stabilize the Medicare Advantage Program

Transcription

1 March 4, 2016 The Honorable Sylvia Burwell Secretary, U.S. Department of Health and Human Services 200 Independence Avenue, S.W. Washington, D.C Dear Secretary Burwell: The U.S. Chamber of Commerce (the Chamber ) is writing to express our concern about the proposed harmful cuts to 2017 Medicare Advantage ( MA ) payments in the Centers for Medicare & Medicaid Services ( CMS ) Advance Notice of Methodological Changes for Calendar Year 2017 for Medicare Advantage Capitation Rates, Part C and Part D Payment Policies and the 2017 Call Letter. As employers, our member companies remain stalwart in their commitment to preserving the viability and continuity of trusted, meaningful coverage through MA plan offerings for their retirees. Therefore, we urge you to stabilize the Medicare Advantage Program and avoid undermining the health care coverage long-trusted and valued by millions of retirees and the employers that offer MA options. The Chamber is the world s largest business federation, representing the interests of more than three million businesses and organizations of every size, sector and region, with substantial membership in all 50 states. Our members have long valued the ability to provide integrated retiree benefits through MA, including innovative care coordination and case management services, as well as the benefits and services offered under fee-for-service (FFS) Medicare. It is through MA that employers are best able to seamlessly transition retirees from active employee coverage to retiree coverage while maintaining stability in out-of-pocket health care costs. The Advance Notice is less than two weeks old and still the proposals put forth have already been analyzed by multiple actuarial third parties concluding that the funding proposals would result in reductions in payments in 2017, contrary to CMS estimate of a 1.35% increase on average in revenues. Oliver Wyman released a report commissioned by AHIP on March 3, 2016, that concludes that Medicare Advantage plans overall will see a reduction in payment between a minus 0.5% and a minus 3.9% in A Milliman report released on March 2, 2016, estimates that a nationwide average reduction in Employer Group Waiver Plan (EGWP) funding will be Advance Notice: Changes to Medicare Advantage Payment Methodology and the Potential Effect on Medicare Advantage Organizations, Oliver Wyman, March 3,

2 % of total federal government Part C funding for EGWPs. 2 Reductions in funding will translate into reductions in benefits, potential restrictions in provider networks, and/or increases in out of pocket costs to retirees who are generally on a fixed income and have limited budgets. There are multiple areas of concern in the preliminary Advance Notice and draft Call Letter including: the continuation of negative payment adjustments that is several years running; elimination of the bidding process for Medicare Advantage Retiree Coverage through EGWPs; significant proposed changes to the risk adjustment methodology; changing the methodology for star bonuses; and failure to follow the federal notice and comment rulemaking process. These deleterious changes will harm the coverage that 18 million American beneficiaries enjoy and is a significant step backwards for the health care system s efforts to move beyond a FFS system to one that, under MA, rewards providers for quality care, and encouraged greater care coordination, early disease detection and included comprehensive efforts to improve health. As Medicare moves to a move value based system, reducing payments to MA plans that encourage and implement numerous value based provider arrangements is a step in the wrong direction. Restore Stability in Medicare Advantage MA is an attractive program because it offers many advantages to beneficiaries over traditional FFS Medicare, such as value-added benefits, including vision and dental benefits, transportation, better management of chronic conditions, and cost protections. These features and cost protections make high-quality and cost effective health care available to more beneficiaries. However, MA plans are experiencing a trend of negative payment adjustments that is several years running. The Chamber is concerned about the cumulative impact that both negative payment updates and significant and problematic policy changes have on the stability of the MA program. These are changes that directly impact employers and beneficiaries. As previously cited, the CY2017 Advance Notice and draft Call Letter continues this trend and includes proposals that, in sum, will have a severe and negative impact on the beneficiaries who depend on MA, by threatening benefits, increasing premium and cost-sharing amounts, and limiting provider access and plan options. These proposed negative payment adjustments and policy proposals are inconsistent with CMS emphasis to improve care for beneficiaries through stronger care coordination and integration, as well as CMS recent efforts to implement changes in FFS that mimic programs currently in place in the MA program that are working effectively, while improving care and lowering costs for beneficiaries. Rather than restructure multiple critical aspects of the MA program at the same time, CMS should instead focus on ensuring that plans have adapted to the numerous changes imposed over the last several years including: the year-over-year the trend of negative adjustments, frequent 2 Employer Group Waiver plans Financial Impact Based on the 2017 Advance Notice Summary, Milliman, Inc. March 2, 2016

3 revisions to the risk model, frequent retrospective changes to the Star Ratings quality program, and the transition to ICD-10. Protect Medicare Advantage Retiree Plans Employers offer health care coverage to approximately 3.3 million retirees through MA-EGWPs, nearly 20% of all MA beneficiaries. MA-EGWPs allow employers to provide comprehensive coverage with out-of-pocket cost protections and prescription drug benefits through Part D, often at no additional cost to their retired seniors and the disabled. These EGWPs not only include more comprehensive benefits and superior care coordination and disease management programs; they also give beneficiaries greater provider access and choice than traditional Medicare. Retirees highly value these MA-EGWPs and as of February 2016 nearly 20% of Medicare beneficiaries are enrolled in these EGWPs. MA-EGWP enrollment has grown rapidly since 2006, nearly tripling since that time, and increasing by nearly 1.3 million enrollees since We have tremendous concerns about the Advance Notice s proposal to abolish the long-standing EGWP bidding process and instead tie payment levels to the weighted average bid-to-benchmark rates associated with the individual non-group MA plans. While in theory it may seem to make sense to have both MA-EGWP and MA individual plans linked to the same benchmark, a closer look at the significant differences between these coverage offerings demonstrates the harm in doing so. Simply put: EGWPs are very different plans which is why their bids have differed historically. Forcing these plans to accept the same payments as the average individual plan will lead to reduced benefits, increased cost sharing and/or limited access to providers. This in turn may impact the trend of lower hospital readmissions and fewer ER visits that has been well documented in the MA-EGWP market. A trend reversal like that will increase the overall costs to the health care system. Both individual and employer group MA plans offer comprehensive health care coverage, including services that are not available in traditional FFS Medicare. MA plans offer additional benefits, such as vision and dental benefits, case management services, annual wellness visits, and prescription drug management tools that are integrated with medical benefits. However, while MA individual plans are largely HMOs, MA-EGWPs are typically PPOs that cover larger geographies in order to accommodate employers with retirees living in various locations across the nation. Beyond offering retirees the ability to see providers outside of the network in the plan s service area for a slightly higher out of pocket cost in a typical PPO type offering, these plans also offer coverage to retirees in extended service areas, including numerous if not all states in the country. As a result MA-EGWPs tend to have higher associated premiums on average than individual MA plans. In addition, in order to offer national coverage, MA-EGWPs may operate in geographies where it is more difficult to establish efficient provider relationships to ensure appropriate risk coding. Consequently while EGWP members may appear to have lower average risk scores, this is more an artifact of the widespread geographic coverage than actual member risk. Changing this payment methodology will harm the viability of these plans and ultimately hurt retirees by increasing premiums, reducing benefits and restricting provider networks. If MA-

4 EGWPs were no longer a cost effective option, employers likely would discontinue offering them to retirees leading to a return to unmanaged care, significant disruption for their retirees, and increased costs the Medicare program. We expect that this would reverse gains in health status and outcomes that have been the hallmark of managed care for employer groups before and after retirement. Additionally, the Chamber has significant concerns with the ability of plans and employers to work within the timeline that this change would demand. If MA-EGWP bids are dependent on the average of the bids for the individual MA plans, it is unlikely that the average will be determined until August of 2016 for plan years beginning in January This leaves just a matter of weeks for employers to prepare for open enrollment which is operationally impossible given that employers will have to negotiate benefits, networks and out-of-pocket fees before contracting with a plan for their retirees. We urge CMS to help employers all over the country provide high quality, innovative, and coordinated care to their valued retirees by reversing the proposal to eliminate the current EGWP bidding process. If CMS does decide to move forward, we believe it would be more accurate for the Agency to segment the benchmark calculation by HMO and PPO product, given the fundamental differences between these plan types. Additionally, we suggest that Special Needs Plans for individuals who are dually eligible for Medicare and Medicaid (D-SNPs) be excluded from the benchmark calculation. D-SNPs are not equivalent to the type of coverage an employer purchases, and are therefore irrelevant to the calculation. Revisions to Risk-Adjusted Payments Should Not Reduce Overall MA Funding CMS has proposed a significant change in the calculation of risk-adjusted payments to MA plans. Under the proposal, certain MA members would receive additional risk-adjusted funding, while other members would receive less risk-adjusted funding. CMS has calculated the net reduction in funding as a result of this risk model change to be -0.6%, which independent actuaries view to be significantly understated. While we recognize the importance of appropriate reimbursement for vulnerable populations, and appreciate that CMS acknowledges that care for certain members is not appropriately reimbursed, changes to the risk model should not result in significant overall funding reductions across the MA population. A March 3, 2016 Oliver Wyman report issued by AHIP estimates that a Medicare Advantage funding cut of 2.1% on average will result from this change in the risk model. This reduction in funding will increase premiums and/or reduce benefits (e.g., higher medical/drug copays, fewer supplemental benefits). The impact of the policy will reduce payments to most plans, making it harder to serve many members -- it tips the balance toward fee-for-service Medicare, which is less cost effective and does not drive innovation the way private plans do. In addition, the policy undermines the ability of MA plans to serve certain low-income beneficiaries, which is the population that benefits the

5 most -- financially and from a health outcomes perspective -- from the managed, integrated care plans provide. We recommend that CMS take a more comprehensive approach that acknowledges all inaccuracies. Preserve Stars Bonuses Employers are continuously developing innovative coverage offerings and exploring ways to help their employees manage and mitigate chronic conditions. Similarly, MA plans are advancing efforts to move beyond fee-for-service towards a more integrated delivery system in the Medicare space. The Star rating program allocates financial rewards to MA plans with better health outcomes and performance. Eliminating the ability of plans to receive these financial rewards simply because they are under sanction will unfairly and unjustly hurt the beneficiaries and providers that are engaged in these innovative models. This policy creates an un-level playing field because the timing of sanctions means that only some insurers can remediate the audit findings before losing these payments. For example, an insurer that is placed under sanction in January would have only two months prior to the March 31 evaluation date to remediate problems and have sanctions lifted before losing any Starsrelated bonuses for the upcoming bid period, while one placed under sanctions in April would have a full year to remediate before losing those bonuses. Given the significant resources insurers have to devote to remediation, the Chamber believes incurring penalty as serious as a Stars-related financial penalty should not depend upon the luck of the draw on the calendar. The Chamber also believes that the Stars penalty is unfair because the size and impact of the penalty increases as the Star rating of a plan prior to sanctions increases. This gives rise to the irony of penalizing most heavily those plans that have the highest Star ratings. Insurers that provide the highest quality care to beneficiaries are the ones hurt most by the arbitrary nature of the automatic Stars downgrade, while plans with poor Star ratings placed under sanction incur no direct financial penalty as a result of the policy. So the downgrade policy actually provides plans with incentives not to provide high-quality care and maintain average Star ratings so they never incur significant financial penalty as a result of sanctions. The Chamber does not believe CMS should incentivize anything short of the best performance by insurers. The Chamber urges CMS to revise its policy to automatically downgrade the Star ratings for a plan placed under sanction. We do not believe that overall Star ratings should be reduced as a penalty on plans placed under sanction. That confuses the purposes of Star ratings with CMS enforcement authority. At the very least, in an effort to treat plans fairly and eliminate the arbitrary nature of the Stars calendar, we recommend that CMS allow plans one year from the effective date of the sanctions to remediate and have sanctions lifted before the Stars penalty would be applied. Revisions to this policy would be in the best interests of beneficiaries who depend on, as well as providers that deliver, high quality care through the Medicare Advantage program.

6 Promulgate Medicare Advantage Changes via the Notice and Comment Rulemaking Process This Advance Notice permits a mere two weeks for comment despite its highly technical content which will significantly impact the coverage, cost and access for millions of Americans. Although additional time will be afforded beginning in 2017 for commenting on the Advance Notice of Methodological Changes for Calendar Year 2018, we still believe that this is insufficient for meaningful notice and comment. Moving forward, we urge CMS to appropriately issue notice changes to the Medicare Advantage program s risk adjustment methodology and payment adjustments in the Federal Register and permit an adequate 60-day comment period to ensure sufficient input from the public. Conclusion The Chamber urges CMS to issue a final Notice that will prevent further harm to retirees, stabilize the MA program, and preserve the ability for employers to continue offering these highly valued options. This is critical in order to prevent millions of Americans from losing the Medicare Advantage plans that they value. Sincerely, Randel K. Johnson Senior Vice President Labor, Immigration, & Employee Benefits U.S. Chamber of Commerce Katie Mahoney Executive Director Health Policy U.S. Chamber of Commerce