One Health Care Fix We All Can Agree on
In the wake of the election results, the list of unknowns and what ifs in the policy world just got a whole lot longer. That includes the future of international trade deals, tax policy and immigration. In health care, even the future of the 2010 Affordable Care Act is in doubt.
But one shining example of bipartisan agreement is the desire to move away from fee-for-service medicine to a value-based system. Rather than focus on the number of tests, scans, and medical procedures that can be ordered, the aim is to pay for better care instead of simply paying for more.
Policy makers took a promising step in that direction when they included quality incentive payments in the popular Medicare Advantage program. Now however, a glitch is causing unintended consequences for millions of seniors resulting in millions missing out on this patient-centered quality revolution.
Medicare Advantage, the program now enrolling more than 30 percent of seniors and other Medicare beneficiaries in private health insurance options, set about improving quality by offering extra payments to health plans receiving four or five stars in the 5-star rating system. Yet in some counties, a 5-star plan receives the same payment as a 3-star plan down the street.
Quality incentives were designed not only to encourage plans and doctors to deliver the best care, but also to improve overall benefits for the seniors they served. The law requires that every quality dollar awarded to a plan is returned to beneficiaries in the form of reduced premiums or increased services such as medication therapy management, case management, care coordination, and hospital readmission avoidance.
But due to the way the U.S. Department of Health and Human Services (HHS) has chosen to interpret the law, quality incentive payments for many of the highest-performing plans are constrained by another provision in the law, called the “benchmark cap.” When — contrary to the intended goals of the government — plans are denied the promised rewards to distinguish high-quality care, they also lose the ability to reinvest in enhanced service for beneficiaries in their communities.
Sadly, the real losers in this odd interpretation are America’s seniors. Millions, including more than 230,000 in California, nearly 40,000 in Oregon, more than 45,000 in Florida — and the list goes on and on — miss out on Medicare benefits and, as a result, incur higher-than-expected out-of-pocket costs. This translates to an estimated loss of hundreds of millions for our health plans and the enrollees they serve. Such resources would otherwise go directly to helping beneficiaries by lowering premiums or offering additional services such as dental coverage, transportation to and from doctors’ appointments, and gym memberships.
Among the many stories from Alliance of Community Health Plans members, UCare, based in Minnesota, withdrew its Medicare Advantage offerings in Wisconsin when the benchmark cap made it financially impossible to continue to provide services to the MA plan’s 7,000 enrollees.
In a letter to HHS Secretary Sylvia Matthews Burwell last month, Ucare CEO Jim Eppel noted that CMS’ narrow legal interpretation of the benchmark cap has caused serious consequences to seniors.
With more than half of the counties in Minnesota affected by the cap, there has been “significant revenue loss that could and should be used to enhance enrollee benefits and lower enrollee premiums and cost-sharing,” Eppel wrote. For its projected 2017 enrollment, the organization anticipates a loss of $14 million in revenue for its UCare for Seniors plan.
The benchmark cap has handed Security Health Plan of Wisconsin a $17.2 million loss in revenue to date; and the organization estimates it will take another $14.7 million hit in 2017. So instead of receiving a 5 percent bonus to reward quality, the 4.5-star plan is getting just slightly more than a 3-star would. Had the glitch been corrected for 2017, some of Security’s most vulnerable members could have seen as much as a $25 per month reduction in monthly premiums, adding up to more than $300 in annual savings.
Geisinger Health Plan of Pennsylvania saw a $19 million revenue loss this year, which translates to as much as $200 per member. For Group Health Cooperative of Washington state, the benchmark cap reduced revenue by more than $6 million in 2015 and 2016, and the plan anticipates an additional $6 million loss in 2017 — or $6.00 per member per month. It is important to note that these are nonprofit, community-based plans already operating on razor-thin margins.
The revenue loss for these plans and others translates to higher member premiums, fewer benefits and higher cost sharing for seniors.
Fortunately, there is bipartisan support in Washington to fix this problem, including a bill, H.R. 4275, introduced in the U.S. House of Representatives. Congress and the Administration need to address the issue before packing their bags for the holidays so that beneficiaries in high-quality 4- and 5-star Medicare Advantage plans are not deprived of benefits to which they are entitled under law.
By taking appropriate steps now, Medicare can meet the promise of a quality-based system nationwide.