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Medicare Advantage rates, risk scores and the future of senior healthcare


Sometimes, in the midst of reporting the news day after day, you miss the proverbial Big Picture. It usually takes several stories centered on a common theme, along with some sort of memory trigger, before the lightbulb goes off and you figure out What It All Means.

My Eureka moment, as it were, came after seeing an NPR story on the growing number of False Claims Act lawsuits hitting Medicare Advantage (MA) plans. (FierceHealthPayer: AntiFraud will cover that story in greater depth later this week. If you don't already subscribe, you should.)

The point that matters for the sake of this discussion: Plans allegedly manipulate Medicare Advantage risk scores to boost their payments and have done so for years. In light of the recently announced Medicare Advantage rates for 2016, which tweak risk-scoring adjustments, this may get worse before it gets better.

MA plans can expect a 3.25 percent increase in average overall revenue in 2016, the Centers for Medicare & Medicaid Services (CMS) said, but revenue from risk model revisions is expected to drop 1.7 percent.

Taken at face value, this makes sense. CMS pays higher rates for sicker Medicare Advantage patients, presuming that their healthcare costs will exceed those of healthier patients. Since healthcare reform centers on promoting wellness as opposed to simply treating sickness, it stands to reason that merely treating sick patients without making them any better would no longer be reimbursed as highly.

The problem stems from the Medicare Advantage rate-setting process itself. Every year, CMS proposes a reimbursement rate. Every year, America's Health Insurance Plans (AHIP) and the payers they represent cry foul. Every year, CMS relents and sets a newer, higher rate.

There's nothing wrong with lobbying, mind you. You can't get very far in life without a bit of self-advocacy, after all.

However, a process as predictably adversarial as Medicare Advantage rate-setting doesn't lend itself to cooperation. Entities that get along aren't going to try to take advantage of each other. Entities that scowl at each other across the bargaining table--or, worse, "negotiate" primarily through written statements or press conferences--will seek whatever advantage they can get. Health risk is largely subjective, which makes it an easy target for anyone who feels slighted about years of, say, lower-than-desired reimbursement rates.

The aforementioned Big Picture here isn't that insurance companies don't always do the most righteous thing. They aren't the only ones at fault, either. As FierceHealthPayer: AntiFraud reported last year, CMS hasn't exactly been vigilant in pursuing allegations of risk score fraud.

Rather, it's that the process of setting the MA payment rate--along with the far more controversial sustainable growth rate (SGR)--essentially boils down to who blinks first. That's no way to negotiate. With billions of dollars at stake, not to mention the lives of millions of Americans, it even smacks of immaturity.

I know the process has to start somewhere, and CMS is probably a bit better suited to propose a rate than, say, AHIP. (Something about the fox guarding the henhouse.) What It All Means, then, is that we need a dialogue--not name-calling, shouting and press-release-releasing--about how we expect to reimburse payers and providers for the increasingly complex care they give to the growing population of seniors in the United States.

AHIP CEO Karen Ignagni said as much in her statement following the MA rate announcement: "The lack of action to address policy concerns around providing care for the chronically ill and vulnerable populations could undermine health plans' efforts to address the needs of these beneficiaries."

Such a dialogue takes on added importance as the Department of Health and Human Services pursues its ambition of expedited value-based Medicare payments. Risk scores, the SGR and accountable care all need to part of that conversation--and soon.

That conversation will never start if everyone keeps staring across the table without actually saying anything. - Brian (@Brian_Eastwood and @HealthPayer

Related Articles:
CMS increases Medicare Advantage payments, reverses February proposal
CMS proposes slight decrease in Medicare Advantage rates for 2016
Feds speed plans for value-based payments
DOJ investigating Humana's Medicare Advantage billing process
The Medicare Advantage risk score debacle