Monday, February 23, 2015
February 20, 2015
CMS pitches 1.1% boost to Medicare Advantage payments
By Bob Herman
The CMS has proposed increasing health insurers' Medicare Advantage
payment rates by 1.05% for 2016, a move that kicks off a 45-day dogfight
in Washington before the rates are cemented.
The base rate was an 0.95% average decrease, but "when combined with
expected growth in plan risk scores due to coding," Advantage plans will
actually receive the 1.05% hike in revenue next year, according to a
release from the CMS posted late Friday afternoon. Risk scores relate to
how Medicare pays for the health status of beneficiaries. CMS pays more
for patients who have more health conditions and less for those who are
Like last year, Advantage plans that earn at least four stars out of
five will receive a 5% bonus payment in 2016, the CMS said. Any plans
with 3.5 stars or fewer will continue to get no additional payments.
Breaking from proposals in the previous two years, the CMS said it will
not propose any adjustments to the use of home visits for patient risk
assessments. Many Advantage plans diagnose the severity of patients'
illnesses at home instead of in a physician's office. But this has
raised concerns that many plans are falsely inflating the diagnoses in a
bid to warrant higher payments for sicker members, a process called
Medicare Advantage's risk-assessment process has been under fire from
policymakers and consumer advocates who argue private insurers are
purposefully bilking money from the program, which covers 17.3 million
people as of this month. The Medicare Payment Advisory Commission has
said the risk scores of Advantage patients have grown more rapidly than
those of regular fee-for-service beneficiaries, and the current
risk-score payment reductions mandated by the Affordable Care Act may
not be enough.
Humana, one of the largest Advantage insurers in the country, disclosed
this week that it is facing increased scrutiny from the U.S. Justice
Department for its risk-adjustment practices.
Health insurers have already begun their Medicare Advantage lobbying
campaign in the hope of extracting higher rates come April. The
Coalition for Medicare Choices, part of America's Health Insurance
Plans, has aired several ads featuring seniors advocating for the
Many members of Congress have also weighed in on the process. A
bipartisan group of 53 senators, led by Chuck Schumer (D-N.Y.) and Mike
Crapo (R-Idaho), sent their own letter to Tavenner this week urging the
agency to "minimize disruptions for beneficiaries enrolled in the MA
program by maintaining payment levels and providing a stable policy
environment for 2016."
The health insurance industry also happens to be one of the top
financial backers of Schumer and Crapo. Since 2009, health insurers have
given more than $493,000 to Schumer's campaigns and more than $234,000
to Crapo's, according to OpenSecrets.org.
CMS Press Release
February 20, 2015
CMS proposes 2016 payment and policy updates for Medicare Health and
The Centers for Medicare and Medicaid Services (CMS) today released
proposed changes for the coming year for the Medicare Advantage (MA) and
Part D Prescription Drug Programs that will advance Health and Human
Services Secretary Sylvia M. Burwell's vision of building a better,
smarter health care system and moving the Medicare program, and the
health care system at large, toward paying providers based on the
quality, rather than the quantity of care they give patients.
The proposed changes reflect the commitment to a Medicare program that
delivers better care, spends health care dollars more wisely and results
in healthier people.
February 20, 2015
NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan
Sponsors, and Other Interested Parties
SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY)
2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D
Payment Policies and 2016 Call Letter
Section H. Medicare Advantage Coding Pattern Adjustment
Below we offer three analyses that strongly suggest that the health
status of MA enrollees is no worse, and more likely is better, than the
health status of FFS beneficiaries of similar age, gender, Medicaid, and
institutional status. These include analyses of self-reported health
status and mortality rates, as well as Part D drug information.
Self-Reported Health Status. Analysis of self-reported data on health
status and on whether the respondent has ever been diagnosed with one of
a variety of conditions from the 2006-2011 Medicare Current Beneficiary
Survey (MCBS) suggests that the average risk for MA enrollees is
approximately 96% of the average risk for FFS beneficiaries.
Mortality Rates. Mortality rates for MA beneficiaries are significantly
lower than mortality rates for FFS enrollees. For example, in 2012, the
mortality rate in MA was 81% of the mortality rate in FFS. (It is
possible that lower mortality rates result from better quality of care
in MA, but it seems more likely, given the size of the difference, that
this reflects, at least in part, relative health status.)
Part D Drug Information. MA enrollees are significantly less likely than
FFS beneficiaries to be prescribed drugs that are predictive of high
expenditures. HHS has used information from Part D data to construct
risk scores for MA and FFS enrollees, and has found that MA enrollees
are at significantly lower risk than demographically similar FFS
Of the three sources of information that are independent of the
diagnoses reported by MA plans, each suggests that MA enrollees are at
similar or lower risk than demographically similar FFS beneficiaries.
CMS Advance Notice (172 pages):
Letter from U.S. Senate members to Marilyn Tavenner, CMS Administrator:
The Coalition for Medicare Choices - 1.8 million voices protecting
The Coalition for Medicare Choices
601 Pennsylvania Avenue, Suite 500
Washington, DC 20004
America's Health Insurance Plans (AHIP)
America's Health Insurance Plans
601 Pennsylvania Avenue, NW, Suite 500
Washington, DC 20004
Comment by Don McCanne
The 2016 base rate for private Medicare Advantage (MA) plan payments was
to have decreased by 0.95%, phasing in a correction of the overpayments
that have been made to the MA plans. Instead, CMS will increase the
payment rates by 1.05%, a full 2.0% increase over the projected base
rate. This is the fourth year in a row that CMS has violated the intent
of ACA and other legislation to bring MA rates down to the equivalent of
payments made in the traditional fee-for-service Medicare program.
CMS's Advance Notice provides three sources of evidence demonstrating
that the MA patients are a healthier subset of patients than those in
the traditional Medicare program. Since this results in adverse
selection in the traditional Medicare program, the rates paid to MA
plans should be even lower than payments made in the traditional
program, not higher.
The record is now clear that the MA plans have been using various
methods of upcoding the severity of illness of their customers (known to
us as patients) thus qualifying for higher risk adjustment payments. One
of the latest schemes is to make home visits, not to provide more care
but merely to try to find more diagnoses to be used in inflating risk
adjustments - diagnoses that do not appear in the billing documents from
physicians and hospitals! Although this abuse is widely recognized, CMS
said "it will not propose any adjustments to the use of home visits for
patient risk assessments." This is at a time that the Justice Department
has increased its scrutiny of these likely criminal acts.
As if we didn't have enough reason to be disgusted with our government,
over 50 Senators have sent a letter to CMS Administrator Marilyn
Tavenner requesting preservation of the overpayments made to the MA
plans. The rhetoric of the letter is clearly that of America's Health
Insurance Plans (AHIP) - the lobby organization for the health insurance
industry. To no surprise the lead signers of the letter, Senators Mike
Crapo and Charles Schumer, between them have received from the insurance
industry close to three-quarters of a million dollars.
The Coalition for Medicare Choices has already begun its intense
campaign to drum up public support for MA overpayments, of course
disguised as protecting Medicare. It surely surprises no one that this
organization is headquartered not only in the same building as AHIP, but
it even shares the same suite.
Perhaps even more ominous is the statement in the CMS press release that
states that the proposed changes "will advance Health and Human Services
Secretary Sylvia M. Burwell's vision of building a better, smarter
health care system and moving the Medicare program, and the health care
system at large, toward paying providers based on the quality, rather
than the quantity of care they give patients." And the the Senators'
letter that states, "At the time of broad agreement on the need to shift
U.S. health care to focus on care coordination, quality, and value-based
payments, it would be counterproductive to jeopardize a program that is
already driven by and aligned toward those goals." This political
support of MA plans clearly advances the agenda of privatizing Medicare
- only one step away from converting to a defined contribution premium
support (voucher) program - the dream of the private insurance industry.
So who is paying the higher costs of these private MA plans? We, the
taxpayers, and the beneficiaries in the traditional Medicare program who
are paying higher Part B premiums to help fund this gift to the private
If there were even a thread of moral fiber left in D.C., instead of
shamelessly supporting overpayments to the private insurance industry,
our representatives would be advocating for using those funds to improve
benefits for all Medicare beneficiaries. Under that scenario, the
private insurers who are keeping three-fourths of the overpayments,
would be dismissed. But then Crapo and Schumer would likely decide that
three-quarters of a million dollars is too dear of a price to pay for a
strand of moral fiber.
at 2:24 PM