AHL’s TOP STORY: CMS Replaces 2.2% Payment Cut With 3.3% Increase for Medicare Advantage Plans

The Obama administration on Monday announced that it is rescinding a proposed 2.2% cut in federal payments to Medicare Advantage plans and instead will revise its reimbursement calculation method to increase payments by 3.3%, the Washington Post reports (Somashekhar, Washington Post, 4/1).

POLL: Will Proposed Medicare Advantage Cuts Grossly Effect Beneficiaries, Insurers?

CMS last week announced a proposed rule that would cut payments to Medicare Advantage plans by 2.2% next year. The changes would amount to an $11 billion payment cut, according to America’s Health Insurance Plans.

BACK AND FORTH: Is the Medicare Advantage Bonus Payment Project Producing Meaningful Results?

A federal demonstration program created under the Affordable Care Act that provides quality bonus payments to Medicare Advantage plans could be effective in improving quality of care while reducing overpayments, according to a pair of analyses.

AHL’s TOP STORY: More Highly Rated MA, Part D Plans Offered in 2013; Premiums Expected To Increase Slightly

With Medicare’s open enrollment period beginning Monday, the number of private Medicare Advantage plans with four- or five-star quality ratings available to beneficiaries in 2013 will increase to 127, up from 106 in 2012, CMS announced Friday, Modern Healthcare’s “Window to Washington” reports (Zigmond, “Window to Washington,” Modern Healthcare, 10/12).

Previewing the Vice Presidential Debate

Juliette Mullin and Dan Diamond of The Daily Briefing look ahead to tonight’s debate between Vice President Biden and House Budget Committee Chair Paul Ryan (R-Wis.), GOP presidential nominee Mitt Romney’s running mate:

After President Obama’s widely criticized performance during last week’s presidential debate, pundits expect to see an aggressive Biden tonight—and it’s unlikely they’ll be disappointed. The vice president’s top targets are expected to include the GOP’s Medicare plan and severalinaccurate statements made by Romney, such as the candidate’s claim that his health care plan would guarantee coverage for Americans with pre-existing conditions.

Meanwhile, GOP vice presidential nominee Paul Ryan will be looking to build on GOP presidential nominee Mitt Romney’s strong debate performance last week. The House Budget Committee Chair also is expected to defend his controversial health proposals.

For the rest of the story, including five things to watch out for, click here.

AHL’s TOP STORY: HHS Finds Disparities Among Medicare Advantage Plans in Fraud Detection

The HHS Office of Inspector General has found wide differences in how Medicare Advantage plans “defined and detected potential fraud,” which could affect their ability to mitigate such problems, Modern Healthcare reports. HHS OIG found that in 2009, three of 170 MA plans identified 95% of the 1.4 million reported incidents of suspected fraud and abuse.

CMS requires MA plans to launch “inquiries and corrective actions” in some cases, but OIG investigators found that not all plans took such actions when they detected potential fraudulent activity.

THE FRIDAY RUNDOWN: ‘Doc Fix’ Done, Moving On

On Friday, the House voted 293-132 and the Senate voted 60-36 to approve legislation (HR 3630) that would extend the payroll tax cut, continue unemployment benefits and delay scheduled cuts to Medicare physician reimbursement rates.

The Blog Line

Included are recent blog postings related to the medical loss ratio, drug development and Medicare Advantage overpayments.

THE BLOG LINE: Medicare in the Mix

So we found out today that in 2011, the 11.3 million U.S. residents who are enrolled in private Medicare Advantage plans can expect to pay on average about 1% less for their premiums. According to the New York Times, this news from CMS Administrator Donald Berwick was unexpected because some lawmakers and health policy experts actually had predicted an increase in MA premium rates. Medicare officials said they were able to negotiate with insurers using new powers provided by the federal health reform law.

Austin Frakt of “The Incidental Economist” believes the officials are making it sound simpler than it really was. “Negotiating,” he writes, “is not a magic process. You can’t just ‘negotiate’ your way to whatever you want. To reach an outcome to your liking via negotiation you need some leverage. There must be something the opposition wants that you can provide. That is, there is some reason why MA plans want to remain in the program and in the good graces of the Administration.” Frakt writes, “The reason … has to do with money.”

Still on the topic of Medicare, the Washington Post‘s Ezra Klein discusses the role of the popular health care entitlement program in efforts to balance the federal budget in comparison with Social Security. He notes that “Social Security is a program of cash transfers to America’s elderly” and its “administrative costs are less than 1%,” whereas Medicare “is a program that purchases health care services on behalf of America’s elderly.” According to Klein, Medicare should be cut first to balance the budget because it is “the primary contributor to our fiscal problem (though really, the entire health care sector is).” He continues, “Washington doesn’t want to face up to this reality because it’s still exhausted from 2010’s health care reform fight, which focused mainly on coverage and contented itself with making a start on costs.”

by Santosh Rao, senior writer

---

What’s the most-important health care news of the day? Subscribers to First Look find out by 8:30 a.m. ET. Start every morning with First Look, American Health Line’s free roundup of the key policy, strategic and clinical developments shaping health care. See a sample issue or subscribe by clicking HERE.

MEDICARE ADVANTAGE: Half of Beneficiaries Enrolled in Lower-Rated Plans

Nearly half of Medicare Advantage beneficiaries are enrolled in plans that received medium-to-fair quality ratings, while just 23% have plans of very good to excellent quality, according to a report released Thursday by Avalere Health, the AP/San Francisco Chronicle reports (Alonso-Zaldivar, AP/San Francisco Chronicle, 4/29).

For the analysis, Avalere compared MA enrollment data with CMS’ 2010 Part C Report Card, which assigns “star” ratings for quality (CQ HealthBeat, 4/29). The rating system is based on several factors, including customer service, prevention and care for chronic conditions (AP/San Francisco Chronicle, 4/29). Five stars is the highest rating.

The report found that about 47% of MA beneficiaries are enrolled in plans with ratings of three stars or below, while 38% are enrolled in plans with ratings of 3.5 stars or above (CQ HealthBeat, 4/29). Specifically, only 23% chose plans receiving the highest ratings of four or five stars. About one in four Medicare beneficiaries, or about 11 million U.S. residents, are enrolled in MA plans.

Robert Zirkelbach, a spokesperson for America’s Health Insurance Plans, did not question the results of Avalere’s study, but he did criticize CMS’ rating system. “Some of the criteria are not objective, meaning that health plans may not be able to move up in the ratings,” Zirkelbach said.

Change Under Overhaul Will Link Payments to Quality

Regardless of quality rating, MA plans receive payments that are on average 9% higher than traditional Medicare, the AP/Chronicle reports. The new health reform law cuts funding to MA plans beginning in 2011. Also, under the overhaul, MA plans that receive quality ratings of four stars or better will qualify for payment bonuses beginning in 2012.

“These ratings are about to become much more important,” Dan Mendelson, president of Avalere, said. He added, “When you start linking quality to payment, you can bet the plans are going to be very motivated to bring the scores up” (AP/San Francisco Chronicle, 4/29).

— Cassandra Blohowiak