Radar on Medicare Advantage

CMS’s Position on Quota Share Reinsurance in MA Confuses Industry

July 8, 2019

After a brief attempt to ban the use of quota share reinsurance by Medicare Advantage organizations, CMS two years ago reversed its position and said it would continue to allow insurers to “share risk proportionally” as long as it fit into one of four categories of exceptions allowed by federal law. But one industry lawyer says CMS has since applied an “inconsistent application” of the rules.

By Lauren Flynn Kelly

After a brief attempt to ban the use of quota share reinsurance by Medicare Advantage organizations, CMS two years ago reversed its position and said it would continue to allow insurers to “share risk proportionally” as long as it fit into one of four categories of exceptions allowed by federal law. But one industry lawyer says CMS has since applied an “inconsistent application” of the rules.

Quota share reinsurance is first dollar proportional reinsurance and is based on the sharing of a percentage of liabilities as opposed to an “attachment point” or fixed dollar amount after which point the reinsurer steps in and bears the risk. It is also widely used by MA and other insurers to manage their financial risk exposure.

According to Jon Biasetti, a partner with Locke Lord LLP, the firm has “become aware” that since CMS’s retraction of its prohibition, “several MAOs have had their quota share reinsurance agreements questioned, and in some cases, disallowed by CMS” while others have reported no issues.

CMS at the time of reversing its decision said the “statute permits MA organizations to share risk proportionally, so long as the risk (the type and amount) is in the exceptions,” referring to four categories of permissible exceptions contained in Section 1855(b) of the Social Security Act. But Biasetti says the four exceptions included in the statute do not address the traditional “amounts” of risk covered by quota share, and that his sense is CMS doesn’t fully understand how quota share reinsurance works.

Bruce Merlin Fried, a partner in the Washington, D.C., office of Dentons, adds that if quota share reinsurance is indeed prohibited in MA, smaller plans could end up using funds that might otherwise be spent on expanding their service areas, which could negatively impact competition.

Provider-Sponsored I-SNPs Are Trendy but Risky

June 25, 2019

Since the creation of institutionalized Special Needs Plans (I-SNPs) with the Medicare Modernization Act of 2003, nursing homes have viewed I-SNPs as a potential reimbursement vehicle for the work they already do in avoiding acute events, transfers to the emergency room and hospital admissions, industry experts tell AIS Health. But the trend of provider-sponsored I-SNPs has only begun to gain traction in the last few years and is likely to pick up even more now that SNPs have been permanently authorized, sources observe.

By Lauren Flynn Kelly

Since the creation of institutionalized Special Needs Plans (I-SNPs) with the Medicare Modernization Act of 2003, nursing homes have viewed I-SNPs as a potential reimbursement vehicle for the work they already do in avoiding acute events, transfers to the emergency room and hospital admissions, industry experts tell AIS Health. But the trend of provider-sponsored I-SNPs has only begun to gain traction in the last few years and is likely to pick up even more now that SNPs have been permanently authorized, sources observe.

“There are many organizations that are considering or are entering this marketplace and one way or other finding the wherewithal to get the job done, but the challenges they face are greater than we anticipated,” observes Stephen Wood, a co-founder and partner with Clear View Solutions, LLC.

Within the small I-SNP market, five of the top 10 plans are sponsored by nursing home chains or other long-term care/skilled nursing providers. And providers that choose to sponsor I-SNPs can do so in several ways.

Of the companies that have consulted with Clear View on launching an I-SNP, about half have opted to work with so-called “aggregators,” or outside firms that may contribute private equity funding, share in the risk, handle licensing and other front-end pieces needed to launch a plan, or some combination of all three. Others opt to “go it alone,” says Wood.

Considering the upfront investment of starting an MA plan, the ongoing costs of operating one and the unknowns of reaching enrollment targets, potential I-SNP sponsors must look at this as a long-term investment, points out Wood. And the greatest financial challenges tend to fall on the administrative side, where plans are constrained by medical loss ratio requirements, adds actuary Kirk Twiss at Clear View. The biggest challenge, however, is getting enrollment, “and you need the economies of scale with bigger enrollment” to offset those costs, he points out.

Kentucky Medicaid Opens Bidding on RFP

June 20, 2019

The commonwealth of Kentucky said it will select up to five managed care organizations to serve more than 1.2 million Medicaid and CHIP enrollees starting on July 1, 2020. Potentially complicating that process, however, are two recent developments: (1) Evolent Health on May 29 unveiled plans to acquire a 70% interest in struggling incumbent Passport Health Plan, and (2) the RFP calls for interested bidders to support a controversial work requirement program even though it was struck down by a federal court in March.

By Lauren Flynn Kelly

The commonwealth of Kentucky said it will select up to five managed care organizations to serve more than 1.2 million Medicaid and CHIP enrollees starting on July 1, 2020. Potentially complicating that process, however, are two recent developments: (1) Evolent Health on May 29 unveiled plans to acquire a 70% interest in struggling incumbent Passport Health Plan, and (2) the RFP calls for interested bidders to support a controversial work requirement program even though it was struck down by a federal court in March.

Five MCOs currently serve the program. They are Aetna Inc., Anthem, Inc., CareSource, Passport Health Plan and WellCare Health Plans, Inc. With nearly 450,718 Medicaid and CHIP enrollees as of April 2019, WellCare has the biggest market share at 35%, according to AIS’s Directory of Health Plans.

“There are five slots with five incumbents and at least a couple of interlopers seeking to enter into the Kentucky market,” weighs in Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, via email. “Evolent has some history helping to run plans in Florida, but this is really a double-down on Kentucky given their previous exposure through Passport (i.e., extensive master services agreement whereby Evolent was really doing most of the non-clinical work for Passport anyway.)”

The RFP represents more than $7 billion in revenue, according to industry estimates. Proposals are due July 5 and even though a federal judge vacated federal approval of Kentucky HEALTH, which would have imposed work requirements, the document asks interested bidders how they will promote the goals of that program, “including methods for outreaching to and engaging Enrollees to seek community engagement activities and to take a more active role in their health.”

Awards are likely to be announced in the third quarter of 2019.

Outstanding Part D Proposals Created Uncertainty in 2020 Bid Process

June 10, 2019

Medicare Advantage and Part D plan sponsors submitting bids for the 2020 plan year faced a considerable amount of uncertainty compared with recent years. On the Part D side, there was “not only one but two pending regulations — both of which would have had a significant impact on bids — and it was difficult for carriers to know 1) how they should bid and 2) how others might be bidding,” observes Shelly Brandel, a principal and consulting actuary in the Milwaukee office of Milliman.

By Lauren Flynn Kelly

Medicare Advantage and Part D plan sponsors submitting bids for the 2020 plan year faced a considerable amount of uncertainty compared with recent years. On the Part D side, there was “not only one but two pending regulations — both of which would have had a significant impact on bids — and it was difficult for carriers to know 1) how they should bid and 2) how others might be bidding,” observes Shelly Brandel, a principal and consulting actuary in the Milwaukee office of Milliman.

Perhaps creating the most uncertainty was when HHS would finalize a January proposed rule that would eliminate safe-harbor protections for rebates paid by manufacturers to plan sponsors under Medicare Part D and Medicaid. CMS in Part D bidding guidance posted May 20 confirmed what it had hinted at in an April memo on how bids should be prepared: the rule would not be finalized before the June 3 bid deadline.

If the so-called rebate rule were to be effective Jan. 1, 2020, as HHS proposed, “I think carriers would want to have sufficient time to incorporate those requirements into their contracting for 2020, which obviously would be difficult the later that rule is released,” suggests Brandel.

Meanwhile, CMS on May 16 issued a final rule on MA and Part D drug pricing in which it did not follow through on a proposal to pass through pharmacy pricing concessions in the form of direct and indirect remuneration (DIR) fees to patients through reduced cost sharing. That gave Part D sponsors needed clarity on how pharmacy DIR should be reported in bids, says Brandel.

Humana Explores Strategies for Loneliness Interventions

May 28, 2019

In recent years, Humana Inc. has piloted loneliness interventions as part of its “Bold Goal” initiative. And two population health executives from the company tell AIS Health that addressing senior loneliness isn’t as simple as offering a one-size-fits-all benefit and that it takes time to first study and understand the impact and prevalence of loneliness in your own membership before developing strategies that will work for different people.

By Lauren Flynn Kelly

In recent years, Humana Inc. has piloted loneliness interventions as part of its “Bold Goal” initiative. And two population health executives from the company tell AIS Health that addressing senior loneliness isn’t as simple as offering a one-size-fits-all benefit and that it takes time to first study and understand the impact and prevalence of loneliness in your own membership before developing strategies that will work for different people.

Conducting its own research in partnership with the Robert Wood Johnson Foundation, Humana found that social isolation and loneliness ranked as the No. 1 most impactful social determinant of health as it relates to Healthy Days, a metric developed by the U.S. Centers for Disease Control and Prevention that Humana uses to track and measure population health.

According to Caraline Coats, vice president for Bold Goal and population health strategy with Humana, the insurer built a predictive model to determine where members are most lonely or severely lonely, where to deploy pilots in the most impactful way, and how to segment and target interventions at different groups.

Andrew Renda, M.D., corporate strategy director with Humana’s population health segment, says the insurer is encouraged by the early results of those interventions and as it evaluates how to expand them further or create others, has approached it in two ways:

(1) Looking for stand-alone interventions that it can pilot and scale up.

(2) Looking for ways to integrate loneliness strategies within its current clinical operating model.

Humana has also created public-facing tools to help educate patients and make it easier for physicians to implement loneliness screenings in their practices.