Radar on Medicare Advantage

CMS Finally Phases Out RAPS Data With Early Release of 2022 Advance Notice

September 22, 2020

In a surprise move aimed at giving some clarity to Medicare Advantage and Part D plans already thinking about their 2022 plan bids, CMS on Sept. 14 released Part 1 of the 2022 Advance Notice. But the items in the notice were largely expected — including the final phaseout of legacy Risk Adjustment Processing System (RAPS) data in determining risk scores — and key information is still forthcoming.

The second part of the notice, which contains planned changes to the MA capitation rate methodology and other risk adjustment methodologies and usually posts in early February, may come out in the fall in order to accommodate an early final rate notice release of mid-January 2021, CMS said in the Sept. 14 document. CMS is statutorily required to post the final rate notice for the coming calendar year by early April.

By Lauren Flynn Kelly

In a surprise move aimed at giving some clarity to Medicare Advantage and Part D plans already thinking about their 2022 plan bids, CMS on Sept. 14 released Part 1 of the 2022 Advance Notice. But the items in the notice were largely expected — including the final phaseout of legacy Risk Adjustment Processing System (RAPS) data in determining risk scores — and key information is still forthcoming.

The second part of the notice, which contains planned changes to the MA capitation rate methodology and other risk adjustment methodologies and usually posts in early February, may come out in the fall in order to accommodate an early final rate notice release of mid-January 2021, CMS said in the Sept. 14 document. CMS is statutorily required to post the final rate notice for the coming calendar year by early April.

However, CMS this year is considering moving up the entire timeline given the uncertainty associated with the COVID-19 pandemic.

The 21st Century Cures Act required that CMS phase in changes to risk adjustment payments over a three-year period, starting in 2019 with full implementation by 2022. As such, CMS plans to fully phase in the 2020 CMS-Hierarchical Condition Categories (HCC) risk adjustment model, which means the expected discontinuation of RAPS data. To determine MA organizations’ risk-adjusted payments for 2021, CMS used a blended calculation composed of 75% of risk scores based on the HCC model from 2020 and 25% of risk scores based on the 2017 model.

For 2022, CMS would cease using a blend of encounter and RAPS data and move to basing 100% of the risk score on diagnoses from MA encounter data and fee-for-service claims, according to the notice.

“There were no surprises in Part 1, which has only small impact on the net payment update for MA plans in 2022,” observed securities analyst Michael Newshel in a research note from Evercore ISI. Part 2 “will have more important details to put together the full build-up of proposed payment change.”

SVB Leerink viewed the early update as positive, “chiefly given CMS’ projection of the net effect on payments to MAO,” wrote securities analyst Stephen Tanal. “Although the transition to the newer risk model and 100% encounter data was expected, we do not believe that its impact was widely understood.”

CMS Needs to Tweak Medicare Advantage Data System for Oversight, OIG Report Says

September 8, 2020

In its latest review of the Encounter Data System (EDS) that is used largely to determine Medicare Advantage plan payments, the HHS Office of Inspector General (OIG) urged CMS for the second time to incorporate National Provider Identifiers (NPIs) into its collection of data from MA organizations. Despite their potential to improve program integrity in certain fraud-prone areas, NPIs for ordering providers are still not required in encounter data submissions and continue to be “largely missing” from records submitted by MAOs, observed the new OIG report.

By Lauren Flynn Kelly

In its latest review of the Encounter Data System (EDS) that is used largely to determine Medicare Advantage plan payments, the HHS Office of Inspector General (OIG) urged CMS for the second time to incorporate National Provider Identifiers (NPIs) into its collection of data from MA organizations. Despite their potential to improve program integrity in certain fraud-prone areas, NPIs for ordering providers are still not required in encounter data submissions and continue to be “largely missing” from records submitted by MAOs, observed the new OIG report.

In the August issue brief, “CMS’s Encounter Data Lack Essential Information that Medicare Advantage Organizations Have the Ability to Collect,” OIG explained that a prior analysis of the EDS found that ordering provider NPIs were missing from 63% of records for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS); clinical laboratory services; imaging services; and home health services for MA enrollees.

In its recent analysis of 2018 MA encounter data from CMS’s Integrated Data Repository, OIG found that encounter data continued to lack ordering provider NPIs on records for DMEPOS, laboratory, imaging, and home health services. And although nearly all MAOs have data systems that can receive and store these NPIs when they are submitted on claims or encounter records, CMS requires NPIs for ordering providers on DMEPOS, etc., only in Medicare fee for service and not in MA, pointed out OIG.

Anne Crawford, senior vice president of compliance solutions with ATTAC Consulting Group, says she’s surprised that NPIs for referring providers of DMEPOS and other fraud-prone areas are still not a required component of EDS submissions.

Given that nearly half of OIG’s MAO sample said they’re receiving the NPIs but not submitting them because it’s not required, Crawford says adding a requirement should not create a major hassle for plans.

However, the timing of CMS implementation depends on a few factors, she points out. How long it would take CMS to reconfigure the EDS to include a field for NPIs is one question. Moreover, CMS has just implemented new audit protocols for 2020 and received comments on the 2021 protocols, so the agency “may be trying to weigh how much IT changes an organization can handle,” she suggests.

Major MCOs Report Strong 2Q Gains in Medicare Advantage

September 1, 2020

While second-quarter 2020 earnings calls centered largely on uncertainty related to the COVID-19 pandemic, insurers with a large Medicare Advantage presence expressed satisfaction in membership growth so far this year and confidence in their positioning for the 2021 Annual Election Period (AEP).

Reporting second quarter earnings on Aug. 5, Humana Inc. exceeded analysts’ expectations with adjusted earnings per share (EPS) of $12.56 and other metrics that it attributed to customers delaying care due to stay-at-home orders and pandemic-related concerns.

By Lauren Flynn Kelly

While second-quarter 2020 earnings calls centered largely on uncertainty related to the COVID-19 pandemic, insurers with a large Medicare Advantage presence expressed satisfaction in membership growth so far this year and confidence in their positioning for the 2021 Annual Election Period (AEP).

Reporting second quarter earnings on Aug. 5, Humana Inc. exceeded analysts’ expectations with adjusted earnings per share (EPS) of $12.56 and other metrics that it attributed to customers delaying care due to stay-at-home orders and pandemic-related concerns.

Similar to other insurers, the company saw utilization drop by about 30% during the second half of March and into April, followed by a slight rebound in June. The insurer’s medical loss ratio (MLR) for the quarter was 76.4%, compared with 84.4% in the second quarter of 2019.

Humana also reported an 11% increase in individual MA membership to 3.88 million as of June 30, with individual MA premiums rising 20% to $13 million.

Reporting adjusted EPS of $2.64, up 40% from $1.89 in the second quarter of 2019, CVS Health Corp. on Aug. 5 attributed earnings growth to the impact of pandemic-related care deferrals on its Health Care Benefits segment, which includes Aetna. MLR hit 70.3% for the second quarter of 2020, compared with 84.0% in the second quarter of 2019.

Aetna reported that its commercial membership declined 2% from the prior-year period. Offsetting those declines was the “continued success of Medicare Advantage, which grew membership 2.6% sequentially,” Chief Financial Officer Eva Boratto stated during an Aug. 5 earnings call.

Cigna Corp. on July 30 delivered adjusted EPS of $5.81 for the quarter, compared with $4.30 for the comparable 2019 quarter, and consolidated revenue of $39.2 billion. Cigna President and CEO David Cordani said that the company anticipates “another year of attractive customer growth” for MA. Cigna had set a goal of increasing its MA enrollment by 10% to 15% this year and is “tracking well to that objective,” he said.

Lastly, market leader UnitedHealth Group on July 15 reported adjusted net EPS of $7.12, far exceeding analysts’ expectations of $5.28. MA membership as of June 30 was 5.6 million, up 0.5% from 5.57 million in the first quarter of 2020 and up 8% from 5.27 million in the second quarter of 2019.

E-Brokers Are Expected to Grow in Medicare AEP Amid COVID

August 24, 2020

As Medicare Advantage organizations prepare to promote their 2021 offerings this fall with no new guidance from CMS on marketing during a pandemic, plans and their broker partners are proceeding as though the safest approach is through digital and telephonic channels. One area that may see more growth than expected is the online broker space, experts say.

A website sponsored by an e-broker (also referred to as an electronic marketing organization, or EMO) contracts with a handful of insurers in a specific market and trains agents on the finer points of those carriers’ products, and the agents earn a per-enrollee commission. How consumers end up on an e-broker’s site varies.

By Lauren Flynn Kelly

As Medicare Advantage organizations prepare to promote their 2021 offerings this fall with no new guidance from CMS on marketing during a pandemic, plans and their broker partners are proceeding as though the safest approach is through digital and telephonic channels. One area that may see more growth than expected is the online broker space, experts say.

A website sponsored by an e-broker (also referred to as an electronic marketing organization, or EMO) contracts with a handful of insurers in a specific market and trains agents on the finer points of those carriers’ products, and the agents earn a per-enrollee commission. How consumers end up on an e-broker’s site varies.

“COVID forced telemedicine to grow three years in three months, and COVID is going to force more sophisticated, more consumer-friendly retail type experiences for digital purchasing of Medicare Advantage,” predicts Lindsay Resnick, executive vice president with Wunderman Thompson Health. “I think you’re going to see more uptake than we’ve seen in past AEPs,” he says, referring to the 2021 Annual Election Period that begins on Oct. 15.

Although many seniors now have a higher comfort level with online channels, it remains to be seen how much switching MA beneficiaries will be doing, given economic and other uncertainties created by the COVID-19 pandemic, suggests Resnick.

Meanwhile, the pandemic has large EMOs like eHealth, GoHealth and SelectQuote banking on increased traffic this fall. For the 2020 calendar year, eHealth expects 37% of its Medicare major medical plan enrollments to be completed online, compared with 27% the year before, according to CEO Scott Flanders.

Another option in the EMO space is GoHealth. In an email to AIS Health, Chief Marketing Officer Jarret DiToro says GoHealth seeks to differentiate itself by “taking a customer-first, carrier agnostic approach.” This means it operates on a “customer Life Time Value basis” and strives to place customers in their best-fit plan.

Cary Badger, principal with HealthScape Advisors, says he’s had numerous engagements with plan clients this year on the use of e-brokers, and he recommends they view it as “an incremental augmentation” of their overall distribution strategy and ensure a balance that includes a strong direct-to-consumer platform.

Missouri Voters Approve Medicaid Expansion

August 10, 2020

Missouri voters on Aug. 4 approved a constitutional amendment to expand Medicaid coverage, reflecting a trend of ballot-driven expansion initiatives in recent years that has been accelerated by the COVID-19 pandemic.

Jerry Vitti, founder and CEO of Healthcare Financial, Inc., says he wasn’t surprised by the outcome “given that COVID is surging in Missouri and other states — I think that really argues well for states that have left it to the people via referendum.”

By Lauren Flynn Kelly

Missouri voters on Aug. 4 approved a constitutional amendment to expand Medicaid coverage, reflecting a trend of ballot-driven expansion initiatives in recent years that has been accelerated by the COVID-19 pandemic.

Jerry Vitti, founder and CEO of Healthcare Financial, Inc., says he wasn’t surprised by the outcome “given that COVID is surging in Missouri and other states — I think that really argues well for states that have left it to the people via referendum.”

“In the context of COVID, you see the nonexpansion states getting hit really hard,” he continues. “And I think it accelerates the impulse to expand coverage because, first of all, it’s good for people, period. And folks with underlying conditions, social conditions and disparities are the most vulnerable, so with the spread of COVID there should be the realization that coverage is more important than ever.”

Katherine Hempstead, Ph.D., a senior policy adviser with the Robert Wood Johnson Foundation, suggests that the pandemic has altered public opinion more favorably toward expanding Medicaid.

Moreover, the political sentiment that Medicaid isn’t an acceptable long-term solution to covering “able-bodied” adults “has been slowly eroded over time, and I think these ballot measures are showing that even in states that are pretty conservative, that’s not a majority view,” continues Hempstead.

Absent ballot measures, however, how will states proceed? “Of the states that are left, I would be shocked if we’d get a legislative expansion of Medicaid during COVID.…[W]hen you’re trying to close massive budget gaps, that 10% of the cost [that states must bear] is still a lot of money in real terms, particularly when you’re looking at more and more people eligible for Medicaid expansion if the economic effects of COVID drag on,” weighs in Chris Sloan, an associate principal with Avalere Health.

While providers are typically part of any major push for Medicaid expansion in a state, federal legislation allowing them to be reimbursed at Medicare rates for providing COVID-related care to uninsured individuals essentially “blunts what could have been a bigger push from providers,” he suggests.

“It takes time and effort to get expansion on the ballot,” and not all states have the mechanisms in place to allow for ballot measures, Sloan says.