Featured in Health Business Daily, Sept. 6, 2017

Under CMS’s New Network Review Policy, 2017 MA Applicants Are Coming Up Short

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Subscribe today!

By Lauren Flynn Kelly, Managing Editor
August 4, 2016Volume 22Issue 15

As CMS carries out a new policy of reviewing Medicare Advantage plans’ entire provider networks for adequacy if they request service area expansions, MAN has learned that plans are dealing with a stricter-than-ever exceptions process and in some cases are having to drop legacy counties in order to expand. And the new system puts existing plans in a tough spot, since the alternative to accepting CMS’s demands is to withdraw their application altogether and face a two-year lockout from the program.

A spokesperson for CMS declined to provide any estimates of how many service area reductions plans will make and pointed out that contracts for 2017 have not yet been finalized. But sources say they know of plans that have been asked to drop certain counties in order to preserve their larger application. And one source who asked not to be identified says some plans aren’t getting their expansion requests approved because they came up short on providers in those areas. While plans used to be able to secure an exception when the only provider in part of a rural county, for instance, refuses to contract with MA plans, that rationale no longer passes CMS muster, adds the source.

“CMS has gotten very demanding about service area network adequacy, and we hear that they have even rejected some expansions from well-established, well-respected plans,” weighs in Stephen Wood, a principal with Clear View Solutions, LLC. “You really have to think twice about going after new service areas if you have any concerns whatsoever about your current service area.”

Medicare Advantage News

During the current application cycle for 2017, CMS for the first time began reviewing the adequacy of plans’ entire networks if they requested service area expansions, whereas CMS historically reviewed the networks of only new applicants or in new service areas requested by existing plans. This was largely in response to criticism from the Government Accountability Office and members of Congress over CMS’s oversight and enforcement of network requirements for MA plans (MAN 10/1/15, p. 4). And during CMS’s annual audit and enforcement conference in Baltimore on June 16, Deputy Administrator and Director of the Center for Medicare Sean Cavanaugh acknowledged that the new process has led to some confusion and frustration among plan sponsors (MAN 7/7/16, p. 1).

“CMS and [Medicare Advantage organizations] find themselves in a strange position this year — needing to service area reduce in order to service area expand,” observes Michael Adelberg, a former top CMS MA official who is now senior director at FaegreBD Consulting. “It would be interesting to know how many MA plans have given up counties that they’ve served for many years without complaints about provider access.”

Sources suggest that part of the problem is the automated system that CMS began using several years ago that leaves little room for error or exceptions. CMS relies on mapping software that measures how long it takes to get to a provider in terms of both time and distance. Those standards are based on the population size and density parameters of individual counties.

“For example, there’s one county we work with where the eastern part of the county is very urban, and the western part of the county is really rural, and this county’s really big,” explains Wood. “So the county’s classified as urban, but when you get out into the western part, there are no providers out there. But you have to abide by urban standards, so we’ve taken a run at that particular county two years in a row and have come up short every time. And it boils down to one or two holdout doctors, or they just don’t exist.”

For a plan that has long served a particular county, where the only dermatologist in a “fringe” area retires, thus making it impossible to meet CMS standards, it’s potentially a big loss to the plan to have to drop a county, observes Washington, D.C., attorney Mark Joffe. “If a plan’s probably fairly entrenched and has fairly large enrollment, giving up an existing county is a pretty big change,” he suggests to MAN. “Moreover, you might have two or three competitors in the exact same county who have that same issue and who also don’t have that provider, so the question then becomes what happens to the other Medicare Advantage organizations, and is this in the best interest of the program? There are all kinds of implications.”

Joffe says he knows of plans that actually decided not to submit service area expansions for 2017 in anticipation of this issue. Meanwhile, Wood says some of his MA clients proactively dropped counties for 2017 even though their internal analysis showed that they would have had adequate networks, but the health services delivery tables updated by CMS shortly before the application deadline indicated a gap.

Physician Shortage Is Impacting Adequacy

A new analysis from America’s Health Insurance Plans (AHIP) suggests that there may not even be enough physicians in certain states for plans to meet their federal and/or state network adequacy requirements. Specifically, AHIP found that 14 states have physician supply rates that are less than 90% of the national rate, and seven of those states have supply rates less than 80% of the national rate.

The AHIP data brief, “Impact of Physician Workforce Supply on Health Care Network Adequacy,” evaluated data on the current geographic distribution of physicians in four specialties whose services are in increased demand as a result of the Affordable Care Act and identified states where the ratio of physicians to population falls below the national average for one or more of those specialty areas. In Iowa, for example, the psychiatrist-to-population ratio (5.6 per 100,000) is well below the national average (8.9 per 100,000), with 64% of counties having no practicing psychiatrists at all.

Moreover, HHS-designated health professional shortage areas — which factor into the MA exception process — vary greatly from state to state, which limits the ability of plans to establish “high-value” provider networks, points out AHIP. As a result, the report concludes that federal and state network adequacy standards “should take into account differences in physician supply and distribution across geographic areas, such as differences in the number of providers in urban versus rural areas,” and expresses support for the enhanced use of telemedicine in federal health care programs and the increased use of nurse practitioners and physician assistants in care delivery.

“Certainly this has become a bigger challenge, and I think it requires a much broader look into our workforce challenges and solutions to address that, from workforce education to scope-of-practice laws,” remarks AHIP spokesperson Clare Krusing. “And I think this is an issue that needs a much bigger focus, other than pointing to the plans and saying, ‘Your networks aren’t adequate,’ when the plans are doing everything they can do to meet those requirements.”

View the AHIP report at http://tinyurl.com/gmqwnyr.

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