to collect those adjustments, the executive said. Plans also complain that the policy is giving them less time to document dual-eligible status.

'Longstanding Issue'
Health plan complaints about the time it takes to establish dual-eligible status for payment purposes go back a number of years. "It's a longstanding issue with the plans," said Candace Schaller, senior vice president for regulatory affairs at America's Health Insurance Plans, the nation's largest health insurance lobby.

But industry complaints have mounted in recent weeks because of enforcement of the July 2005 policy change limiting the time a plan has to convince the agency a patient's care should have been reimbursed at the higher dual-eligible rate. The policy gives plans 45 days to notify the agency that the payment should have been at the higher rate and generally a total of six months to document dual-eligible status to CMS.

Plans say that the deadline shortens the time that they have to provide documentation, adding that prior to the July 2005 policy change the deadline was more open-ended. They complain that in a number of cases they can't provide the proof within that window because of difficulties getting data from the states.

Another complaint is that while the policy still allows plans to receive payment adjustments for services provided within the prior 36 months, it's harder to collect the adjustments because the plan must provide documentation that they were working continuously with the state agencies to try to get the data, the industry executive said. The criteria for documenting those efforts are unclear, the executive added.

$50 Million Shortfall?
The executive estimated that between 0.25 percent and 1 percent of a Medicare Advantage plan's enrollees are dual eligibles but aren't recognized as such by CMS. He estimated that industrywide Medicare Advantage plans are owed more than $50 million because of the data problem.

Plans should have up to 36 months to file the needed confirmatory data and CMS should apply to the dual population a better but still flawed method it has used to identify dual eligibles in switching them from Medicaid to Medicare drug coverage, the executive said.

He added that other data-exchange problems relating to reconciling plan and CMS data on the "risk status" of an enrollee also are costing plans additional millions of dollars. Under the "risk-adjustment" process, CMS pays Medicare Advantage plans more if beneficiaries are sicker and have a higher risk score and less if they are relatively healthy and have a lower risk score.

The conversion of an older computer system for paying Medicare managed care plans also has led to data inaccuracies producing underpayment of plans, he said.

Another industry executive said the problems would not cause plans to shy away from enrolling dual eligibles but would erode already thin profit margins. "At 3 or 4 percent, margins aren't that great to begin with," the executive said.

Both executives expressed frustration that America's Health Insurance Plans, the giant health insurance lobby, hasn't pushed the issue harder. One said AHIP was reluctant to take it up for fear of antagonizing CMS. The other said AHIP and CMS have so much to do with implementing the Part D drug benefit that they haven't elevated the data issue to a top priority.

AHIP President Karen Ignagni said, "plans need to be made whole" for their treatment of dual eligibles and that it's "certainly not the case" that the lobby is not aggressively pursuing the issue with CMS. She said that in the past week alone AHIP has had "several conversations" with CMS on the issue.

"CMS has asked us for concrete examples of plans in this situation and we have a very aggressive outreach program under way to provide this," Ignagni said. Schaller, who said AHIP has been working the issue at CMS for "years," commended the agency for urging states last year to improve the flow of data to CMS to document dual-eligible status, but said the agency needs to clarify what steps plans must take place to establish that they are making good-faith efforts to obtain data from the states.

Schaller said AHIP has been actively engaged in efforts to determine the number of plans currently affected. "It's an important issue even if a small number of plans are affected," she said.

Asked about the issue after a speech on Monday to managed care executives, CMS Administrator Mark B. McClellan said, "definitely the plans are going to get fully reimbursed." But McClellan added that "we do want plans to get us transaction information in time, so we have to set deadlines to make that happen."

CMS spokesman Peter Ashkenaz said agency policy seeks to assure that plans have made concerted efforts to document dual-eligible status. Higher payments shouldn't be made if plans say only years later that an enrollee was a dual eligible without having consistently pursued documentation, he said.

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