The CMS said Thursday it wants to move ahead with a proposal to adjust payments to Medicare Advantage plans in 2020 to reflect the total number of conditions each patient has, in addition to viewing each condition individually in the risk adjustment model—a change that was proposed but not finalized in the 2019 rate announcement.
The CMS also proposed increasing the amount of encounter data, or information about the care of an Advantage beneficiary received from a clinician, to determine risk scores for health plans. The agency also wants to use a risk-score blend of 50% diagnoses from encounter data, inpatient records and fee-for-service claims; and 50% fee-for-service claims and inpatient records.
In 2019, risk scores are being calculated using a mix of 75% fee-for-service data and 25% encounter data. Health insurers have lobbied heavily against the use of encounter data, claiming it’s often inaccurate.
For 2020, beneficiaries’ risk scores would also take into account additional conditions for mental health, substance abuse disorder, and chronic kidney disease in the payment model. The new model would be phased in until 2022.
The 21st Century Cures Act required the CMS to improve the Medicare Advantage risk-adjustment methodology, which is used to pay for seniors and disabled people enrolled in private Advantage plans. This is the first part of the 2019 Medicare Advantage Advance Notice. Comments are due to the agency by Feb. 19, 2019. Medicare Advantage capitation rates and final payment policies are expected no later than April 1, 2019.
Federal payments to Medicare Advantage plans are adjusted to reflect the beneficiary’s level of sickness. Insurers evaluate the health of their members and build “risk scores” based on medical coding. The sicker the person, the higher the risk score and, consequently, the higher the payment an Advantage plan receives from the federal government.
The risk-adjustment model is designed to reduce the incentive for insurers to cherry-pick the healthiest members. Government audits have found evidence that some plans inflate the severity of their members’ diagnoses and their risk scores to obtain higher payments.
In the 2019 rate notice, the CMS estimated that accounting for the number of conditions a beneficiary has among the conditions that are included in the Advantage payment model would increase plans’ risk scores by 1.1%.
Some groups expressed concern about that change. America’s Health Insurance Plans, relying on an analysis from consultancy Oliver Wyman, said changing risk scores to reflect the total number of conditions a patient has could lower risk scores for large numbers of dual-eligible patients, while also raising payments for people with no reported health conditions.
- With its final Outpatient Prospective Payment System (OPPS) rule for 2019, CMS is eliminating the pay discrepancy Medicare beneficiaries face visiting a hospital-owned outpatient setting as opposed to a traditional doctor’s office. CMS said cutting reimbursement at hospital-owned outpatient settings for these visits will save Medicare $380 million in 2019 alone. The American Hospital Association promptly vowed to sue.
- On the 340B front, the agency is expanding payment cuts to off-site hospital departments in a bid to keep hospitals from shifting their pharmacy services to off-campus facilities. By doing this, hospitals receive higher payment rates, so CMS’ move is sure to anger safety net hospitals.
- The agency is also allowing Medicare beneficiaries to receive more care outside of hospitals by adding 12 additional procedures at ambulatory surgical centers, a move supplemented by reductions to reporting requirements for both ASCs and hospitals. Those reporting cuts are expected to save providers $27 million over the next two years, according to CMS.
As hospitals continue to gobble up competitors and physician practices, consolidation has had a perverse affect on where Medicare beneficiaries are getting low-acuity care and how much Medicare is paying for those services.
A 2015 GAO report found that after acquiring a physician practice, a shift occurred where more patients were seen at the higher-cost setting of a hospital outpatient facility rather than the lower-cost option of a traditional doctor’s office.
“While vertical consolidation has potential benefits, we found that the rise in vertical consolidation exacerbates a financial vulnerability in Medicare’s payment policy: Medicare pays different rates for the same service, depending on where the service is performed,” the GAO report found.
CMS’ final rule issued Friday is an attempt at creating “a level playing field” for providers, CMS administrator Seema Verma said in a statement.
The change is expected to save Medicare $380 million in 2019 alone, adding up to a sizable payment cut for hospitals.
Tom Nickels, Executive Vice President of the American Hospital Association (AHA) railed against CMS’ “ill-advised” payment cuts to outpatient clinics, arguing further that the rule is “based on unsupportable analyses and erroneous policy rationales” that will hit rural patients and vulnerable communities hardest.
Even so, the final rule eases up a bit compared to an earlier proposal, by spreading out the site-neutral cuts over two years.
And overall, factoring in the cuts and payment rate increases, reimbursement on a net basis will rise slightly, 0.6%, for nonprofit hospitals and 1% for for-profit, according to the final rule. Height analysts said that’s an improvement from the proposed rule in which nonprofits net reimbursement would have been negative.
Friday’s rule also would allow ambulatory surgical centers to do more, creating another threat to hospitals. Under the rule, ASCs could provide and be reimbursed for 12 additional procedures, mainly for cardiovascular issues, according to CMS.
The agency was expected to extend 340B payment cuts to previously exempt off-campus providers, a move proposed in July that received swift pushback from safety net hospital advocates and the hospital industry at large.
Maureen Testoni, interim president of advocacy group 340B Health, said in a statement that her organization is disappointed in the “misguided and damaging policy,” and encouraged Congress to move to reverse the cuts.
“Cutting Medicare payments for drugs for patients treated in 340B hospitals by nearly 30% will damage the healthcare safety net that serves uninsured, underinsured, and Medicaid patients across the country,” Testoni said. “We have already seen the negative impact these cuts are having on patient care. Our member hospitals report that they have had to cut back on services and have had to forgo hiring or lay off doctors, nurses, pharmacists, and other healthcare professionals.”
When CMS proposed extending 340B cuts to off-campus facilities in July, the American Hospital Association argued that the agency “misconstrued Congressional intent” to provide off-campus clinics with the existing outpatient payment rate. If CMS were to go through with the rule, AHA said at the time, it would ultimately “impede access to care for the most vulnerable patients” instead.
AHA, according to Nickels, intends to rally with other industry groups and “promptly bring a court challenge to the new rule’s site-neutral provisions.” AHA and a handful of other hospital associations are already in a legal battle with HHS over its 340B cuts.
A discrepancy in eligibility ages for Medicare and Social Security benefits means that some Medicare-eligible individuals are not enrolled in the program, leaving them unknowingly open to penalties.
During a meeting on Thursday, the Medicare Payment and Advisory Commission (MedPAC) discussed why this problem exists and how to fix it.
Eligibility for both Medicare and Social Security has begun at age 65 for many years. Although Medicare eligibility still starts at age 65, the “full retirement” age for Social Security is gradually increasing to 67.
People who receive Social Security benefits are enrolled in Medicare automatically. But due to this change, about 40% of 65-year-olds who are not yet receiving Social Security benefits have not been auto-enrolled in Medicare.
Some can enroll after life events, such as losing employer-sponsored coverage after retirement. The rest, however, face delays in coverage and late enrollment penalties: $13.40 per month for each year delaying enrollment in Part B, and $4.20 per month for each year delaying enrollment in Part D.
There is an appeals process for people stuck with penalties, but they must prove that they received incorrect information from a government official.
Several commissioners saw those penalties as overly harsh, but a few said Medicare needs a better system to ensure the eligible population enrolls.
One commissioner suggested providing seniors a way to enroll in Medicare when they go to enroll in an exchange plan. Similarly, another commissioner said exchange plans could help communicate information about enrolling in Medicare to seniors.
Yet another commissioner, however, worried insurance companies would try to retain as many of their enrollees as possible—even those that could enroll in Medicare.
Little is known about the eligible-but-not-enrolled population—age 65 or otherwise. This population could be mostly healthy individuals deferring enrollment until they feel they need coverage, or they could be low-income individuals who feel they can’t afford the premiums.
Scott Harrison, Ph.D., a principal policy analyst who presented at Thursday’s session, suggested that MedPAC urge the Department of Health and Human Services (HHS) to work with the Social Security Administration (SSA) to better inform individuals about their Medicare eligibility.
Usually, beneficiaries receive enrollment information through the mail. But one commissioner, Karen DeSalvo, M.D.—who served as acting assistant secretary for health at HHS under President Obama—encouraged the group to “think broadly.”
HHS and the Social Security Administration can communicate via Federally Qualified Health Center networks, Substance Abuse and Mental Health Services Administration grantees, and more, DeSalvo said. Communicating through “a lot of avenues” could also reach individuals that lack a permanent address, she added.
MedPAC plans to collect more information about this population’s age, geographic distribution, income, and literacy before taking action.
- Nearly 300 patient and provider groups and other health organizations sent two separate letters to CMS Administrator Seema Verma to protest proposed evaluation and management (E/M) service changes in the 2019 Physician Payment Rule.
- A letter that included the American Medical Association and about 150 other groups did praise the rule’s effort to cut back on physician paperwork.
- However, another letter that was signed by 126 groups said “this proposed approach to reducing paperwork would have unintended consequences for Medicare beneficiaries” like doctors responding to the rate cuts by spending less time with patients or cherry-picking the healthiest patients.
CMS proposed a change in its 2019 physician fee schedule that would consolidate billing codes for E/M office visits. It’s part of a move to reduce Medicare provider documentation and reporting burdens. However, opponents to the proposal say it will hurt specialists and lead to flat payments for all E/M visits regardless of complexity.
Doctors are generally onboard with proposals that reduce required documentation and red tape, but a substantial change in the way payments are calculated has many of them uneasy and speculating a harmful fallout.
The American Medical Association’s letter with about 150 medical groups said the groups support CMS’ “Patients Over Paperwork” initiative. The agency has promoted efforts to reduce providers’ administrative burdens through changing and reducing regulations.
Proposed documentation changes that will cut administrative tasks include allowing providers to document only the interval history since the last visit, eliminating the requirement that physician re-document information and not forcing providers to justify a home visit rather than an office visit.
In its letter, the organizations praised the attempt to reduce “note bloat.” One of the groups that signed the letter, the American Academy of Family Physicians, said earlier this year that rules and paperwork burdens are “untenable” for family physicians. At the time, the group offered seven ways to reduce that burden.
The medical groups writing to CMS were concerned, however, with the proposal to collapse payment rates for eight office visit services for new and established patients down to two each.
“We oppose the implementation of this proposal because it could hurt physicians and other healthcare professionals in specialties that treat the sickest patients, as well as those who provide comprehensive primary care, ultimately jeopardizing patients’ access to care,” according to the letter.
The other letter states that specialist services are already “grossly under-compensated” and additional cuts would make workforce shortages worse, including in specialties like rheumatology. “Not only will this will result in an additional burden on patients with more copayments and costs associated with time and travel, it will also reduce the quality of care, particularly for patients with complex medical conditions,” the letter reads.
Rather than move forward with the proposal, the organizations suggested that CMS convene stakeholders “to identify other strategies to reduce paperwork and administrative burden that do not threaten patient access to care.”
CMS paid $434 million in improper premium assistance payments in 2014, according to the Office of Inspector General (OIG). And the true total of improper payments could approach $1 billion.
At least 461,127 financial assistance policies that CMS authorized that year were not in accordance with federal requirements, the OIG estimated in a recent report. Another 183,983 policies were “potentially improper,” the office found, amounting to an additional $504.9 million.
At issue is a substitute authorization system CMS employed in 2014, which OIG says failed to accurately authorize at least 19% of a sample of premium assistance policies the office analyzed. But the multimillion-dollar loss is also representative of a premium assistance model gone awry—one that sets up incentives for providers to push patients toward private insurance.
“CMS did not have an effective system in place to ensure that financial assistance payments were made only for confirmed enrollees and in the correct amounts for the 2014 benefit year. Instead, CMS relied on [qualified health plan] issuers to verify that their enrollees were confirmed and to attest that the financial assistance payment information they reported on their templates was accurate,” OIG wrote in its report (PDF).
Lacking that verification, it’s possible some of the policyholders were not, in fact, paying their full premium balance but were instead being supplemented by predatory providers through controversial patient-steering practices. Some providers—dialysis centers in particular—have been accused of inappropriately meddling in patients’ coverage decisions.
Because Medicare and Medicaid have much lower reimbursement rates than private insurers, providers have a structural incentive to prefer patients with private insurance. And through premium assistance programs, they have a functional, though inappropriate, mechanism to “steer” patients out of public programs and onto the higher-paying ACA marketplaces: They can make some premium payments on behalf of patients and still come out ahead on the reimbursement side.
OIG does not consider this a “proper” use of patient assistance programs.
To correct for the improper payments, OIG recommended that CMS work with the Treasury Department and QHP issuers to recoup the $434.4 million. However, while CMS partially concurred with the agency’s recommendations, it stated it would not return payments in which issuers “acted in good faith,” nor would it go after issuers that had gone out of business since 2014. It did not provide an estimated figure it hoped to recover.
In its report, OIG also noted that the deficiency that enabled these improper payments has since been solved.
“As of May 2016, CMS had fully transitioned QHP issuers operating through the Federal marketplace to an automated payment system that makes financial assistance payments to QHP issuers on an individual policy-level basis. CMS plans to fully transition most QHP issuers operating through State marketplaces to the automated system in 2018,” it wrote.
- CMS is proposing an overhaul of the Medicare Shared Savings Program (MSSP) that would force Accountable Care Organizations to take on financial risk sooner. While ACOs currently have six years to shift to a risk-bearing model, the proposed rule would give existing ACOs one year to shift and new ACOs two years.
- Currently, 82% of Medicare ACOs are in the upside-only MSSP track, meaning they share in savings but avoid sharing in losses. With this proposal, CMS anticipates 109 of the current 649 participants to drop out of the program by 2028.
- Critics, however, feel those numbers might be higher. A recent survey from the National Association of ACOs (NAACOS) showed 71.4% of ACOs would rather drop out than assume more financial risk. The association said at the time that it does “not support forcing ACOs to assume risk if they are not ready.”
After six years of allowing ACOs to participate in MSSP without taking on downside risk, CMS is getting serious about cutting the cord. CMS Administrator Seema Verma said the agency expects the changes to result in $2.24 billion in savings for the Medicare program over the next 10 years. CMS is calling the initiative “Pathways to Success.”
Providers have long been reticent to take on risk in payment models, including dropping out of programs once that requirement is triggered. Many policy experts agree, however, that the potential for financial penalty is needed if there is to be real change.
ACOs, created in 2012 as a cornerstone of the Affordable Care Act, were expected to save Medicare nearly $5 billion by 2019, according to the Congressional Budget Office. A recent analysis from Avalere showed that ACOs have actually increased government spending. That analysis, published in March, found that between 2013 and 2016, the MSSP increased federal spending by $384 million rather than produce the $1.7 billion in savings it was expected to over that time period.
“It’s time for the program to evolve. It’s time for ACOs to start taking upside and downside risk,” Verma said on a call with reporters. “What the data tells us is that ACOs taking two-sided risk are delivering better results.”
In addition to forcing ACOs to take on downside risk sooner, the proposed rule would provide incentives for telehealth, require ACOs to adopt the 2015 Edition of EHR technology and encourage ACOs to inform their beneficiaries that they are indeed an ACO and explain how that might impact their care.
Medicare ACOs currently enroll more than 10 million beneficiaries. Interestingly, in an effort to “bolster engagement,” CMS is proposing to “allow certain two-sided ACOs to provide an incentive payment of up to $20 to each assigned beneficiary for each qualifying primary care service that the beneficiary receives.” Verma said this incentive could come in the form of gift cards.
Importantly, CMS is proposing to phase out its no-risk model by 2020.
Critics of the proposed rule say it is too extreme and will force more ACOs out of MSSP than CMS might be anticipating. In a statement released shortly after the proposal, American Hospital Association Executive Vice President Tom Nickels said the rule would “create barriers to entry in transitioning to value-based care.”
“While we acknowledge CMS’s interest in encouraging providers to more quickly move toward accepting risk, drastically shortening the length of time in which ACOs can participate in an upside-only model ignores the reality that providers are starting at vastly different points and will have vastly different learning curves when moving toward value-based care,” Nickels said.
According to the statement, AHA advocates for a happy medium between quality of care, Medicare savings and support for ACOs.
The proposed rule does have its fair share of supporters, even receiving a stamp of approval from former CMS administrator Andy Slavitt.
The Health Care Transformation Task Force, made up of a mix of industry players, applauded the proposed rule, calling it an “important step to promote value-based transformation and to push industry momentum forward.”
Tim Gronniger, former deputy chief of staff at CMS and current SVP of development & strategy at Caravan Health, said the rule would have “significant impacts on the market” and shows “CMS is committing to a future where ACOs play a large role in the future of the Medicare program.” Caravan CEO Lynn Barr added that its members are prepared for the rule, if finalized.
Rita Numerof, president of healthcare consulting firm Numerof & Associates, told Healthcare Dive she applauds CMS’ proposal, but added that the complexity of the rule’s delivery does it no justice.
“CMS has the power to shift performance by setting direction and expectations,” Numerof said. “But it shouldn’t dictate the specifics of how and where care is delivered. 600 pages of guidance to explain changes in rules is yet another example of how administrative bureaucracy unintentionally distracts from the business of delivering care to those who need it.”