The coronavirus has forced states to build emergency action plans for their Medicaid programs at lightning speed. Nearly all have begun with the Section 1135 “blanket waivers” issued by the Centers for Medicare and Medicaid Services (CMS), but as the pandemic continues, many are seeking additional options.
A variety of broader policy and expenditure options are available under emergency 1115 waivers and other federal authorities to support states with accelerated access to emergency assistance for Medicaid recipients and healthcare providers. In this paper, Milliman consultants discuss options for states to consider as they build their emergency response.
Profitability is critical for long-term sustainability in
the Medicare Advantage (MA) market and a major consideration for new and
established Medicare Advantage organizations (MAOs). While there are many paths
to increase profitability, increasing revenue is often a first consideration
MAOs receive funding from the Centers for Medicaid and
Medicare Services (CMS), and, in some cases, from their enrolled beneficiaries.
Total revenue can be categorized into two groups: Part C and Part D.
Part C revenue from CMS depends on the county benchmark
rate, which CMS sets as the maximum funding it will provide to cover
traditional fee-for-service Medicare benefits for an average beneficiary. Each
year, an MAO estimates a bid amount for each of its plan offerings, indicating
the estimated cost to cover its expected population. As for Part D, CMS funds a
portion of it through the direct subsidy, calculated as the difference between
the national average bid amount and the national average member premium. In
addition to the revenue from CMS, MAOs must balance the offered benefits,
profitability, and the resulting member premium.
In this paper, Milliman consultants Kelly Backes, Greg Herrle, and Douglas Rodrigues discuss the various components of MA revenue, avenues MAOs may explore to increase their Part C and Part D revenue, and key considerations for each approach.
The Centers for Medicare and Medicaid Services (CMS) requires all Medicare Advantage organizations (MAOs) to submit a bid by the first Monday in June that estimates the cost to provide traditional Medicare benefits to an “average risk” Medicare beneficiary for the coming year. A portion of any savings generated by the MAO (the savings defined as the difference between the bid and the benchmark rate) is returned to the plan as a rebate, which can be used by the plans to provide benefits above and beyond traditional Medicare.
As MAOs prepare to submit these bids each year, they must take into account historical costs, CMS revenue levels, anticipated market changes, and membership characteristics, which all impact how a plan’s costs and benefits will change in the coming year. As the Medicare Advantage (MA) market continues to evolve through the Patient Protection and Affordable Care Act (ACA), it is important to analyze how the landscape of this program is changing in the coming year.
This report highlights key changes in beneficiary premiums and benefits for the 2014 MA market and aims to assist MAOs in making strategic decisions during 2015 bid preparations.
Private health exchanges (PHEs) have attracted attention from some large employers sponsoring healthcare benefits. In the latest issue of Benefits Perspective, Milliman’s Troy Filipek, Gregory Herrle, and Paul Houchens discuss three key issues large plan sponsors should evaluate regarding PHEs: risk selection, quality, and cost perspective.
Here is an excerpt considering each issue:
…When considering private exchange options, plan sponsors should evaluate how the private exchanges are balancing greater employee choice with limits on the potential for adverse selection. For example, are employees permitted to change from a lower-cost to higher-cost benefit option in a single year, or is plan selection movement restricted in some manner? Unmanaged risk selection may result in unsustainable employee healthcare cost increases, which may unravel an employer’s defined contribution strategy or result in benefits that are perceived by employees as below average relative to industry norms.
With the introduction of guaranteed issue coverage to the individual market through the Patient Protection and Affordable Care Act (ACA), some employers believe they have a diminished incentive to offer healthcare coverage to employees. However, in addition to avoiding penalties for not offering coverage, employers have strategic reasons to offer healthcare benefits to employees. Specifically, healthy employees generally translate into minimized absenteeism, as well as greater productivity. Health coverage has also been a critical benefit in terms of attracting and retaining the best employees. Therefore, quality healthcare is an important part of the value proposition offered by employers….
Cost considerations relative to self-funded plans
Plan sponsors should also remember some of the advantages available to self-funded plans (whether inside or outside of private exchanges), including, for example:
• Eliminating or substantially limiting insurer profit margins;
• Lowering administrative costs, in general;
• Avoiding state premium taxes and certain ACA provisions, such as the health insurer tax;
• Providing benefit flexibility by avoiding state benefit mandates and allowing for other options better suited to a specific workforce when designing benefit plans; and
• Allowing more control over benefit management.
Large employers interested in offering their employees health plans through PHEs should also consider the questions asked by Dan Bostedt in this paper.
The fourth installment in our “strategic considerations” series (see #1, #2, #3) looks at state health insurance exchanges.
The state exchanges mandated by the PPACA are not required to be in effect until 2014, but states are planning for them now and insurers need to consider how to position themselves with respect to the exchanges. States have a wide-ranging authority to set the conditions of the exchanges, and there are many questions to be answered in each case, for example:
- What level of product and essential benefits will be required by an exchange?
- Will there be separate exchanges for individuals and small groups, or will they be combined in one pool?
- What kinds of market forces may be created by exchanges that influence carriers operating outside the exchange?
- Which states’ exchanges will have a cost-control mechanism, and which will not?1
- Will there be interstate exchanges?
- The political atmosphere within some states is strongly opposed to the healthcare reforms. Will those states try to avoid developing an exchange, or establish an exchange so weak that it cannot function effectively?