Total Medicare Advantage impact equals nearly 5% in 2015

Several factors beyond the 45 day notice affect plan outlook

As of February, more than 30% of those eligible for Medicare are enrolled in a Medicare Advantage (MA) plan, but the market could become less friendly for private plan participation by this time next year.

While the industry was expecting 6% payment cuts or higher from the federal government for 2015, the 45-day advanced notice from the Centers for Medicare and Medicaid Services (CMS) seemed to indicate slightly lower reductions. Analysis reports ranged from -1.9% to more than -7% immediately after the notice was public.

Experts at Gorman Health Group have calculated an average -4.79% MA impact when all the 2015 factors are accounted for.

MHE asked the organization to suggest some options plans might have to absorb the total MA impact-other than increasing premiums or reducing pay to providers. Via email, Gorman Health Group says: “They can also improve their management of risk adjustment, although this must be done in a way that is compliant with CMS risk adjustment requirements. And, most significantly, they can improve the effectiveness of their care management programs to reduce the incidence of avoidable events, such as certain admissions and readmissions, surgery for conditions that respond well to more conservative treatment, patient monitoring for drug adherence and interactions, and similar programs.”

Bill MacBain, senior vice president of strategy, stressed that the percentage is an average and that many plans will see higher or lower impact. The factors that comprise the Gorman analysis include:

  • Trends described in the 45-day advanced notice;

  • Risk adjustment recalibration revisions;

  • Fee for service normalization;

  • Previously scheduled changes under the Affordable Care Act (ACA);

  • End of the star bonus demonstration;

  • Recalculation of county-specific FFS cost estimates;

  • Quartile reassignment;

  • ACA excise tax; and

  • Revised health risk assessment rules.

NEXT: Rule change you must weigh in on >>>


Rule change

One change potentially affecting plan’s earnings includes the proposed rule to disregard diagnoses obtained during home visits. CMS is concerned plans leverage home visits to document diagnoses for the purpose of gaining more favorable risk adjustment.

Assessments will need follow-up clinical encounters to support the codes, and the burden of proof is on the plan, MacBain says. MA plans should ensure that data from home visits is used to supplement other data for comprehensive management of risk-related medical conditions by providers.

Special Needs Plans in particular will need to incorporate the home risk assessments into their care models to establish a direct link between diagnosis and care management.

MacBain advises that health plans should weigh in on the home-visit rule before it becomes final. “Is there a problem, and how do you address it?” he says.

While the CMS advance notice is open for comment until March 7, final rules won’t be available until April 7. Send comments to: