Medical Advantage Plans
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Medicare Advantage plans are gaining in popularity. PYA Principal Robert Paskowski, CPA will provided an overview, discussed the business model, and offered contracting strategies at the South Carolina Hospital Association Managed Care Conference.
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Medical Advantage Plans
- 1. Managed Care Forum November 13, 2019 Medical Advantage Plans SOUTH CAROLINA HOSPITAL ASSOCIATION (SCHA)
- 2. Prepared for South Carolina Hospital Association Page 1 Agenda 1. National Overview 2. Traditional Medicare v. Medicare Advantage (MA) 3. Medicare Advantage Business Model a) Enrollment b) Revenue Cycle c) Star Ratings d) Risk Adjustment e) Provider Payments 4. Provider Interactions β Strategy and Contracting 5. Questions & Answers
- 4. Prepared for South Carolina Hospital Association Page 3 Medicare Spending
- 5. Prepared for South Carolina Hospital Association Page 4 MA Enrollment
- 6. Prepared for South Carolina Hospital Association Page 5 MA Enrollment
- 7. Prepared for South Carolina Hospital Association Page 6 MA Enrollment
- 8. Prepared for South Carolina Hospital Association Page 7 MA Quality
- 9. Prepared for South Carolina Hospital Association Page 8 MA β Prior Authorization
- 10. Prepared for South Carolina Hospital Association Page 9 Payer Gross Margins
- 11. Traditional Medicare vs. Medicare Advantage
- 12. Prepared for South Carolina Hospital Association Page 11 Definition ο§ Medicare Advantage ο§ Insurance plans offered by private insurance companies to Medicare beneficiaries ο§ Beneficiaries elect to join a MA plan or stay with traditional fee-for-service ο§ Managed care with a health plan network
- 13. Prepared for South Carolina Hospital Association Page 12 MA v. Traditional Medicare Feature MA Traditional Eligibility and Enrollment Age 65 - Enrolled in Parts A and B Standard enrollment from October 15 β December 7 Age 65 β Enrolled in Parts A and B Network Customized by Payer Providers participating in Medicare Benefits Parts A and B Supplemental benefits Parts A and B Beneficiary Premiums Various: Part B premiums + MA premiums Part A ($0) + Part B premiums ($135.50 in 2019) Claims Adjudication Follow Payer payment guidelines Follow CMS payment guidelines Future Outlook Stable Transitional
- 14. Medicare Advantage Business Model
- 15. Prepared for South Carolina Hospital Association Page 14 MA - Revenue
- 16. Prepared for South Carolina Hospital Association Page 15 Payment to MA Plans β’ Submit an annual bid to CMS β’ Receive a fixed (or capitated) monthly payment from CMS per enrollee (beneficiary) β’ Monthly payments are based upon the following factors: β’ Geographic benchmarks as determined during the annual bid process β’ MA planβs Star rating β’ Enrolleeβs Risk Adjustment Factor (RAF) scores CMS payments β’ Fixed monthly premium payments based on benefit plan selected Enrollee payments
- 17. Prepared for South Carolina Hospital Association Page 16 Star Ratings ο§ βStar Ratingsβ system measures the quality performance on a scale of one to five stars (one being the lowest and five being the highest) ο§ MA Planβs monthly payments are influenced by its overall star rating ο§ 4 stars or greater, monthly benchmark rate is increased by 5% ο§ Less than 4 stars, no increase ο§ New Plans and/or not yet qualified due to low membership: ο§ Benchmark rate increased initially by 3.5% until the minimum data requirements are met
- 18. Prepared for South Carolina Hospital Association Page 17 Star Ratings The program consists of 48 measures across 9 domains: 1. Staying healthy: screening tests and vaccines 2. Managing chronic (long-term) conditions 3. Member experience with the health plan 4. Member complaints and changes in the health planβs performance 5. Health plan customer service 6. Drug plan customer service 7. Member complaints and changes in the drug planβs performance 8. Member experience with the drug plan 9. Drug safety and accuracy of drug pricing
- 19. Prepared for South Carolina Hospital Association Page 18 RAF Scores ο§ A RAF score is assigned to each MA enrollee during a benefit year. ο§ Prospective: historical diagnoses are used as a measure to predict future expenses ο§ Example: 2019 monthly payments made by CMS to an MA Plan are based on the enrolleeβs claims and respective diagnoses from 2018 ο§ The RAF score is based on the MA enrolleeβs: ο§ Demographics (i.e., age, gender, etc.) ο§ Disease burden as measured by chronic conditions ο§ Number of disease interactions ο§ The RAF score is reset each year and does not carry over to subsequent benefit years
- 20. Prepared for South Carolina Hospital Association Page 19 Payment to Providers How do MA Plans pay for Medical Services on behalf of their Enrollees? ο§ MA Plan directly contracts with Providers in their network to provide covered services for their enrollees ο§ MA Plans can pay for such services under various methods ο§ FFS ο§ Capitation ο§ Other Payments (Quality, Shared Savings)
- 21. Prepared for South Carolina Hospital Association Page 20 Success Factors What are the Major Success Factors for an MA Plan? Quality β measured under the CMS Star rating system For a Payer that has a 4+ Star rating, the Payer earns a 5% bonus, which amounts to $500 per member per year on an average $10,000 annual capitation payment Accurate risk coding β direct impact on CMS capitated revenue For every 10 basis points (1.0 to 1.1 risk score) = $1,000 per member per year based on an average $10,000 annual capitation payment Utilization risk management Acute care utilization β ensure right care in right setting End-of-life care β use of robust palliative and hospice care programs
- 22. Provider Strategies and Contracting Approaches
- 23. Prepared for South Carolina Hospital Association Page 22 Strategic Considerations MA landscape Infrastructure Market dynamics Network considerations Risk tolerance
- 24. Prepared for South Carolina Hospital Association Page 23 Contracting Options ο§ FFS only (traditional) ο§ FFS + quality incentives ο§ FFS + shared savings ο§ FFS + risk-sharing ο§ Full capitation ο§ Joint-venture with a payer ο§ Provider-sponsored plan R I S K
- 25. Prepared for South Carolina Hospital Association Page 24 FFS Contracting Market rates Uncompensated Care Pool (UCP) payments Audits Prior authorizations Site of care Inpatient v. observation
- 26. Prepared for South Carolina Hospital Association Page 25 Value-Based Contracting Quality metrics that align with MA Star Rating measures Accurate coding for risk adjustment Alignment with physicians to effect total cost of care Care management Data analytics
- 27. Prepared for South Carolina Hospital Association Page 26 Questions?
- 28. PYA, P.C. 800.270.9629 | www.pyapc.com Robert S. Paskowski Principal β Healthcare Consulting bpaskowski@pyapc.com
Editor's Notes
- Star Ratings β MA Planβs monthly payments are also influenced by its overall star rating. For plans with an overall rating of 4 stars or greater, their monthly benchmark rate (as previously described) is increased by 5Β Β % based on achieving this rating based on their performance. For MA Plans with an overall rating of less than 4 stars, there is no increase. For plans that are new and have not yet qualified due to low membership, their benchmark rate is increased initially by 3.5% until the minimum data requirements are met. This initial rate is established for newer plans and allow them to be successful in the earlier years as they compete against the established MA Plans with 4+ star ratings.
- The star ratings program consists of 48 measures across 9 Β domains: 1) Staying healthy: screening tests and vaccines; 2) Managing chronic (long-term) conditions; 3) Member experience with the health plan; 4) Member complaints and changes in the health planβs performance; 5) Health plan customer service; 6) Drug plan customer service; 7) Member complaints and changes in the drug planβs performance; 8) Member experience with the drug plan; and 9) Drug safety and accuracy of drug pricing.Β Β The findings are aggregated into the following categories: Outcomes, Intermediate Outcomes, Patient Experience, Access, and Process.
- RAF Scores β In general, a RAF score is assigned to each MA enrollee during a benefit year. The RAF score is prospective, meaning that historical diagnoses are used as a measure to predict future expenses. For example, the 2019 monthly payments made by CMS to a MA Plan are based on the enrolleeβs claims and respective diagnoses from 2018. The RAF score is based on the MA enrolleeβs demographics (i.e. age, gender, etc.) and their disease burden as measured by chronic conditions and the number of disease interactions. It should be noted that a RAF score is reset each year for an enrollee and does not carry over to subsequent benefit years. See the section on risk adjustment methodology for more detail.
- Fee-for-service (βFFSβ) β This is the most common form of payment. MA Plans contract directly or indirectly with the providers in their network and typically follow the methodology and fee schedules established by CMS. MA Plans do not have to follow CMSβ methodology under the FFS model. Capitation β For some MA Plans, they will pay for a certain service on a pre-determined per member per month (βPMPMβ) amount. The Provider continues to submit the claims for such services but bears the risk if the claims (on a FFS basis) are greater than the monthly capitation amount. Other payments β There are other forms of payments made by the MA Plan to Providers. Those payments include quality payments for achieving certain quality measurements and shared savings when the Provider manages their enrolleesβ overall cost of care below a pre-determined claims target.
- Quality β For MA Plans that focus their efforts on the quality measures established under CMSβ star rating system, the MA Plan can realize a competitive advantage in the market. As illustrated earlier, MA Plans can earn additional rebates (difference between the bid and the benchmark rates, which are increased by the Star rating) and apply those rebates by providing additional benefits and premium reductions to its enrolleesΒ Β . For example, an MA Plan that earns a 4-star rating could earn an additional $40 PMPM based on a monthly benchmark rate of $800 PMPM. Accurate risk codingΒ β As illustrated previously, the enrolleeβs RAF score is multiplied by the MA Planβs benchmark capitation rate. Therefore, for every 10 basis points (1.0 to 1.1 risk score), the MA Plan will earn approximately $80 PMPM based on a monthly payment rate of $800 PMPM. Utilization Management (UM) β Due to the risk profile of MA enrollees, MA Plans must manage overall utilization of health care within their networks. There are typically two significant UM programs administered by the MA Plan: (1) acute care utilization β to ensure enrollees receive the right care in the right setting: and (2) palliative and hospice care program for end of life care.Β Β Investments are currently being made by MA Plans regarding social determinants of health and managing patient populations with these factors as a consideration for coverage and benefits. Β Discuss chronic care management as well.