Radar on Medicare Advantage

Industry Groups Praise OIG Report on Medicare Part D Rebates

September 26, 2019

Industry trade groups that would like rebates preserved in the Medicare Part D purchasing system were thrilled to see a Sept. 13 report from the HHS Office of Inspector General that they viewed as dispelling the oft-purported “myth” that rebates are responsible for high drug prices.

The report examining the more than 1,510 brand-name drugs with Part D reimbursement and rebates between 2011 and 2015 found that rebates did not always go up when unit reimbursement grew.

By Lauren Flynn Kelly

Industry trade groups that would like rebates preserved in the Medicare Part D purchasing system were thrilled to see a Sept. 13 report from the HHS Office of Inspector General that they viewed as dispelling the oft-purported “myth” that rebates are responsible for high drug prices.

The report examining the more than 1,510 brand-name drugs with Part D reimbursement and rebates between 2011 and 2015 found that rebates did not always go up when unit reimbursement grew.

The report also observed that total rebates for brand-name drugs reviewed in Part D rose from $9 billion in 2011 to $17 billion in 2015, but the majority (60%) of that rebate growth was driven by only 10% of drugs. Furthermore, OIG said that while rebates substantially reduced overall Part D spending growth, “they did not prevent increased overall Part D spending…as Medicare still spent $2 billion more for brand-name drugs with rebates in 2015 than in 2011.”

America’s Health Insurance Plans issued a statement from President and CEO Matt Eyles: “This new HHS-OIG report…clearly demonstrates our effectiveness as a negotiator — and the rebates we secure for seniors in Part D lead to lower costs.”

The Pharmaceutical Care Management Association also praised the report for putting to rest “the false narrative about PBM-negotiated rebates” and confirming that rebates lead to lower prescription drug costs in Part D.

But one industry expert says he doesn’t think this will alter any possible government action on drug pricing and Part D.

“The OIG’s analysis is unfortunately a historical document — in that it only reports on changes in drug prices through 2015,” observes Avalere Health Founder Dan Mendelson. And while rebates are “an important market mechanism” for negotiating drug prices, rebates “alone won’t solve the consumer crisis of drug affordability,” he says.

New Medicare Advantage Codes, Supplemental Benefits May Improve Dementia Treatment

September 23, 2019

With the addition of two new codes to the Medicare Advantage risk adjustment payment system and expanding flexibility in MA benefit design, Alzheimer’s disease advocates are hopeful that such changes will lead to increased diagnoses, improved treatment and greater awareness of clinical trials for disease-modifying therapies.

Starting Jan. 1, 2020, CMS will incorporate into its risk score calculation for MA plans an alternative payment condition count model that includes additional Hierarchical Condition Category (HCC) codes for dementia: HCC51 — Dementia With Complications and HCC52 — Dementia Without Complications.

By Lauren Flynn Kelly

With the addition of two new codes to the Medicare Advantage risk adjustment payment system and expanding flexibility in MA benefit design, Alzheimer’s disease advocates are hopeful that such changes will lead to increased diagnoses, improved treatment and greater awareness of clinical trials for disease-modifying therapies.

Starting Jan. 1, 2020, CMS will incorporate into its risk score calculation for MA plans an alternative payment condition count model that includes additional Hierarchical Condition Category (HCC) codes for dementia: HCC51 — Dementia With Complications and HCC52 — Dementia Without Complications. Plans will therefore have a financial incentive to capture the appropriate diagnosis codes, and by assigning equal weights to the two codes, CMS has minimized the chance of upcoding, observes Catherine Murphy-Barron, a principal and consulting actuary with Milliman.

“I think anytime you add conditions to the HCC, obviously it gets a higher priority. From an MA-PD plan perspective, coding is crucially important to its success, and part of the challenge with dementia is that it’s not always coded,” Murphy-Barron points out.

John Dwyer, president and founding board member of the Global Alzheimer’s Platform, says his organization is hopeful that the availability of new MA supplemental benefits and the new risk adjustment codes will do more to raise awareness of dementia treatment options, including enrolling in clinical trials, since one of the biggest challenges with drug research and development is recruitment.

At the same time, MA organizations may be able to use newly expanded supplemental benefits to address brain health.

“Memory fitness programs are a largely undefined nonspecific clinical benefit that plans are starting to slowly roll out,” explains Dwyer. These could range from discounts to online “brain training” exercises that are incorporated into a fitness or overall wellness benefit to something more substantial that is dedicated to brain health.

Tech-Focused Medicare Advantage Startups Unveil Plans for 2020

September 9, 2019

Whether they are new to the insurance market altogether or got their start on the Affordable Care Act (ACA) exchanges, many insurance startups this fall are placing their bets on Medicare Advantage.

With MA enrollment increasing each year as a percentage of the overall Medicare program and the Trump administration’s continued efforts to bolster the MA program, the time is right for these startups to pursue the market, suggests Patrick Phillips, founder and CEO of Health care technology firm Cavulus.

By Lauren Flynn Kelly

Whether they are new to the insurance market altogether or got their start on the Affordable Care Act (ACA) exchanges, many insurance startups this fall are placing their bets on Medicare Advantage.

With MA enrollment increasing each year as a percentage of the overall Medicare program and the Trump administration’s continued efforts to bolster the MA program, the time is right for these startups to pursue the market, suggests Patrick Phillips, founder and CEO of Health care technology firm Cavulus.

Some advantages these plans have over longstanding MA insurers that typically operate multiple lines of business is “they don’t have a health plan culture to overcome” and can build their own technological infrastructure from scratch to avoid gaps in operations and member touchpoints that are often created by legacy systems, Phillips adds.

Orange, Calif.-based Alignment Healthcare has remained solely committed to the MA population since it was founded and has spent the last several years building a “connected care model” that relies on technology to help improve senior care.

For example, the proprietary artificial intelligence (AI)-powered “command center,” Alignment Virtual Application (AVA), aggregates data from disparate sources every 30 minutes to catch key health indicators and triage members.

Alignment on Aug. 20 unveiled plans to double its geographic footprint and the number of plans it offers in Northern California this coming Annual Election Period.

Meanwhile, new entrant Zing Health aims to launch a physician-led MA plan in Cook County, Ill., with a focus on underserved populations and using local resources and technology to impact social determinants of health.

Zing is also working on ways to digitally support its community-based “local field care teams” that will be embedded at partner hospitals, community health centers and other locations where members receive care.

Major Insurers Project Medicare Advantage Enrollment Growth in 2019

August 28, 2019

Aetna Inc. and Humana Inc. in recent weeks posted second-quarter 2019 earnings that were aided by substantial growth in their Medicare Advantage segments, while Cigna Corp. expressed confidence in its ability to grow that business in 2020.

CVS Health Corp. on Aug. 7 reported a 55% year-over-year increase in consolidated adjusted operating income to $4 billion, which it mainly attributed to the November 2018 addition of Aetna Inc. and growth of the pharmacy benefit manager.

By Lauren Flynn Kelly

Aetna Inc. and Humana Inc. in recent weeks posted second-quarter 2019 earnings that were aided by substantial growth in their Medicare Advantage segments, while Cigna Corp. expressed confidence in its ability to grow that business in 2020.

CVS Health Corp. on Aug. 7 reported a 55% year-over-year increase in consolidated adjusted operating income to $4 billion, which it mainly attributed to the November 2018 addition of Aetna Inc. and growth of the pharmacy benefit manager.

Aetna this year embarked on its largest MA service area expansion ever, and enrollment in its MA products increased by roughly 33,000 lives from the first quarter of 2019 to 2.26 million members as of June 30. That’s an increase of 30% from 1.73 million MA lives it reported in the year-ago quarter.

Meanwhile, Humana Inc. on July 31 said enrollment in its individual MA plans grew 15.1% from the year-ago quarter to 3.48 million lives as of June 30, 2019, and projected full-year enrollment growth of 16% for the highest individual MA membership increase in a decade.

Humana also updated its projection for an anticipated enrollment decline in its Prescription Drug Plan segment, and said it now expects to lose 700,000 members in 2019 compared to a previous estimate of 700,000 to 750,000 enrollees.

Cigna Corp. on Aug. 1 raised its full-year EPS guidance by 25 cents to 35 cents to a range of $16.60 to $16.90 per share, representing growth of 17% to 19% over 2018. Cigna Corp. President and CEO David Cordani during an Aug. 1 conference call highlighted the “tremendous growth opportunity” in MA for 2020 and said the company expects to achieve between 10% and 15% average annual growth in its MA membership.

CMS Updates Medicare Marketing Guidelines, Opening Additional Doors to Plan Sponsors

August 19, 2019

CMS’s newly updated Medicare Communications and Marketing Guidelines (MCMG) contain multiple flexibilities that were previously unavailable to plan sponsors. These include a loosening of rules around co-branding, educational events and marketing of rewards and incentives programs (RI programs), as well as the ability to operate a call center dedicated to prospective enrollees.

By Lauren Flynn Kelly

CMS’s newly updated Medicare Communications and Marketing Guidelines (MCMG) contain multiple flexibilities that were previously unavailable to plan sponsors. These include a loosening of rules around co-branding, educational events and marketing of rewards and incentives programs (RI programs), as well as the ability to operate a call center dedicated to prospective enrollees.

Although CMS at press time hadn’t posted a redlined version of the complete 2020 document, an Aug. 6 memorandum from the CMS Medicare Drug & Health Plan Contract Administration Group highlighted the various updates, including the deletions from 2019, and urged plans to cross-reference the memo with the existing MCMG.

“The deletions are more important than the insertions,” says Michael Adelberg, a principal with Faegre Baker Daniels Consulting and a former top CMS MA official. “Probably the most important deletion concerns the prohibition on holding back-to-back educational and marketing events. This seems to open the door to piggybacking marketing sessions on educational events.”

Last year’s MCMG expanded what can happen at educational events by allowing plan representatives to set up future marketing appointments and hand out business cards and contact information for beneficiaries to initiate communications. But by deleting the word “future” and the stipulation that representatives “may not conduct a marketing/sales event immediately following an educational event in the same general location,” it appears that CMS may allow plans to set up marketing appointments immediately after an educational event, says Kelli Back, a health care attorney in Washington, D.C.

Another example of important “deletions” is around RI programs, for which marketing no longer has to be done “in conjunction with information about plan benefits,” nor does it have to include information about all RI programs offered by the MA plan.