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Medicare AdvantageFeatured Health Business Daily Story Sept. 11, 2008 Medicare Advantage Plans Must Expect Greater CMS Oversight and Should Focus on Revenue Management Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs. By Judy Packer-Tursman, Editor, (tursman@comcast.net) Under a new era ushered in by the Medicare law enacted July 15, Medicare Advantage (MA) plans can expect lower payment rate increases, new operational requirements and more accountability as CMS intensifies its oversight activities — along with much greater congressional intervention on the MA program thrown into the mix, according to industry consultant John Gorman. "It should be abundantly clear that the glory days of MMA [i.e., the 2003 Medicare reform law] are over, and the MIPPA [Medicare Improvements for Patients and Providers Act of 2008] era has arrived," Gorman, Washington, D.C.-based CEO of Gorman Health Group, LLC, told an Aug. 7 audioconference sponsored by AIS. "This will be a very different environment at the regulatory and legislative level," he said. The audioconference, in which Jean LeMasurier, director of the employer group practice at Gorman Health Group, also spoke, centered on strategies for MA plans and stand-alone Prescription Drug Plans (PDPs) under the new Medicare law. The MA program "bears a disproportionate share of cuts to pay for this legislation," Gorman said of MIPPA, "and Congress will have potentially broader reforms next time." He noted that the new law, while not imposing MA payment cuts for 2009, will trim $13.6 billion from MA plans over five years and $48.7 billion over 10 years. It reduces the regional MA plan stabilization fund to $1, phases out duplicate indirect medical education payments to MA plans starting in 2010, and eliminates private-fee-for-service (PFFS) network "deeming" — thus requiring written provider contracts — for most PFFS plans starting in 2011. Yet despite this challenging scenario, many MA plans will continue to make money with careful revenue management, Gorman said. Specifically, he noted a significant opportunity for MA organizations to "get out and do things right," capitalizing on the impending demise of PFFS plans with a new emphasis on MA PPOs. Low-income subsidy (LIS)-eligible beneficiaries will furnish a growth opportunity for MA HMOs and Special Needs Plans (SNPs) using a proper bidding strategy, he added. Given the costs incurred in building provider networks, PFFS plan sponsors will have to evaluate the current enrollment and future potential of each county in their service areas, Gorman said. This will be the beginning of a "pruning" strategy. If potential revenue appears insufficient to cover costs in two to three years, then it is time to "prune" PFFS plans, he said. That will leave hundreds of thousands of MA enrollees "homeless," thus creating opportunities for those MA organizations left standing, he asserted. Low-income PFFS enrollees may consider an MA HMO with a robust network, according to Gorman, while high-income PFFS enrollees may consider an MA PPO. In the end, Gorman told the recent audioconference, "There's significant opportunity on both sides [for PFFS and non-PFFS plan sponsors] to go through the same exercise, see if competitors are likely to stay…and try to pick up enrollment for 2010." Regulators Are Intensifying Oversight On the regulatory side, Gorman noted that the new law codifies marketing guidelines and places new conditions on the program that now carry the full weight of law. "Accountability means a lot more regulation is coming," he said, adding that CMS seems more willing than previously to use the enforcement tools at its disposal. As an example of CMS's intensifying oversight, Gorman pointed out that CMS will conduct its first round of MA coding-intensity audits in September. Agency officials expect a 30 times return on investment on what they're spending for the audits versus what they expect to recover from the plans based on how many unsubstantiated diagnostic codes plans are submitting, he said. Thus, he asserted, the industry must recognize that CMS is "already on the warpath on this and other activities." "We still maintain a very good relationship with the industry," CMS official Abby Block responded. CMS's initial focus for 2006 and moving into 2007 was to get the Part D program up and running, she said, but by mid-2007 CMS began turning its attention toward ensuring that Medicare plans are performing well and in compliance. From that point, "there was a lot of information in guidance we enforced…so this is not something new happening because of MIPPA," she maintained. On the political side, the expectation is that Democrats will substantially increase their margins in Congress in the November election, which will heighten their ability to "wreak havoc" on the MA program, Gorman said. In effect, the industry is now seen as a "pot of gold" by which Congress will fund Medicare initiatives, Gorman asserted. Congress, since it avoided a Medicare physician pay cut for only 18 months, will have to revisit the issue in the latter half of 2009, he said, "and they keep coming back to the pot of MA funding to pay for it." He added that the industry ought to "expect bills to be progressively more hostile [to MA plans] as Democrats flex their muscle up on the Hill." Yet even with a hostile Congress, there is a role for private Medicare
plans, Gorman said, citing the 10 million-plus beneficiaries enrolled
in MA plans and 17 million enrollees in PDPs. In addition to steadily
rising enrollment into SNPs and employer-group retiree plans, there
has been a resurgence of Medicare PPOs, he said. There now are 356 local
MA PPOs, and he predicted "several dozen or at least 100 more"
local PPOs in the market for 2009, citing the need to offer a broad
portfolio of MA products in the market. |
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