RISE summarizes recent regulatory-related headlines.
Advance Notice fallout: BMA urges CMS to hold off on risk adjustment changes for 2024 plan year
In a March 1 letter to the Centers for Medicare & Medicaid Services (CMS), the Better Medicare Alliance and 40 organization asked the agency to reconsider implementation of the “harmful” risk adjustment changes it has proposed for the 2024 plan year.
The proposed risk adjustment changes contained in the 2024 Medicare Advance Notice may jeopardize progress the health care industry has made to advance health equity, prevent disease progression, and deliver high-value, high-quality care, according to 41 organizations representing diverse communities, providers, aging service organizations, and beneficiary advocates. They asked CMS Administrator Chiquita Brooks-LaSure to reconsider implementation until the industry can fully understand the impact the changes will have on seniors with multiple chronic conditions and social risk factors.
The organizations referenced a recent Avalere report that found the proposed changes could lead to payment cuts to Medicare Advantage plans, with an average reduction of $540 per beneficiary per year and likely a higher impact in many underserved communities. “For those living on a fixed income, $540 per year in reduced benefits or increased costs can drastically impact their ability to afford rent, food, transportation, internet, other basic costs, particularly in an inflationary economic environment,” they wrote.
The cut will also lead to a decrease in funding for supplemental benefits, which could mean seniors will lose access to dental, hearing, and vision coverage. “Beneficiaries have come to rely on these benefits, and losing them, coupled with increased premiums, is a burden many of these seniors cannot afford,” they wrote.
Commonwealth Fund report: Most brokers would choose Medicare with Medigap over Medicare Advantage
Most brokers and agents who sell Medicare plans across the country and interviewed as part of a focus group last fall said that they personally would choose traditional Medicare with Medigap, believing that combination offers better coverage and choices than Medicare Advantage, particularly as people age.
The online focus groups included 29 insurance brokers and agents who sell Medicare Advantage plans, Medigap supplemental coverage plans, and Part D prescription drug plans. The findings from those discussions were recently published by the Commonwealth Fund.
Among the findings:
- Most brokers and agents in the focus groups recalled receiving higher commissions — sometimes much higher —for enrolling people in Medicare Advantage plans compared to Medigap supplemental plans for traditional Medicare, with some variation by geographic region and new enrollments versus renewals.
- Brokers and agents said they tend to sell the combination of traditional Medicare with a Medigap policy to beneficiaries with higher incomes and Medicare Advantage plans to those with lower incomes.
- Most brokers and agents personally would choose traditional Medicare and Medigap over a Medicare Advantage plan. When asked, most said that they believe traditional Medicare, with the addition of Medigap supplemental plans, offers better health care coverage and choices, particularly as people age. One broker explained their choice, “If I ever have a medical issue, I’d want to be able to go to any physician I want.” A few participants, however, thought Medicare Advantage plans would be fine for their needs.
OIG: CMS needs stronger fraud oversight to identify denied claims in MA
A new report by the Office of Inspector General (OIG) calls on CMS to definitely identify payment denials on encounter records submitted for Medicare Advantage (MA) to enhance program oversight and help combat fraud.
OIG said that most 2019 MA encounter records contained a payment adjustment, but it is challenging to identify whether these adjustments are payment denials. CMS doesn’t require MA organizations to include an indicator that identifies denied claims in their MA encounter data. Instead, they must submit claim adjustment reason codes when MA organizations do not pay the actual amount billed by the provider. Adjustment codes explain the reasons for payment adjustment to the claims. However, CMS does include denied-claim indicators for traditional Medicare and Medicaid.
The problem, the OIG found, is that the descriptions for some adjustment codes are too vague to clearly identify whether the MA plan denied payment for a service. The watchdog recommends that CMS require MA plans to definitively indicate on MA encounter data records when they have denied payment for a service on a claim. CMS did not concur or nonconcur with the recommendation.
MA plans report higher gross margins per enrollee than other insurers
A Kaiser Family Foundation (KFF) analysis of health insurers’ 2021 financial data shows that insurers continue to report much higher gross margins per enrollee in the Medicare Advantage (MA) market than in other health insurance markets.
The analysis examines insurers’ financial data in MA, Medicaid managed care, individual (non-group), and fully insured group (employer) markets.
For MA, the gross margins per enrollee in 2021 were similar to the period before the COVID-19 pandemic. Margins per enrollee for the individual and group markets in 2021 were below pre-pandemic levels, while the margins per enrollee for Medicaid managed care insurers are higher.
The high margins per member for MA follows years of rapid growth in the market, with more than half of eligible beneficiaries expected to enroll in MA plans this year.
In 2021, MA organizations reported gross margins averaging $1,730 per enrollee, at least double the margins reported by insurers in the individual/non-group market ($745), the fully insured group/employer market ($689), and the Medicaid managed care market ($768).
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