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Medicare AdvantageFeatured Health Business Daily Story Jan. 26, 2010 Observers See Medicare Advantage Special Needs Plans Faring Well in 2010 Despite Payment Cuts and New Rules Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs. By James Gutman, Managing Editor While tougher times probably are ahead for many of them, Medicare Advantage Special Needs Plans (SNPs) have been doing well at adding members recently, according to several industry sources. And with both the House and Senate reform bills reauthorizing SNPs through 2013, their near-term future seems assured — at least for the ones that survive seemingly inevitable consolidation.
None of the experts queried by MAN was willing to predict the size of SNP gains in the just-completed Annual Election Period (AEP) for 2010 until CMS comes out Jan. 15 with figures for the initial weeks of that period, which ended Dec. 31. But several of them said there are specific reasons for expected gains among the bigger players. One of the major factors, says Dennis Barnes, president of Marketing Direct, Inc., is advances in identifying prospective clients who have the illnesses and/or income levels needed to qualify for the plans.
Finding the eligibles and bringing them into SNPs has been a problem for such plans in the past, notes Stephen Wood, a senior vice president at Ingenix Consulting. As a result, after the initial membership surge in the aftermath of SNPs being created by the 2003 Medicare reform law, enrollments “have been conservative,” he says.
Consultant John Gorman, CEO of Gorman Health Group, LLC, points out that 53% of SNPs now have fewer than 500 members, a figure he terms “unsustainable.” Moreover, he says, 10 companies in nine states have two-thirds of the members of Medicare-Medicaid dual-eligible SNPs. For these reasons, he tells MAN, there is likely to be major consolidation in SNPs in the coming years.
But the future of SNPs for the entities left is not really in question, he asserts. Aside from the reauthorization contained in both reform bills, SNPs stand to get an alternative risk adjuster that could help.
Any aid like that is important because there are also storm clouds on the horizon. One stems from a coming federal requirement under reform legislation that dual SNPs also have contracts with states. California already has its own rule under which the state won’t contract with dual SNPs unless they also have a contract with Medi-Cal, California’s Medicaid program, to ensure care coordination. The requirement, notes actuary Brian Weible, principal in Wakely Consulting Group, grew out of CMS concerns that dual SNPs could be a “subterfuge” for getting out of the MA lock-in period since SNPs are allowed to market year-round.
The other big problem for the dual SNPs relates to reimbursement trends. Under the MA competitive-bidding approach contained in the Senate reform bill, dual SNPs will not be able to generate enough revenue to offer the zero-premium plans that are their staple, predicts Wood.
Gorman agrees that zero premium “would certainly be a challenge” for dual SNPs and says they would have to make up for the loss of reimbursement through “aggressive medical management.”
And this is precisely what some SNP operators such as XLHealth say they are bringing, although even that firm acknowledges the zero-premium hurdle. “We would like to keep the zero premium where we can, and not where we can’t,” Paul Serini, executive vice president of the Baltimore-based company, tells MAN. “We need to manage the medical to do this.”
XLHealth’s SNP roots are in chronic care SNPs, but it recently unveiled plans to begin operating dual SNPs Jan. 1. And Serini, who calls the company’s enrollment gains in the AEP “very good” while acknowledging “not everybody in our field” is experiencing that, voices optimism about its SNP future. He cites growing understanding of the product as well as a loyal cadre of members in its chronic SNPs. The company says it had a total of just over 59,000 SNP members as of December.
Although he notes that nobody knows what the potential competitive bidding in health reform would look like in terms of methodologies, Serini says he’s “not terribly concerned,” at least as it affects chronic SNPs. Some observers have expressed concern about chronic SNPs having to bid against plans without chronically ill populations, he says, but “that won’t happen” based on what XLHealth has learned in discussions about the legislation.
Pointing out that XLHealth operates in a lot of rural areas, Serini contends that it should be paid fee-for-service rates plus bonuses for quality. The Senate bill does offer such bonuses, he notes.
“It is undeniably true that the current risk-adjustment system underpays SNPs for beneficiaries in the first year of enrollment,” according to Serini. But that isn’t “fatal,” he asserts, and sponsors can get favorable coding over time and thus lift revenues to “where they need to be.” He notes that both the House and Senate bills address risk adjustment as it pertains to the chronically ill.
Serini also disputes arguments made by some in the Capitol Hill debates that SNPs get paid too much. XLHealth doesn’t get paid any more as a chronic SNP than does an MA prescription drug (MA-PD) plan, he contends. The only advantage SNPs have over MA-PDs, he says, is the ability to market year-round. Were SNPs not to be reauthorized — and he adds that “we don’t expect that to happen” — the company’s chronic SNPs could continue as MA-PD plans and be viable with that payment rate “unless risk adjustment is taken away.” |
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