Medicare Advantage Payments
The final bill reduces MA funding by a total of $206 billion over 10 years - $66.7 billion more than the underlying Senate bill. Direct cuts account for $136 billion and interactions with other cuts in the FFS Medicare program account for an additional $70 billion.
- MA Benchmark Cuts
- Changes to MA Benchmarks. MA Benchmarks generally will be phased-down to a level of county FFS spending based on a complicated formula:
- Intermediate Update. In 2011, MA rates do not receive an update and have been set at the 2010 levels.
- Phase-down to 100% FFS benchmark. In 2012: ½ current benchmark and ½ local FFS; in 2013 and beyond, benchmark equals 100% local FFS (adjusted by county rank described below) unless county qualifies for alternate phase-down schedule.
- Alternate Phase-Down to 100% FFS
- 4-year: if the reduction between the current 2010 benchmark and one projected for 2010, with ½ FFS and ½ current benchmark, is between $30 and $50, the phase-down to 100% FFS would take 4 years, until 2015.
- 6-year: if the reduction between the current 2010 benchmark and one projected for 2010, with ½ FFS and ½ current benchmark, is $50 or more, the phase-down to 100% FFS would take 6 years, until 2017.
- 100% FFS Benchmark Adjustment Based on Rank of County in U.S. County benchmarks will be further adjusted based on the comparison of local FFS spending to the national average and divided into quartiles.
- Counties in first quartile of FFS spending (highest), benchmark is adjusted to 95% FFS
- Second quartile to 100% FFS
- Third quartile to 107.5% FFS
- Fourth (lowest) quartile to 115% FFS
- At no point can a benchmark exceed what would otherwise apply had the law not been enacted. (HCERA § 1102(b))
- MA Coding Intensity
- Requires HHS to adjust MA rates for coding pattern differences between MA and FFS (i.e., coding intensity adjustment) until HHS implements MA risk adjustment using MA “diagnostic, cost and use data.” Previous law sunset this adjustment after 2010.
- Beginning in 2011, requires HHS to produce an annual analysis of coding differences.
- Mandates a minimum coding intensity adjustment of 5.7% annually beginning in 2019.
- Requires 2014 coding intensity adjustment to be no less than 2010 plus 1.3%.
- In 2015-2019, requires the adjustment to be no less than the previous year plus 0.25%. (HCERA § 1102(e))
Medicare Advantage Quality Bonus Provisions
Makes quality/performance bonus payments available for both “Qualifying Plans” and “Qualifying Plans in Qualifying Counties”
(HCERA § 1102(c))
- Qualifying Plans. Bonuses result in increased benchmarks for “qualifying plans.” Qualifying plans achieve scores of 4 stars or higher on a 5-star rating system developed by HHS based on data from the quality improvement program.
- Benchmark Increases for Qualifying Plans
- 2012: 1.5% increase
- 2013: 3.0%
- 2014 and beyond: 5.0%
- These amounts are doubled for qualifying plans in qualifying counties.
- Qualifying Counties. Defined as historical “urban floor” counties as of 2004; had MA penetration of 25% or greater as of 12/09; and county that has FFS spending below the national average for the year involved.
- Low Enrollment Plans. In 2012, plans with low enrollment that would not qualify for a star rating are treated as qualifying plans. HHS is directed to develop a method to compute quality of low enrollment plans for 2013 and subsequent years.
- New Plans. Organizations that have not had a contract with HHS for the previous 3 consecutive years are treated as qualifying plans with the following benchmark increases:
- 2012: 1.5% increase
- 2013: 2.5%
- 2014 and beyond: 3.5%
- Rebate dollars are tied to an HHS developed 5-star rating system. For plans that bid below the benchmark:
- Plans with 4.5 stars or higher receive a rebate equal to 70% of the difference between bid and benchmark (previous law provided for 75%).
- Plans with 3.5 to 4.5 stars receive a rebate of 65%.
- Plans with fewer than 3.5 stars receive a rebate of 50%.
- New plans are treated as having 3.5 stars.
- In 2012, low enrollment plans are treated as having 4.5 stars.
- Phased-in from 2012 to 2014. (HCERA § 1102(d))
Retroactive Enhanced Penalties
False Claims. Expands the use of civil monetary penalties (CMPs) for making false statements or delaying inspections and increases the penalty to $50,000 per statement and $15,000 per day delay. Effective 1/1/10. (PPACA § 6408(a))
- Ensures that audits and inspections of Medicare Advantage plans will be “timely.” Effective 1/1/10. (PPACA § 6408(b)(1))
- Adds new types of marketing violations for which sanctions and penalties can be applied, including enrolling or transferring an individual between plans without their consent or transferring an individual solely for the purpose of earning a commission. Extends such prohibition to all employees, contractors, providers or suppliers that contract with the MA plan. Effective 1/1/10. (PPACA § 6408(b)(2)).
- Sets the CMP amount for a MA plan providing false information or misrepresentations to HHS at not more than the amount claimed by such plan or plan sponsor based upon the misrepresentation of false information. Effective 1/1/10. (PPACA § 6408(b)(3))
- Extends HHS’ permissive exclusion authority to include individuals convicted of interfering with or obstructing an audit related to federally funded health care programs. Effective 1/1/10. (PPACA § 6408(c))
- Applies to both MA and Part D plans.
Other Medicare Advantage Provisions
- Minimum Medical Loss Ratio (MLR)
- Starting in 2014, requires 85% MLR.
- Plans failing the MLR test must remit to HHS “total revenue of the MA plan under this part” for the year multiplied by the amount under the 85% MLR requirement (e.g. $100 revenue with 80% MLR owes $5 = $100 x 5%).
- After 3 consecutive years of failing the MLR requirement, plans are prohibited from new enrollment.
- After 5 consecutive years, plans will be terminated. (HCERA § 1103)
- Limits on OOP Costs for Individual Health Services. Beginning in 2011, reduces the flexibility to design benefit packages that meet beneficiary needs by prohibiting MA plans from charging higher cost-sharing greater than that in traditional Medicare for chemotherapy, dialysis, skilled nursing care and such other services CMS deems appropriate. (PPACA § 3202(a))
- Simplification of Election Periods. For plan years 2012 and beyond, establishes the open enrollment period as 10/15 through 12/ 7 to help ensure enrollment processing by January; the statute is silent on the open enrollment period for 2011 but the agency has indicated it will continue the current open enrollment period for CY 2011 as 11/15/10 through 12/31/10 . Beginning in 2011, permits MA enrollees to disenroll and return to traditional Medicare at any time within the first 45 days of the year and enroll in a Part D plan. (PPACA § 3204)
- Special Needs Plans
- Extends, to 2013, authority for MA Special Needs Plans (SNPs) for beneficiaries with chronic conditions.
- Requires HHS to transition enrollees without applicable chronic conditions to which the SNP is restricted to a non-SNP MA plan or traditional Medicare by no later than 1/1/13.
- Extends, through 2012, SNPs for dual eligible enrollees with restriction on service area expansions.
- Beginning 2012, requires that all SNPs be NCQA approved. (PPACA § 3205)
- Authority to Deny Bids. Provides authority for CMS to deny MA and PDP bids for a plan if it proposes “significant increases in cost-sharing or decreases in benefits.” Effective for plan years 2011. (PPACA § 3209)
- Cost Contracts. Extends, through 2013, Medicare Cost contracts. Effective upon enactment. (PPACA § 3206)
- PFFS Plans. Extends the employer waiver of PFFS network requirements to employers that contract directly with HHS as a PFFS plan. Effective 2011. (PPACA § 3207)
- Comparative Cost Adjustment (CCA). Repeals the CCA program. CCA was part of the MMA and was designed as a demonstration program where MA and FFS Medicare would directly compete in 6 metropolitan areas. (HCERA § 1102(f))
- Expansion of Recovery Audit Contractor Program. Expands federal Recovery Audit Contractor (RAC) program to Medicaid and Medicare Parts C and D. Effective 12/31/10. (PPACA § 6411)