Medicare Advantage Plans to Get More Subsidy, Drug
Plans Get Higher Deductible
CMS to pay 3.6% more to MA plans, drug deductible
goes to $295 from $275 in 2009
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complete Fact Sheet below news report.
April 9, 2008 – The subsidy paid by Medicare to
Medicare Advantage Plans will increase by 2.6% next year, despite
consistent opposition by advocacy groups and Democrats to this subsidy,
according to an a Fast Sheet published by the Centers for Medicare and
Medicaid Services on Monday. And, the drug plan providers also got a
small boost in the form of higher deductibles for prescription drug
plans next year.
CMS Says Payments to Medicare Advantage Plans Will
Increase by 3.6% in 2009
CMS on
Monday announced that average reimbursements to providers of private
Medicare Advantage plans will increase by 3.6% in 2009, the
AP/Houston
Chronicle reports. CMS, which increased average
reimbursements to sponsors of MA plans by 3.5% last year, previously
estimated an increase of 3.7% for next year.
Republicans want to cut Medicare, Medicaid;
Democrats want to expand VA health care, key report says traditional
Medicare more efficient than Medicare Advantage
The reimbursement rate will serve as a benchmark
against which MA plan providers offer services, rather than a final
payment rate. MA plan providers often offer services for less than the
benchmark because they can use a portion of the funds that remain to
provide additional benefits, such as vision and dental care, to help
increase enrollment.
About 22% of Medicare beneficiaries are enrolled in
MA plans.
UnitedHealth Group and
Humana are the largest providers of MA plans, with 14% and 13%
shares of the market, respectively (AP/Houston Chronicle, 4/7).
In addition, CMS announced that the deductible for
the Medicare prescription drug plans will increase to $295 in 2009 from
$275 this year and that the initial coverage limit will increase to
$2,700 from $2,510 (CQ
HealthBeat, 4/7).
Unions, Consumer Groups Seek Reduction in MA Plan
Reimbursements In related news,
AFL-CIO,
AFSCME,
Families USA and the
Medicare Rights Center on Thursday sent a letter to lawmakers that
requested a reduction in “excessive corporate subsidies” for MA plan
providers. Democrats in Congress since last year have sought to reduce
reimbursements for MA plan providers, which receive 13% more in payments
than the fee-for-service program for equivalent benefits.
Analysts said
that such a reduction is unlikely, as President Bush has said that he
would veto any legislation that decreased reimbursements for MA plan
providers (AP/Houston Chronicle, 4/7).
Forbes Examines Positions of Presidential
Candidates on MA The current issue of
Forbes examines how “one of the very few things” on which Democratic
presidential candidates Sens.
Hillary Rodham Clinton (N.Y.) and
Barack Obama (Ill.) and presumptive Republican presidential nominee
Sen.
John McCain (Ariz.) agree is that MA “has been an expensive
boondoggle” and “could face the scalpel of a new administration in
Washington.”
According to Forbes, privatization of Medicare “was once
championed as a decent idea for curbing health care inflation,” but
“opponents counter that the $95 billion budgeted annually for private
Medicare is $10 billion more than government-run Medicare would spend.”
Legislation to reduce reimbursements for MA plan providers has failed in
the past, but, “with a new president, that could change,” according to
Forbes (Whelan, Forbes, 4/21).
Fact Sheet - Centers for Medicare and Medicaid
Services
CMS Announces 2009 Medicare Advantage Payment
Rates and MA Part D Payment Updates
The Centers for Medicare & Medicaid Services (CMS)
today (Monday, April 7, 2008) released the Announcement of Calendar Year
(CY) 2009 Medicare Advantage (MA) Capitation Rates and MA and Part D
Payment Policies.
Audit Initiative for Coding Intensity
CMS is announcing a new audit initiative to
determine the accuracy of the diagnosis code information submitted to
CMS by MA plans. CMS will audit the medical records from a sample of
plans including those with high, medium, and low risk score differences.
As errors of coding are identified, CMS will reconcile payments to
correct for these errors at the plan level. CMS intends to begin the
reconciliation process by the end of calendar year 2008. The results of
these audits will also help CMS to establish whether differences in risk
scores between MA plans and fee-for-service (FFS) Medicare are
attributable to differences in coding patterns, and therefore, to
determine whether an adjustment to rates would be appropriate for 2010.
2009 Rate Increases
For MA plans, the aged and disabled capitation
rates will increase on average about 3.6 percent. This increase is
slightly lower than the estimated 3.7 percent Medicare growth trend for
2009. Individual counties may see different increases because CMS
rebased the FFS rates and recalibrated the CMS-HCC risk adjustment model
for 2009 (discussed below).
This fact sheet discusses the factors shaping
expected payment rate increases under Part C (original Medicare benefits
and related supplemental benefits offered by MA plans), followed by a
discussion of Part D payment policies.
Method for Calculating MA Payment Rates
The average 3.6 percent increase in MA rates is a
result of the following calculations CMS performs to determine the
capitation rates for 2009.
● Step one --to determine a 2009 minimum percentage
increase rate for each county, the 2008 Budget Neutrality (BN) factor of
1.0169 is backed out from the final 2008 rates.
● Step two -- the 2009 National Per Capita MA
Growth Percentage (also known as the “minimum percentage increase”)
(4.24 percent) is applied to the 2008 rates.
● Step three -- the 2009 BN factor (1.009) is
applied to the result of Step two.
National Per Capita MA Growth Percentage for 2009
The final estimate of the 2009 growth percentage is
4.24 percent for aged and disabled beneficiaries, which includes 3.74
percent for the 2009 underlying trend change and approximately 0.5
percent due to corrections to prior years’ estimates, as required by
law. The MA Growth Percentage is used to determine the minimum
percentage increase rate.
FFS Rates were Rebased
Rebasing the FFS rates means that CMS retabulates
the per capita FFS expenditures for each county so that the FFS rates
reflect more recent county growth trends in FFS expenditures. If a
county’s 2009 FFS rate is greater than its 2009 minimum percentage
increase rate, then the final 2009 capitation rate for that county is
the FFS rate.
Determination of County Rates
Because CMS rebased the FFS rates for 2009, we then
compare the county’s minimum percentage increase rate (see above) with
its FFS rate to determine which is larger.
Budget Neutrality Factor
Each final county rate is adjusted by a BN factor
of 1.009 for 2009. This factor is calculated as the estimated difference
for 2009 between payments to MA organizations at 100 percent of the
demographic rates and payments at 100 percent of the risk rates,
expressed as a percent of risk-adjusted payments. As required by the
Deficit Reduction Act of 2005, 2009 is the third of four phase-out
years; 25 percent of the total budget neutrality factor of 1.038 is
applied to the risk rates.
Normalization Factor
In addition to the factors above, which determine
the annual capitation rates, CMS must apply an additional adjustment
when calculating the payment amount for each beneficiary in a particular
plan. A “normalization factor” is applied as a downward adjustment to
beneficiary risk scores when calculating CMS’ monthly payment to plans.
Because average predicted FFS expenditures increase after the model
calibration year, CMS applies a normalization factor to adjust
beneficiaries’ risk scores so that the average risk score is 1.0 in any
particular year. The 2009 normalization factor for the CMS-HCC model is
1.030, and for the ESRD CMS-HCC dialysis model it is 1.019.
Relative Risk Factors in the CMS-HCC Risk
Adjustment Model were Recalibrated CMS used more recent FFS diagnosis
and claims data to update the relative risk factors in the CMS-HCC
model, which is used to produce risk scores for all Medicare
beneficiaries.
Changes in Medicare Part D Payment for Calendar
Year 2008
Calculation of the Low-Income Benchmark Premium
Amounts
On April 3,2008, CMS issued a final regulation,
“Modification to the Weighting Methodology Used to Calculate the
Low-income Benchmark Amount,” changing the method used to determine the
benchmarks for the low-income subsidy (LIS) (please cite the FR
reference). Benchmarks are the maximum amounts of a plan’s premium that
will be paid by the Federal government through the low-income subsidy.
Lower low-income subsidy benchmarks mean that there are fewer plans that
offer low or zero-premiums for low-income subsidy beneficiaries.
Currently, beneficiaries enrolled in prescription
drug plans no longer offering a zero-premium plan, and who have not made
an affirmative choice to change plans, are reassigned by Medicare to a
different prescription drug plan in their region that offers coverage
with no premium.
Under the final rule, the benchmarks will be
weighted on each plan’s share of low-income enrollees receiving the
low-income subsidy, rather than their share of total Part D enrollment.
This means plans with a greater number of low-income subsidy enrollees
will be a larger factor when CMS calculates the benchmark. This will
help to ensure that the premium subsidy amount better reflects the plans
in which low-income subsidy beneficiaries participate.
This change will likely increase many of the
benchmarks compared to the prior regulation and could allow nearly one
million Medicare beneficiaries with limited income and resources to
remain in the Medicare prescription drug plan in which they are enrolled
without having to pay a premium.
In the Advance Notice, CMS proposed to extend the
“Medicare Demonstration to Transition Enrollment of Low Income Subsidy
Beneficiaries” for contract year 2009 in order to reduce the number of
LIS reassignments. Given the regulation change noted above, CMS will
not extend the LIS transition demonstration to 2009.
Annual Updates to Medicare Part D Benefit
Parameters.
Every year CMS is required to update the statutory
parameters for the defined standard Part D prescription drug benefit.
The annual percentage increase in average per capita Part D spending
used to update the deductible, initial coverage limit, and out-of-pocket
threshold for the defined standard benefit for 2009 is 7.54 percent. The
annual percentage increase in the Consumer Price Index used to update
the 2009 maximum copayments below the out-of-pocket threshold for
certain dual eligible enrollees is 3.18 percent. The 2009 Part D benefit
parameters are provided in the table below.
Read
complete Fact Sheet below news report.