The 2.1% Medicare fee-for-service (FFS) 2016 medical risk score trend was the primary driver behind the increase in the Part C FFS normalization factor proposed in the 2018 Advance Notice.
Milliman’s Darcy Allen, Karin Cross, and Robert Pipich conducted a risk score trend analysis, which is consistent with the trend in the Advance Notice. They also identified the six Hierarchical Condition Category (HCC) contributors shown in Figure 2 as the key drivers of the 2016 risk score trend. For more perspective, read their article “What’s driving the high risk score trend in the 2018 Advance Notice?”
A new analysis by Milliman’s Andrew Mueller and Brian Larsen shows a strong relationship exists between higher/lower Medicare Advantage (MA) market penetration rates and lower/higher Medicare fee-for-service (FFS) cost trends. Based on this, they developed for consideration a modest adjustment to the Medicare Payment Advisory Commission’s (MedPAC’s) reported MA payment to FFS cost ratio.
The adjusted ratios indicate that estimated 2015 MA plan payment rates are slightly lower than FFS costs might be, absent significant MA market penetration. While the adjusted ratio is modestly different from MedPAC’s ratios, it may present a reasonable alternative to the MedPAC ratio often used to assess MA value.
To read their entire analysis, click here.
Alternatives to traditional fee-for-service (FFS) reimbursement have gained attention as financial pressures mount and as many recognize how FFS may not provide incentives for efficient care. The recent Centers for Medicare and Medicaid Innovations (CMMI) Bundled Payments for Care Improvement Initiative is a prominent example, as are private payor contracts.
This healthcare reform briefing paper provides an overview of bundled payments and discusses recent developments, as well as an analysis of considerations in contracting for bundled payments.