Plan Payment Reductions, MLR, and Compliance, Oh My! The Medicare Advantage Update for Plans and Providers

Transcription

1 Plan Payment Reductions, MLR, and Compliance, Oh My! The Medicare Advantage Update for Plans and Providers Anne W. Hance McDermott Will & Emery LLP AHLA Institute on Medicare and Medicaid Payment Issues Program March 20-22, 2013 Overview Medicare Advantage (MA) Plan payment policies and the potential ripple effects of proposals and changes CMS's proposed Medical Loss Ratio regulations and potential implications for plan-provider relationships Challenges posed by CMS's evolving compliance program requirements Latest and greatest on risk adjustment data validation audits Quality Star Ratings Program and plan-provider initiatives 2 1

2 MA Plan Payment Policies 3 MA Plan Payments Under the Affordable Care Act (ACA) The transition to FFS-linked benchmarks began in CY 2012 Counties assigned to a quartile, based on FFS spending in the county Each county s benchmark equals a percentage of FFS spending, determined according to the quartile assignment Highest FFS-spending quartile benchmark is 95% FFS costs Second highest FFS-spending quartile benchmark is 100% FFS costs Third highest FFS-spending quartile benchmark is 107.5% FFS costs Lowest FFS-spending quartile benchmark is 115% FFS costs County assignments change with CMS rebasing Transition to new payment methodology is incremental between 2012 and 2017, depending on the amount of the PMPM reduction calculated in

3 MA Payments Under the ACA (cont.) Quality bonuses for high-ranking MA Plans Ranking based on CMS 5-star quality rating system Phase-in 1.5-5% bonuses for 4- and 5-star MA Plans Double bonuses (up to 10%) for qualifying plans in qualifying counties Bonuses available for new and low-enrollment MA Plans Reduction in MA rebates CY phase-down of MA rebates to 50% High ranking quality MA Plans eligible for 65-70% rebate retention Certain new and low-enrollment MA Plans may be eligible for 65 70% rebate retention 5 MA Payments Under the ACA (cont.) Stars Pre-ACA Rebate % ACA- Rebate % CY 2012 Phase-in CY 2013 Phase-in CY 2014 <3 75% 50% 66.7% 58.3% 50% 3 75% 50% 66.7% 58.3% 50% % 65% 71.7% 68.3% 65% 4 75% 65% 71.7% 68.3% 65% % 70% 73.3% 71.7% 70% 5 75% 70% 73.3% 71.7% 70% Morgan Stanley Research, Managed Care: Expecting Improvement in Medicare Adv. Star Ratings October 5,

4 MA Payments Under the ACA (cont.) Plan #1: 2 stars Plan #2: 4 stars Plan #3: 5 stars Benchmark = $800 Benchmark = $832 Benchmark = $ Bid = $750 Bid = $750 Bid = $750 = = = $50 $82 $90 x X x 50% 65% 70% = = = Rebate = $25 Rebate = $53 Rebate = $63 Total Payment = $775 Total Payment = $803 Total Payment = $813 Morgan Stanley Research, Managed Care: Expecting Improvement in Medicare Adv. Star Ratings October 5, CMS Quality Bonus Payment Demonstration Project Enhanced quality bonuses for CY star MA Plans eligible for 5% bonus 4-star and 4.5-star MA Plans eligible for 4% bonus for CY and 5% bonus in CY star MA Plans eligible for 3.5% bonus in CY (versus no bonus under the ACA methodology) 3-star MA Plans eligible for 3% bonus in CY (versus no bonus under the ACA methodology) 8 4

5 Marketing and Enrollment Special election period for 5-star MA and Part D Plans Plans may enroll individuals at any time during the benefit year Does not affect enrollment periods for other coverage Medicare.Gov 5-star MA and Part D Plans receive high-quality designation Caution rating for MA and Part D Plans with overall rating below 3-stars for 3 consecutive years CMS disables the online enrollment function on Medicare.gov for MA and Part D Plans with the low-performing plan icon CMS issues notices to individuals enrolled in MA and Part D Plans with fewer than 3 stars in 3 consecutive years, alerting them to the low rating and offering an opportunity to request a special enrollment period to move into a higher quality plan 9 CY 2014 Advance Notice Released February 15, 2013 with Draft Call Letter Growth Percentages incorporated into MA benchmark calculation -2.3 percent National Per Capita MA Growth Percentage for aged and disabled enrollees combined -2.1 percent FFS USPCC Growth Percentage Reflects several factors, including Decrease in underlying per capita costs percent reduction to the Medicare Physician Fee Schedule percent coding intensity adjustment for MA Plan payments Recalibration of the CMS HCC and Rx risk adjustment models Proposed exclusion of diagnosis data collected through risk assessments that are not subsequently confirmed through another clinical encounter 10 5

6 CY 2014 Draft Call Letter Total Beneficiary Cost CMS interprets Social Security Act (SSA) 1854(a)(5)(C)(ii) as permitting the agency to deny MA Plan bids if CMS determines that the bid proposes too significant of (i) an increase in cost sharing, or (ii) a decrease in benefits between contract years CY 2014 proposed threshold is $30, down from $36 for CY 2013 Quality Star Ratings Proposed modification to the methodology for scoring individual measures, which ultimately comprise a Plan s rating Anticipated ½ to 1 star reduction in Plans overall rating 11 Sequestration? 12 6

7 Medicare Medical Loss Ratio 13 Medicare MLR Requirements ACA/HCERA 1103 amended SSA 1857(e) to add a new medical loss ratio requirement (4) REQUIREMENT FOR MINIMUM MEDICAL LOSS RATIO. If the Secretary determines for a contract year (beginning with 2014) that an MA plan has failed to have a medical loss ratio of at least.85 (A) the MA plan shall remit to the Secretary an amount equal to the product of (i) the total revenue of the MA plan under this part for the contract year; and (ii) the difference between.85 and the medical loss ratio; (B) for 3 consecutive contract years, the Secretary shall not permit the enrollment of new enrollees under the plan for coverage during the second succeeding contract year; and (C) the Secretary shall terminate the plan contract if the plan fails to have such a medical loss ratio for 5 consecutive contract years. CMS released its proposed rule released on February 15 th 78 Fed. Reg (Feb. 22, 2013) proposing to establish a new Subpart X in 42 C.F.R. Parts 422 and Parts 423 Comments are due by April 16,

8 Medicare MLR Requirements (cont.) Proposed applicability Section 1860D-12 of the SSA incorporates by reference the requirement of SSA 1857(e) CMS proposes that the 85% MLR requirement applies to MA Plans, MA-PD Plans, and stand-alone prescription drug plans (PDPs) Evaluated at the contract level, rather than plan benefit package or parent organization levels No carve-out for employer/union sponsored group waiver plans 15 Medicare MLR Requirements (cont.) Proposed scope Numerator is similar to commercial MLR regulations and includes Incurred claims costs, such as direct claim costs, capitation payments, and quality incentive and bonus payments paid to providers Costs for quality improvement activities Improving health outcomes - e.g., quality reporting and care coordination Preventing hospital readmissions - e.g., comprehensive discharge planning Improving patient safety and reducing medical errors Wellness and health promotion activities, or Use of health care data to improve quality and transparence and outcomes MA rebate dollars used to reduce Part B premium 16 8

9 Medicare MLR Requirements (cont.) Proposed scope (cont.) Numerator adjustments/exclusions Prescription drug rebates and other direct/indirect remuneration Overpayments to providers that are recovered Amounts paid to vendors for secondary network savings Amounts paid to vendors for network development, administrative fees, claims processing, and utilization management E.g., network administrator s spread E.g., utilization management that is not a quality improvement activity Amounts paid for professional or administrative services that do not represent compensation or reimbursement for covered services 42 C.F.R (b), (b) 17 Medicare MLR Requirements (cont.) Proposed scope (cont.) Denominator is similar to commercial MLR regulations Total revenue, including All premiums paid by CMS and by/on behalf of the member Low income premium subsidies Risk corridor and reinsurance payments to Part D Plan Sponsor Less taxes and fees, such as Federal taxes and assessments e.g., ACA health insurer tax Licensing and regulatory fees State taxes and assessments State income, excise, and business taxes other than premium taxes CMS will recognize community benefit expenditures for federal income tax-exempt issuers, up to 3 percent of total revenue (or the highest premium tax rate in the state) 42 C.F.R (c), (c) 18 9

10 Medicare MLR Requirements (cont.) Proposed Quality Improvement Activities Activity must fall within one of the following categories Improving health outcomes Preventing hospital readmissions Improving patient safety and reducing medical errors Wellness and health promotion activities, or Use of health care data to improve quality and transparence and outcomes AND the activity meets all of the following requirements It must be designed to improve health quality It must be designed to increase the likelihood of desired health outcomes in ways that are capable of being objectively measures and of producing verifiable results It is directed toward individual enrollees or incurred for the benefit of specified segments of enrollees or provides improvements to a larger population (at no cost to the individual) It is grounded in evidence-based medicine, widely accepted best clinical practice or criteria issued by recognized professional medical associations, etc. 42 C.F.R , Medicare MLR Requirements (cont.) Proposed reporting requirements Proposed July 31 st reporting deadline Similar to commercial MLR requirements for CY 2014 Also evaluating September or December reporting deadline Retain and provide access for CMS, HHS, the Comptroller General and their designees MA organizations and Part D sponsors with third party vendors would be required to have or be able to obtain and validate all underlying data associated with their services prior to the preparation and submission of MLR reporting to CMS (78 Fed. Reg. at 12441) 42 C.F.R ,

11 CMS Compliance Program Guidelines 21 Current Landscape 2012 Compliance Program Guidelines Expressly applicable to MA Organizations and Part D Plan Sponsors Includes CMS s interpretive guidance (shalls vs. shoulds and best practices) Aiming to prevent, detect, and correct Part C and Part D non-compliance and fraud, waste and abuse (FWA) Emphasizes effectiveness of Plan Sponsors compliance programs Adequate resources Tailored to Plan Sponsors unique organization, operations and circumstances Focus on oversight and monitoring first-tier, downstream and related entities (the so-called FDRs) Plan Sponsor accountability for satisfying MA/D Program requirements Guidance regarding which contractors are FDRs under MA/D Programs Expectations regarding oversight and management 22 11

12 Evaluation of an Internal Compliance Program Does the compliance program and its implementation demonstrate the Plan Sponsor s commitment? Are sufficient resources dedicated to the compliance department? Effective SOPs for FDRs Identifying and maintaining a list of FDRs Baseline assessment and identification of risk areas Education and training Monitoring and auditing Reporting 23 Evaluation of an Internal Compliance Program (cont.) How is the compliance plan communicated and what are the levels of communication? Is discipline carried out? In a standardized manner? How frequently is training and documentation reviewed? Internal training External training External reporting to CMS, MEDIC, law enforcement 24 12

13 Effectuating Compliance Outside the Plan Sponsor Compliance Program Most compliance elements/obligations extend to FDRs Distribution of standards of conduct, policies and procedures Education and training Effective communication Oversight and monitoring Disciplinary standards Corrective action One challenge is balancing degree(s) of delegation Oversight and flexibility may be the critical factors 25 Identifying an FDR What are the FDR s functions? Administrative or health care service functions Related to the Plan Sponsor s MA/D contracts Factors that may affect the analysis Does CMS require the Plan Sponsor to perform the function Is there a Medicare beneficiary touch Does the function involve Medicare beneficiary services Does the entity have access to Medicare beneficiary information or PHI Does the entity have decision making authority Is the entity in a position to commit FWA Could the entity put a Medicare beneficiary in harms way Remember that the Plan Sponsor is always ultimately responsible 26 13

14 FDR Education and Training Requirements Plan Sponsors must ensure general compliance information is communicated to their FDRs All FDRs employees involved in the administration or delivery of Part C/D benefits must receive FWA training Options Plan Sponsor provides FWA training to FDRs Plan Sponsor provides appropriate FWA training materials to FDRs Plan Sponsor accepts FDRs use of CMS training module How does a Plan Sponsor proceed, and if it delegates to the FDR performance of the training, how does the Plan Sponsor confirm compliance? 27 Monitoring and Oversight Multi-prong approach to monitoring and oversight of operations Dashboard and other regular monitoring mechanisms by department heads and compliance department Audit work plan Coordinate audit activities among departments (e.g., audit, compliance, area-specific) Risk assessment to identify and prioritize audit areas and issues Multiple audit strategies Routine vs. new priority Scheduled vs. unannounced Paper vs. on-site Performance standards Subject matter experts Reporting results and implementing corrective action 28 14

15 FDR Monitoring and Oversight Risk assessment of FDRs - by department, by issue, by CMS audit area Does the contract permit (or impose any restrictions on) monitoring and audits Scope of monitoring and auditing Routine by Plan Sponsor Routine by FDR Downstream contractors Reporting results and implementing corrective action Who is told what, by whom, and when? Plan Sponsor corrective action FDR corrective action Verification of corrective action through oversight and audit Oversight and flexibility as key factors for execution 29 Citations Only a Lawyer Could Love Social Security Act 1856 (42 U.S.C. 1395w-26) for the MA Program 1860D-12 (42 U.S.C. 1395w-12) for the Medicare Part D Program Title 42 of the Code of Federal Regulations (b)(4)(vi) for MA Organization compliance program requirements (b)(4)(vi) for Part D Plan Sponsor compliance program requirements CMS manuals Chpt. 21 of the Medicare Managed Care Manual (issued 2012) Chpt. 9 of the Medicare Prescription Drug benefit Manual (issued 2006, revised 2012) Other references OIG Compliance Guidance for Medicare+Choice Organizations (64 Fed. Reg (Nov. 15, 1999)) U.S. Sentencing Guidelines, Chpt. 8 (

16 Risk Adjustment Data Validation (RADV) Audits 31 CMS RADV Audits 2011 payment year will be the first subject to an audit pursuant to the Final Payment Error Calculation Methodology Methodology released by CMS in February 2012 to address extrapolation and other issues Followed April 2010 Final Rule implementing new RADV regulations (75 Fed. Reg (Apr. 15, 2010); 42 C.F.R )) Audit specifications referenced in the Methodology Up to 201 enrollees per audit sample MA contracts will be permitted to subject multiple medical records for each HCC being validated One best medical record rule continues to apply in appeals Estimated payment error for each enrollee will be extrapolated across entire contract population Preliminary recovery amount will reflect a Fee-For-Service Adjuster 32 16

17 Some Implications for Providers Plans will place increasing emphasis on accuracy and completeness of diagnoses and claims data Compensation adjustments, penalties for inaccurate data Plan-initiated audits to validate data submissions Note CMS commentary in CY 2014 Advance Notice regarding enrollee risk assessments and subsequent clinical encounter verification 33 Quality Star Ratings 34 17

18 Star Quality Rating System Quality measures 37 measures for MA Plans 18 measures for Part D Plans 49 measures for MA-PD Plans Grouped into 5 categories or domains for MA Plans 4 categories or domains for Part D Plans All Plans under a contract get the same score Part C score Part D score MA-PD Plans get overall score as well 35 Data Sources CMS administrative data Various measures collected throughout the benefit year E.g., IRE appeals, call center performance Consumer Assessment of Healthcare Providers and Systems (CAHPS) Survey of beneficiaries regarding their health care E.g., flu and pneumonia vaccines, ease of getting to physicians Survey conducted in spring of each year Healthcare Effectiveness Data and Information Set (HEDIS) Data collection in June for prior benefit years E.g., screenings for breast, colorectal cancers and metrics for diabetic members Heath Outcomes Survey (HOS) Survey of beneficiaries as to their longitudinal health/health care under the Plan and changes in past two years E.g., status of physical, mental health, monitoring of physical activity Members surveyed twice, two years apart 36 18

19 Quality Metrics Individual measures Each contract receives a number of stars for each individual quality measure CMS designates performance standards for certain metrics Meeting/exceeding a specific performance threshold automatically results in a pre-determined number of stars (e.g., 4 stars) Compliance with an absolute regulatory standard typically results in automatic 3 stars Other metrics may be evaluated on a relative scale and may be adjusted for certain patient characteristics, such as age, physical/mental health status, Medicaid eligibility 37 Quality Metrics (cont.) Domain measures Individual measure scores are grouped with similar measures A domain score is assigned a star rating, based on the weighted average of the measures Weighted scores Patient outcome measures receive greatest weight Then patient experience/complaints and access measures Process measures weighted the least Increased emphasis on measures for higher-risk beneficiaries Program and Overall Scores All of a Program s domains are combined to determine the Program score MA-PD Plans receive an overall score summarizing Part C and D Program scores 38 19

20 Quality Metrics (cont.) CY 2013 Performance Ratings Three new measures focusing on care coordination and improvement, and one measure focusing on enrollment timeliness Three measures moved to display status Still displayed publicly on CMS website and CMS still monitors performance Not included in Quality Star Rating measures Poor scores are subject to CMS compliance action 39 Quality Metrics (cont.) Domain: 1 - Staying Healthy: Screenings, Tests and Vaccines Measure: C01 - Breast Cancer Screening Measure: C02 - Colorectal Cancer Screening Measure: C03 - Cardiovascular Care Cholesterol Screening Measure: C04 - Diabetes Care Cholesterol Screening Measure: C05 - Glaucoma Testing Measure: C06 - Annual Flu Vaccine Measure: C07 - Improving or Maintaining Physical Health Measure: C08 - Improving or Maintaining Mental Health Measure: C09 - Monitoring Physical Activity Measure: C10 - Adult BMI Assessment Domain: 2 - Managing Chronic (Long Term) Conditions Measure: C11 - Care for Older Adults Medication Review Measure: C12 - Care for Older Adults Functional Status Assessment Measure: C13 - Care for Older Adults Pain Screening Measure: C14 - Osteoporosis Management in Women who had a Fracture Measure: C15 - Diabetes Care Eye Exam Measure: C16 - Diabetes Care Kidney Disease Monitoring Measure: C17 - Diabetes Care Blood Sugar Controlled Measure: C18 - Diabetes Care Cholesterol Controlled Measure: C19 - Controlling Blood Pressure Measure: C20 - Rheumatoid Arthritis Management Measure: C21 - Improving Bladder Control Measure: C22 - Reducing the Risk of Falling Measure: C23 - Plan All-Cause Readmissions CMS Medicare Health & Drug Plan Quality and Performance Ratings 2013 Part C & Part D Technical Notes (Oct. 10, 2012) 40 20

21 Quality Metrics (cont.) Domain 3 Member Experience with Health Plan Measure: C24 - Getting Needed Care Measure: C25 - Getting Appointments and Care Quickly Measure: C26 - Customer Service Measure: C27 - Overall Rating of Health Care Quality Measure: C28 - Overall Rating of Plan Measure: C29 Care Coordination Domain: 5 - Health Plan Customer Service Measure: C34 - Plan Makes Timely Decisions about Appeals Measure: C35 - Reviewing Appeals Decisions Measure: C36 - Call Center Foreign Language Interpreter and TTY/TDD Availability Measure: C37 Enrollment Timeliness Domain: 4 - Member Complaints, Problems Getting Services, and Choosing to Leave the Plan Measure: C30 - Complaints about the Health Plan Measure: C31 - Beneficiary Access and Performance Problems Measure: C32 - Members Choosing to Leave the Plan Measure: C33 Health Plan Quality Improvement CMS Medicare Health & Drug Plan Quality and Performance Ratings 2013 Part C & Part D Technical Notes (Oct. 10, 2012) 41 Quality Metrics (cont.) Domain: 1 - Drug Plan Customer Service Measure: D01 - Call Center Pharmacy Hold Time Measure: D02 - Call Center Foreign Language Interpreter and TTY/TDD Availability Measure: D03 - Appeals Auto Forward Measure: D04 - Appeals Upheld Measure: D05 - Enrollment Timeliness Domain: 3 - Member Experience with Drug Plan Measure: D010 - Getting Information From Drug Plan Measure: D11 - Rating of Drug Plan Measure: D12 - Getting Needed Prescription Drugs Domain: 2 - Member Complaints, Problems Getting Services, and Choosing to Leave the Plan Measure: D06 - Complaints about the Drug Plan Measure: D07 - Beneficiary Access and Performance Problems Measure: D08 - Members Choosing to Leave the Plan Measure: D09 Drug Plan Quality Improvement Domain: 4 - Drug Pricing and Patient Safety Measure: D13 - MPF Composite Measure: D14 - High Risk Medication Measure: D15 - Diabetes Treatment Measure: D16 - Part D Medication Adherence for Oral Diabetes Medications Measure: D17 - Part D Medication Adherence for Hypertension (RAS antagonists) Measure: D18 - Part D Medication Adherence for Cholesterol (Statins) CMS Medicare Health & Drug Plan Quality and Performance Ratings 2013 Part C & Part D Technical Notes (Oct. 10, 2012) 42 21

22 Timing of Data Collection and Ratings Payment Year Data Year Post- Performance Ratings for Open Enrollment Post Performance Ratings for Payment Purposes October 2010 January October 2011 January October 2012 January October 2013 January 2014 Timeframe for Appealing Quality Scores Oct Feb Oct Feb Oct Feb Oct Feb Rate Notice Publication Feb/April 2011 Feb/April 2012 Feb/April 2013 Feb/April Bringing This To A Practical Level Short-term initiatives to improve quality scores Long-term strategic initiatives Engaging the member Influencing provider behavior Creating partners out of providers Capitalizing on other health care reform developments 44 22

23 Questions and Comments Anne W. Hance