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AHIP: Medicare Advantage may underpay for chronic conditions

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A proposed change in the Medicare Advantage risk-adjustment formula could cut overall program funding by 2.1 percent in 2017, according to America’s Health Insurance Plans (AHIP).

Because the formula would cut payments to plans that cover a high percentage of patients with conditions such as diabetes and congestive heart failure, it would be especially hard on efforts to improve care for people with common chronic conditions, AHIP says.

AHIP talks about those concerns in comments on the recently released draft of the 2017 Medicare Advantage program call letter and draft program standards.

See also: Medicare plans may face wave of network adequacy fines

The Medicare Advantage program gives private carriers a chance to sell plans that serve as an alternative to traditional Medicare coverage. The Centers for Medicare & Medicaid Services (CMS) uses a bidding process to get carriers to compete with one another, to try to keep costs as low as possible for the Medicare program and its enrollees.

Negotiations over the call letter, and other program rules and standards, has become a part of the bidding process.

CMS uses the Medicare Advantage risk-adjustment program, which is separate from the Patient Protection and Affordable Care Act (PPACA) risk-adjustment program for commercial health plans, to compensate Medicare Advantage plans that end up covering a high percentage of high-risk enrollees.

CMS says it wants to update its risk-adjustment formula because it leads to underpayments for enrollees with disabilities, and for “dual eligibles.” Dual eligibles are low-income enrollees who are eligible both for Medicare and Medicaid.

“AHIP continues to strongly support changes in CMS policy that ensure Medicare Advantage plans serving beneficiaries with complex needs… are accurately reimbursed for their costs of meeting the needs of these vulnerable populations,” AHIP says. 

But actuarial analysis shows that the funding cuts for some plans could be so severe that they would hurt dual eligibles along with other enrollees, according to AHIP.

Like the American Benefits Council and the U.S. Chamber of Commerce, AHIP is also objecting to a CMS proposal to base Medicare Advantage group plan funding on the results of Medicare Advantage individual coverage program bidding.

The retirees in the group plans tend to have higher costs than the retirees who enroll in individual Medicare Advantage coverage, because the group plan enrollees tend to live away from the big, deeply discounted networks available in bigger cities, AHIP says. Basing group plan payments on individual program costs could hurt 3 million group plan enrollees, they said.

AHIP is also objecting to a warning that CMS may soon start imposing fines on plans with inaccurate provider directories. 

CMS is still testing strategies for improving provider directory accuracy, and it has not yet provided any details on how it will be monitoring the directories, AHIP says. ”We urge CMS to refrain from pursuing enforcement actions during this time period and not penalize plans that can demonstrate good faith efforts to update provider directory data,” they said.

See also:

Chamber, insurers blast proposed Medicare group coverage change

Humana to record 2016 PPACA shortfall, membership drops


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