(Unless you are a masochist, skip down to the comment at the end. The following excerpts from the CMS documents are merely to provide verification for the statements in the comment.)
CMS Ensures Higher Value and Quality for Medicare Health and Drug Plans
CMS, April 7, 2014
Today, the Centers for Medicare & Medicaid Services (CMS) issued the 2015 rate announcement and final call letter for Medicare Advantage and prescription drug benefit (Part D) programs.
Payments to Medicare Advantage Plans:
* CMS estimates that the overall net change to plan payments between 2014 and 2015 to be +0.4 percent, compared to the estimated overall net change to plan payments of -1.9 percent for the proposals in the Advance Notice Individual plan payments will vary by plan based on, but not limited to, its location and star rating.
* Before the Affordable Care Act, Medicare Advantage plans were paid more than 10 percent compared to traditional Medicare, costing the program more than $1,000 per person each year, while quality and health outcomes were similar to those enrolled in traditional Medicare. The changes underway reduce excessive payments to Medicare Advantage plans, while incentivizing quality improvements by basing part of Medicare Advantage payment on plan quality performance.
* To provide for continued stability in the Medicare Advantage program, CMS will implement a new phase-in schedule for the Part C risk adjustment model introduced in 2014. In addition, to improve payment accuracy, CMS has refined its risk adjustment methodology to account for the impact of the influx of baby boomers. In addition, for 2015, CMS will not finalize the proposal to exclude diagnoses from enrollee risk assessments.
http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2014-Press-releases-items/2014-04-07.html
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Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter
CMS, April 7, 2014
Key Changes from the Advance Notice:
Growth Percentages
CMS-HCC Risk Adjustment Models for CY2015
Medicare Advantage Enrollee Risk Assessments
Normalization Factors
RxHCC Risk Adjustment Model
International Classification of Diseases-10 (ICD-10) Code Sets and Diagnosis Data Sources for 2015 Risk Scores:
Attachment III
Section A. Final Estimate of the National Per Capita Growth Percentage and the Fee-for- Service (FFS) Growth Percentage for Calendar Year 2015
Comment: Several commenters had concerns about the magnitude of changes proposed in the Advance Notice and the potential impact to Medicare beneficiaries and plans. Commenters raised concerns that the payment reductions described in the Advance Notice would lead to significantly higher MA premiums, significantly reduced benefits, or both. Some commenters argued that these cuts would lead to MA plans exiting the market. Some providers noted that the reductions to MA contained in the Advance Notice would seriously threaten their ability to provide high quality care to beneficiaries. We also received comments that the cuts would lead to market contraction, less competition, and ultimately less access for beneficiaries. Commenters requested that we keep Medicare Advantage revenue flat for 2015.
Response: We are committed to a strong, stable Medicare Advantage program and to continued access to high quality plan choices for Medicare beneficiaries. Over the past several years, even as the Medicare Advantage program transitioned to payments that are more aligned with FFS Medicare costs, enrollment in Medicare Advantage has increased to an all-time high of approximately 15 million beneficiaries. Today, nearly 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan and benefits remain stable. We believe that the proposals outlined in the Advance Notice will continue the transition to payments that are more comparable to FFS costs, while at the same time continuing the trend toward greater enrollment in high quality plans.
Section G. CMS-HCC (Hierarchical Condition Category) Risk Adjustment Model for CY 2015
Comment: We received a few comments opposing our proposal to use a blend of the 2013 CMS-HCC model and 2014 CMS-HCC model in 2015, and supporting instead calculating risk scores using exclusively the 2013 CMS-HCC model. Many commenters were in support of continuing to use a blend of risk scores from two different models. Two commenters were in favor of ending the phase-in of the clinically revised model introduced in 2014 and calculating risk scores in 2015 using only this model.
Response: As we remain committed to the clinically revised model introduced for the 2014 payment year, we will not use risk scores exclusively from the 2013 CMS-HCC model as recommended by some commenters. Because we still believe that additional time to transition to the 2014 model is needed, we also will not use risk scores from the 2014 model exclusively as recommended by two commenters, and will continue for 2015 payment year to blend the risk scores calculated using the 2013 CMS-HCC and 2014 CMS-HCC models.
In light of the impact of the final payment updates and changes for 2015, however, we are concerned that the use of the 2014 blend percentages of 75% and 25% that we proposed to continue in the Advance Notice would not have the same effects on payment stability that they had last year, and that we assumed they would have when proposing them this year. As in 2014, we will continue to blend the risk scores from the old and new models, in order to both support our intention to move to the updated model while also providing time for plans to transition to its use in payment. Thus, to further our goal of promoting stability and given concerns about the impact of payment changes for 2015, we will blend the two scores using a 67 percent and 33 percent blend, respectively. Specifically, we will blend the risk scores calculated using the 2014 CMS-HCC model with risk scores using the 2013 CMS-HCC model, each appropriately normalized, weighting the normalized risk scores from the 2013 model by 67 percent and the normalized risk scores from the 2014 model by 33 percent. These risk scores from the 2013 and 2014 CMS-HCC models will include the risk scores calculated from the community, institutional, new enrollee, and C-SNP new enrollee segments of the model and will be used in Part C payment for aged/disabled beneficiaries enrolled in MA plans. See Section II.G of the 2014 Advance Notice and Section III.D of the 2014 Rate Announcement for more details on the clinically revised CMS-HCC model.
Section H. Medicare Advantage Enrollee Risk Assessments
Comment: Many commenters opposed the proposal to exclude diagnoses that resulted from home visits, including enrollee risk assessments, unless there was a subsequent clinical encounter.
Response: CMS continues to support the use of enrollee risk assessments for wellness, care coordination, and disease prevention; however, we remain concerned that many home visits are being used primarily for the gathering of diagnoses for payment rather than to provide treatment and/or follow-up care to beneficiaries. We recently instituted a new requirement for MA organizations to identify, in the diagnoses they submit to CMS, which diagnoses are from home visits. These new data will enable CMS, for the first time, to evaluate how many diagnoses are identified in home visits and to assess what effect the home assessments have on the care provided to beneficiaries. In order to allow our policy to be informed by this analysis, we have decided not to implement the proposal to exclude diagnoses from home visits for 2015 payments. We will study the data submitted by MA organizations to determine appropriate policy options for consideration for 2016 and future years.
Section J. Normalization Factors
Comment: The majority of commenters supported CMS’ proposal to calculate the normalization factors for the CMS-HCC and RxHCC risk scores using a methodology to better capture the increased proportion of younger beneficiaries known as the “baby boomers.” Several commenters recommended that CMS make retroactive adjustments to the normalization factors.
Response: We appreciate the support for modifying the normalization factor methodology to account for the influx of baby boomers to the Medicare population. CMS uses historical data to develop normalization factors prior to a payment year in order to promote stability for bidding purposes. Given this policy, CMS will not retroactively change the normalization factors for prior years. However, we did consider whether using more historical data could better inform the calculation of the 2015 normalization factors (in the Advance Notice we proposed using 2012 and 2013 risk scores to estimate annual trends for the CMS-HCC models). By using a quadratic functional form fit to risk scores from 2010 through 2013, the normalization factors will better reflect more recent changes in the population trends. Thus, we are finalizing the 2015 normalization factors for the CMS-HCC and RxHCC models as shown in Table III-2:
Excerpts from Table III-2 2015 Normalization Factors:
0.992 CMS-HCC model implemented in 2013
0.978 Clinically revised CMS-HCC model implemented in 2014
Comment: A number of commenters asked for more transparency around the calculation of the normalization factors.
Response: In Table III-3. below, we show the risk scores used to calculate the normalization factors for 2015.
Excerpts from Table III-3. 2010-2013 Risk Scores Used to Calculate 2015 Normalization Factors
CMS-HCC model implemented in 2013
2010 0.986
2011 0.977
2012 1.009
2013 1.008
Clinically revised CMS-HCC model implemented in 2014
2010 0.978
2011 0.988
2012 0.997
2013 0.995
To access this 154 page announcement, at the following link select “Announcements and Documents” from the left column, and then select “”2015 Announcement” with a release date of “2014-04-07”: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/
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Washington insiders crossing the line in defense of Medicare Advantage
Quote of the Day, April 3, 2014
The Affordable Care Act included provisions to reduce these overpayments to levels comparable to the costs of patients in the traditional Medicare program. AHIP has already used its influence to convince the administration to use chicanery to reduce the cutbacks in the first two years of the reductions (by issuing phony quality awards and by using accounting gimmickry with the scheduled but deferred SGR adjustments). Since the administration seems to be resisting further chicanery (we’ll soon find out) AHIP has intensified its public campaign using some of Washington’s “finest.”
https://www.pnhp.org/news/2014/april/washington-insiders-crossing-the-line-in-defense-of-medicare-advantage
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Comment:
By Don McCanne, MD
In an effort to privatize Medicare, conservatives in Congress enacted legislation to provide private Medicare Advantage plans with a 14 percent overpayment in order to unfairly compete with the traditional Medicare program. The Affordable Care Act included measures to gradually eliminate this overpayment. CMS appears to be thwarting the intent of Congress to correct this injustice.
Because of pressure from the insurance industry, the Obama administration used chicanery in the first two years of the ACA implementation to maintain higher Medicare Advantage rates. This year the reduction was to have been 1.9 percent. So the insurance industry initiated an intensive campaign to reverse these reductions. Once again, CMS has used more chicanery to convert their reduction into a 0.4 percent gain – reassuring private insurers that they can continue to expand their private takeover of Medicare.
There are numerous gimmicks that were used, and some of them are quite obscure. For instance, perhaps the most important revision was in the “normalization factors.” Because of the influx of baby boomers into the Medicare program, it was decided to use “a quadratic functional form fit to risk scores from 2010 through 2013” in the CMS Hierarchical Condition Category. To provide “transparency around the calculation of the normalization factors,” they showed “the risk scores used to calculate the normalization factors for 2015.” Glad that’s clear.
Seriously, CMS has used innovative accounting to increase payments to Medicare Advantage plans based on the fact that there is an influx of baby boomers – a subset of Medicare beneficiaries that is younger, healthier, and less expensive than the older beneficiaries already enrolled. Taxpayers will pay more for lower cost beneficiaries. I remember the quadratic equation, but I don’t remember it ever being used to cheat taxpayers and reward the private insurer rentiers.
Rentiers? Those are individuals whose income is derived from capital, and now our nation’s capital is being concentrated in the top centile. If you missed yesterday’s Quote of the Day on Thomas Piketty’s “CAPITAL,” you should not bother reading the CMS song and dance above, and instead read yesterday’s message.
Congress and the Obama administration are serving the interests of the rentiers, and this Medicare Advantage payment scam is only one example. It is time for the people to take control. As Thomas Piketty wrote, “if we are to regain control of capitalism, we must bet everything on democracy.”
qotd: Thomas Piketty – “CAPITAL in the Twenty-First Century”: https://www.pnhp.org/news/2014/april/thomas-piketty-capital-in-the-twenty-first-century