Medicare Advantage

*Among the ways by which ACHP advocates on behalf of our members is through comment letters. Read comment letters pertaining to Medicare Advantage and the Affordable Care Act.

As of March 2015, 31 percent of Medicare beneficiaries receive their Medicare benefits through a private health plan. Many ACHP members offer Medicare Advantage plans – in all, ACHP members enroll about 14 percent (nearly 2.4 million) of the 17.2 million Medicare Advantage members.

ACHP Medicare Advantage Plans Are Among the Highest-Quality Plans in the Nation

Building on Medicare’s Star Ratings that assess clinical quality, consumer satisfaction and regulatory compliance, the Medicare Advantage (MA) program “pays for performance” through a new system of quality incentive payments. CMS rates MA plans on a scale of one to five stars, with five stars representing the highest quality. These ratings provide Medicare beneficiaries with a tool to compare the quality of care and customer service that Medicare health plans offer, helping consumers make better health care choices. The ratings also are the basis for quality incentive payments.

Of 12 MA plans receiving 5 stars for the 2016 plan year, eight are ACHP members. ACHP organizations:

  • Enrolled nearly 93 percent of the beneficiaries in 5-star plans
  • Enrolled 40 percent of the beneficiaries in plans with 4.5 stars or better
  • Offered 4, 4.5 or 5 star plans in 18 states and the District of Columbia

Read more information on ACHP members’ performance on health care quality ratings:

For more information on the value of MA to beneficiaries, please see ACHP and the Medicare Advantage Value Proposition.

Medicare Advantage Benchmark Cap

The Problem: Rooted in a Contradiction between ACA Provisions

An unanticipated flaw in the Medicare Advantage (MA) benchmark calculation has a major negative effect on the quality improvement goals of the ACA. Congress created quality incentives for MA plans receiving 4 or more stars in the MA star ratings. These quality incentive payments (QIPs) must be used to enhance benefits to enrollees. At the same time, Congress imposed a cap on MA payment benchmarks which has been implemented in a way that affects many of the plans Congress (and HHS) most want to reward.

The effect of this provision – Sec. 1853(n)(4) of the Social Security Act – is to reduce or, in many places, entirely eliminate the quality incentive payments for MA plans. That’s because this provision has been implemented in a way that compares the pre-ACA benchmark calculation (without considering the quality incentives) to the post-ACA benchmark calculation with the quality incentives included – an apples-to-oranges comparison. Nowhere else in Medicare are quality incentives arbitrarily cut in this way. Across fee-for-service programs – even where there is a “budget neutrality” provision – quality payments are added after payment reductions.

The Impact on High Quality MA Plans

Quality incentive payments to health plans in half of all counties were limited by the benchmark cap in 2015 and 2016. In those counties most affected by the benchmark cap, a 5-star plan can be paid the same as a 3-star plan “down the street” – contrary to all notions of paying for value. This distorts beneficiary choice under the ACA’s MA reforms, which allow higher quality plans to offer additional benefits including better care management initiatives.

The quality incentive payments can also cycle on and off depending on factors totally outside a plan’s control and even if they have improved on prior performance – creating uncertainty for plans and a whipsaw effect on benefits and premiums. From 2015-17, in 186 counties the cap reduced QIPs in 2 of the 3 years; in 273 counties, the cap reduce QIPs in 1 of the 3 years.  As an example, the cap applied to San Mateo County, California (over 50,000 MA beneficiaries) in 2016 but not in 2015 or 2017.

The following are the quality incentive revenue losses in the top 10 affected states in 2016 (See this chart for estimated quality incentive payment impact by plan in all states):

  • Pennsylvania: $58.3M
  • Ohio: $53.1M
  • California: $35.5M
  • Michigan: $29.9M
  • Illinois: $27.4M
  • North Carolina: $25.2M
  • Wisconsin: $24M
  • Kentucky: $15M
  • Georgia: $14.8M
  • Indiana: $14.5M

These revenue losses mean fewer benefits and higher cost sharing for beneficiaries. As noted above, quality incentive payments must be used to enhance benefits, including the care management activities the Administration and lawmakers are seeking to promote.

Proposed Solution

ACHP recommends adjusting the benchmark cap calculation to reflect the quality incentive payments in both the pre-ACA and post-ACA computation. This would facilitate an apples-to-apples comparison of old and new benchmarks, retaining the cap while restoring quality payments to 4- and 5-star plans.

There is broad agreement on the problem from a policy perspective. MedPAC has proposed removing the benchmark cap, and the Administration has done the same in the President’s proposed budget. Our proposal is actually more modest. We are not proposing to eliminate or ignore the cap, only to protect quality incentive payments that otherwise fall under the cap.

Fixing the cap and restoring the quality payments also has bipartisan support on Capitol Hill. Republican and Democratic cosponsors from the House Ways and Means and Energy and Commerce Committees introduced H.R. 4275 to fix the benchmark cap. A section of House-passed H.R. 2570 expresses “Sense of the Congress” language that the Secretary of HHS has the authority to fix the cap.

A Health Affairs blog post, A Glitch In The Road to Pay-For-Performance, authored by Margaret O’Kane, president of the National Committee for Quality Assurance (NCQA), also provides an overview of the issue.

Telehealth in Medicare

ACHP members and many other health plans increasingly utilize telehealth (also referred to as remote access technologies) to provide clinical care and strengthen coordination of services across settings; these efforts are enhanced by our members’ reliance on an electronic medical record. Health plans are using electronic visits, video technology, and remote monitoring to provide maintenance and preventive care for their enrollees, as well as diagnosis and treatment when it is clinically appropriate. ACHP members are finding very high enrollee satisfaction with this approach and no degradation in the quality of care; in fact, remote technologies provide the opportunity for improvements in the quality of care because they increase the amount of interaction between the patient and health care team and the information available on the patient’s health status.

A combination of statutory and regulatory restrictions inhibit the use of these technologies in both the traditional Medicare program and in Medicare Advantage (MA). Currently, the use of remote access technologies is considered a mandatory supplemental benefit in MA. ACHP believes that telehealth technologies should be considered an alternative modality or complementary means of providing clinical services, and not a service itself. Telehealth is a different way of delivering an already covered service, whether that is a physician visit or preventive service. Most state Medicaid programs recognize that telehealth is a different way of delivering the covered service – not merely a supplement or complement to face-to-face encounters – so they provide some level of reimbursement for telehealth, particularly for real-time interactive video visits. Many states also require commercial health plans to provide reimbursement for services provided via telehealth, although not necessarily at parity with services provided in person.

For more information on telehealth, please see ACHP’s statement for the record to the House Ways and Means Committee (July 2014).

Chronic Care in Medicare Advantage

ACHP responded to a request from the Senate Finance Committee on what changes need to be made to Medicare to enable better and more efficient, lower cost care for beneficiaries with multiple chronic illnesses. Our comments focused on possible changes to the Medicare Advantage program. Read the letter here.