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Ranking Committee Members Echo Advocates’ Complaints to CMS about Draft 2019 Medicare & You

As discussed in a previous CMA Alert, the Center for Medicare Advocacy, Justice in Aging and the Medicare Rights Center recently sent a letter to the Centers for Medicare & Medicaid Services (CMS) raising “strong objections to serious inaccuracies” in the draft 2019 Medicare & You Handbook, and urged CMS to rectify the errors prior to dissemination. 

As stated in a joint press release about the letter, without fair and accurate information, older adults, people with disabilities and their families cannot make informed choices about their Medicare and health care coverage.  The organizations assert that rather than presenting information in an objective and unbiased way, the draft Handbook’s information about traditional Medicare and Medicare Advantage (MA) distorts and mischaracterizes facts in serious ways.

On June 14, 2018, Ranking Members Richard Neal and Frank Pallone, of the House Ways & Means and Energy & Commerce Committees, respectively, wrote a letter to CMS Administrator Seema Verma echoing many of the same concerns raised by our organizations.

Here is an excerpt from the letter, including questions posed to CMS:

The coverage decisions that beneficiaries make can have life-long ramifications. It is not the government's role to direct Americans to one choice over another – rather, its role is to provide fair and balanced information so individuals can reach their own conclusions based on their individual circumstances. To that end, we request responses to the following questions:

  1. How was the decision to make changes made?
  2. What is the rationale for each of the language edits specified above?
  3. To what extent were these changes vetted with beneficiaries and tested to ensure that they do not inadvertently lead seniors to false conclusions about their Medicare coverage options?
  4. Please provide the data/reports from the field testing conducted with consumers to inform these new changes.

Given our concerns, we respectfully request that you not include this language in future outreach, enrollment, or training materials and that copies of those final materials be provided in a timely manner to the undersigned.  We also request that you provide another copy of the handbook to relevant stakeholders prior to its publication.

Another Study Finds Medicare Advantage Plans are Overpaid Based on Enrollees’ Health

Payment to Medicare Advantage (MA) plans is based, in part, on the health of plans’ enrollees.  Recent studies have shown, however, that the amount that plans are paid is higher than warranted based on the health of their enrollees.  As described by the Medicare Payment Advisory Commission (MedPAC) in a fact sheet summarizing their March 2018 Report to Congress,

Medicare payments to MA plans are enrollee-specific, based on a plan’s payment rate and an enrollee’s risk score. Risk scores account for differences in expected medical costs and are based in part on diagnoses that providers code. MA plans have a financial incentive to ensure that their providers record all possible diagnoses because higher enrollee risk scores result in higher payments to the plan. For several years now, the Commission has observed that risk scores for MA enrollees are higher than the risk scores of similar beneficiaries in [traditional Medicare].

A recent study published in Health Services Research adds to an existing body of work surrounding the misalignment between MA payment and enrollees’ health status.  In a paper entitled “Getting What We Pay For: How Do Risk‐Based Payments to Medicare Advantage Plans Compare with Alternative Measures of Beneficiary Health Risk?” by Paul D. Jacobs Ph.D. and Richard Kronick Ph.D. (May 22, 2018), the authors posed the following questions: “[w]hat is the relative health risk of MA beneficiaries compared with those in traditional Medicare (TM), and how do these relative rates of underlying health risk compare with the risk-adjusted payments that plans receive?”

The authors analyzed Medicare claims and enrollment records for a sample of beneficiaries enrolled in Part D between 2008 and 2015, using prescription drug utilization data “independent of diagnostic information that MA plans report for their enrollees and that beneficiaries do not report themselves.” Among their findings was that in each year of their study period, “MA enrollees had substantially lower predicted health spending than enrollees in [traditional Medicare]” and “predicted spending was consistently lower for MA beneficiaries than beneficiaries in [traditional Medicare] across key subgroups, including those living in an institution, and those living in the community with or without Medicaid.”  While they found that the health risk of MA enrollees relative to those in traditional Medicare has been increasing over time, the rate of increase is “substantially less than the rate at which the risk scores used to pay MA plans are increasing.”

Noting that these findings have important implications for MA payment policy, the authors conclude that “our results provide further support for the premise that MA enrollees are no sicker, and may well be healthier, than similar beneficiaries in [traditional Medicare], and further support changing the method of computing the coding intensity adjustment to reflect this principle.”

Some analysts have tried to quantify how much MA plans are being overpaid based upon enrollees’ health status. A 2017 study published in Health Affairs found that coding intensity practices could result in overpayments to MA plans totaling $200 billion over the next decade.  Similarly, in April 2016, the General Accounting Office (GAO) issued a report stating that CMS estimates that about 9.5% of its annual payments to Medicare Advantage (MA) organizations were improper – totaling $14.1 billion in 2013 alone – “primarily stemming from unsupported diagnoses submitted by MA organizations.” 

At a time when the majority in Congress continues to propose budgets that would push more people into private plans and cut $537 from the Medicare program – following passage of a tax cut bill that will add over a trillion to the deficit – addressing MA overpayments should be low-hanging fruit, and should be addressed immediately. 

June 21, 2018, D. Lipschutz

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