Healthcare Town Hall

Medicare Advantage is an insurance program that invites private payors, including health plans and insurance companies, to offer alternatives to traditional Medicare. By providing access to the private insurance market, Medicare Advantage gives beneficiaries the option to choose from a wide range of competing plans, many of which offer richer benefits than Medicare. This video explains how Medicare Advantage works.

For more on healthcare costs, view the earlier videos in this series, about Medicaid and employer-sponsored insurance.

Cost, Medicare Medicare, Medicare Advantage, Understanding healthcare costs, video

The pressure on Medicare Advantage (MA) plans to ensure that risk scores appropriately reflect the health status of their population under the Patient Protection and Affordable Care Act (PPACA) continues to increase. Payment rates from the fee-for-service (FFS) phase-in as well as changes in star ratings for MA plans have been impacted.

The Centers for Medicare & Medicaid Services (CMS) assigns a risk score to every MA member based on the member’s characteristics, including age, gender, disability status, Medicaid status, and “health” status. The majority of revenue received by MA plans is based on the risk scores of their members, and the health status is the primary variable in the calculation of the risk score.

CMS determines the diseases/hierarchical condition categories (HCCs) for each member based on ICD-9 diagnosis codes. Identifying and submitting all appropriate ICD-9 diagnosis codes to CMS results in a higher risk score for the member and an increased payment to the MA plan.

This article, first published in the October 2012 issue of the Society of Actuaries’ Health Watch newsletter, discusses accurate diagnostic coding as an important revenue tool.

Medicare, Reform Healthcare Reform, hierarchical condition categories, Medicare Advantage, SOA

The Retiree Drug Subsidy Program (RDS) was created to enable employers to assist Medicare-eligible retirees in acquiring more cost-effective drug coverage. Under the Patient Protection and Affordable Care Act (PPACA), employers will now be taxed on government subsidies associated with the program.

Troy Filipek provides perspective on the subsidy taxation in this BenefitsPro article. Here is an excerpt:

“The big change for 2013 with the RDS program is that in the past, from 2006 forward, the allowance that these employers receive from the government for the subsidies used to be non-taxable income,” Filipek says. “That has changed since the enactment of the [PPACA].”

Now, Filipek explains, the money that employers receive from the government for these subsidies is subject to taxation.

“It’s a pretty big change,” he says. “A lot of employers have already felt the impact of it because once the law passed, based on the accounting standards, you had to recognize the future impact of that in your financial statements.”
Substantial adjustments have been taken in the form of reflections of these soon-to-be taxed subsidies. “Starting in 2013, it will be a practical effect that these moneys are going to be taxed,” Filipek says.

He notes that a lot of brokers, advisors and even employers are currently in the process of reevaluating their options for offering retirees prescription drug coverage. As far as what steps are necessary to take in order to be prepared for the coming year’s changes, Filipek feels it’s important for employers and their advisors to simply understand that there are a variety of choices available.

Options include continuing coverage and working with the newly taxed subsidies or dropping coverage and allowing retirees to enroll in individual part D plans. Additionally, Filipek says, employers can maintain group coverage and work with a pharmaceutical benefit manager or health plan in the Part D program to develop a custom benefits package through a Part D Employer Group Waiver Plan plus secondary wrap plan design, which are plan options gaining traction in the marketplace.

Regardless of what decision is made, it’s imperative that both brokers and HR professionals “make sure it’s seamless for the retiree and easy for them to understand,” Filipek says.

“It’s important to communicate with the retirees because these are not people who are coming into the workplace every day where it’s easier to communicate with them. You have to find ways for outreach to them and their spouses.”

Medicare, Pharma Healthcare Reform, Medicare, retiree drug subsidy, Troy Filipek

The U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) has announced cost-of-living adjustment figures for Medicare Part A and Part B for 2013. In April this year, CMS announced the updated amounts for the Medicare Part D standard prescription drug benefit for 2012. As a convenience, those figures are also provided in this latest Client Action Bulletin.

Medicare CMS, COLA, cost-of-living, Medicare

Atrial fibrillation is the most common form of cardiac arrhythmia, better known as an irregular heartbeat. The disorder has significant health and cost concerns for the Medicare population because of its association with an increased risk for stroke and all-cause mortality.

A study published in the May/June issue of American Health & Drug Benefits by Milliman’s Kate Fitch, Jonah Broulette, Bruce Pyenson, and Kosuke Iwasaki used Medicare Part D claims data to assess the use of the anticoagulant drug warfarin in the Medicare population.

Here is an excerpt highlighting key points from the study entitled “Utilization of Anticoagulation Therapy in Medicare Patients with Nonvalvular Atrial Fibrillation:”

• Patients with atrial fibrillation (AF) are at a significant, 5-fold increased risk for stroke and all cause mortality compared with those without AF.

• Oral anticoagulation therapy is recommended by national guidelines as the cornerstone for stroke prevention in patients with AF.

• Warfarin significantly reduces the risk for ischemic stroke; newer anticoagulant agents have shown even greater reduction of stroke risk compared to warfarin.

• Although AF risk increases with age, this present study shows that anticoagulation therapy is underutilized in Medicare beneficiaries who have nonvalvular AF (NVAF), resulting in an increase in ischemic strokes.

• These findings suggest the need to follow guideline-based anticoagulation recommendations in patients with NVAF to prevent strokes and the associated excess in healthcare costs, reduced quality of life, and even death.

• These findings also raise the need to investigate provider compliance with clinical guidelines regarding oral anticoagulation therapy for stroke prevention in older patients (aged >65 years) with NVAF.

A copy of the entire study can be read here.

Winghan Jacqueline Kwong, of Daiichi Sankyo Inc. also co-authored the study.

Medicare, Research anticoagulation, atrial fibrillation, Bruce Pyenson, Jonah Broulette, Kate Fitch, Kosuke Iwasaki, Medicare, Medicare Part D

The Medicare and Social Security Trustees released their reports on the programs’ financial solvency on April 23. The Social Security report is here, and the Medicare report is here. The Trustees summarized the results on the SSA Web site:

The long-run actuarial deficits of the Social Security and Medicare programs worsened in 2012, though in each case for different reasons. The actuarial deficit in the Medicare Hospital Insurance program increased primarily because the Trustees incorporated recommendations of the 2010-11 Medicare Technical Panel that long-run health cost growth rate assumptions be somewhat increased. The actuarial deficit in Social Security increased largely because of the incorporation of updated economic data and assumptions. Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers.

These results are not very surprising as they are similar to previous reports. The Trustees strongly recommend action sooner than later:

Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare. If they take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.

As in past years, the Medicare actuary stated that cost projections based on current law may be unrealistic:

While the Part B projections in this report are reasonable in their portrayal of future costs under current law, they are not reasonable as an indication of actual future costs. Current law would require a physician fee reduction of an estimated 30.9 percent on January 1, 2013—an implausible expectation.

Further, while the Affordable Care Act makes important changes to the Medicare program and substantially improves its financial outlook, there is a strong likelihood that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree—or even approach such a level—as a result of the labor-intensive nature of these services.

Medicare Cost, cost inflation, Medicare, Social Security

The Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) has announced cost-of-living adjusted figures for Medicare Part A and Part B for 2012. In April this year, CMS announced the updated amounts for the Medicare Part D standard prescription drug benefit for 2012. Read more in the latest Client Action Bulletin.

Medicare CMS, COLA, Medicare

We blogged last week about how payment reform is affecting Medicare Advantage. These plans are facing an increasing emphasis on quality and efficiency, both of which are complicated topics. For more on the quality dimension, consider this recent article from HealthWatch by Corey Berger and Eric Goetsch about hierarchical condition categories.

Medicare Corey Berger, Eric Goetsch, hierarchical condition categories, Medicare Advantage

The Patient Protection and Affordable Care Act (PPACA) will lead to significant changes in the Medicare Advantage (MA) market. But because the act’s payment reform effects and specific MA plan circumstances will vary by area, each MA organization will have to evaluate its star rating and the payment reform details in its service area to determine the particular impact that the PPACA changes will have on its future revenue.

Read the paper here.

Medicare Brad Piper, Eric Goetsch, Medicare Advantage, Pat Dunks

With the release of the September Consumer Price Index by the U.S. Bureau of Labor Statistics, CMS has announced cost-of-living adjusted figures for Medicare Parts A and B for 2011. Read more here.

Medicare COLA