Medicare Watch

New Guidance on State Option to Put Dual-Eligibles Into Managed Care

Last week, the Medicare-Medicaid Coordination Office and the Center for Medicare, parts of the Centers for Medicare & Medicaid Services (CMS), released more detailed guidance to private insurance plan sponsors about the capitated financial alignment demonstration. This demonstration attempts to integrate financing and care for dually eligible individuals, or people with both Medicare and Medicaid. Under this demonstration, which was initially announced in July 2011, interested private insurance plans will enter into three-way contracts with federal and state governments. Those dual-eligibles subject to the demonstration will receive both Medicare and Medicaid coverage from private plans, including for long-term care services and supports. The demonstration is required to produce reduced Medicare and Medicaid spending, without adversely affecting—and ideally improving—the quality of care that dual-eligibles receive.

The memo generally describes how CMS and states will determine prospective capitated payments, as well as the adequacy of plans’ provider networks. In addition, the memo includes timelines for both the approval of state demonstrations and the selection of participating plans. CMS anticipates that for this demonstration, beneficiaries who are affected will have effective plan enrollment dates of January 1, 2013. As a result, many key deadlines will occur in 2012: states will have to submit their demonstration proposals, insurance plans will have to submit their letters of intent and plan models, and CMS will have to review and approve both. The memo also sets forth key programmatic area requirements, explaining existing federal requirements for plans under Medicare and Medicaid, as well as pre-established or preferred requirements for the new demonstration. Many of the requirements under the demonstration are hybrids of the existing Medicare and Medicaid requirements, though some will be negotiated through the CMS approval process.

According to the memo, 26 states are still exploring the capitated financial alignment demonstration.

Read CMS’ guidance to “Organizations Interested in Offering Capitated Financial Alignment Demonstration Plans.”

Medicare Advantage Plans Overpaid by Billions

According to a new report released by the General Accountability Office (GAO), the federal government overpaid Medicare private plans, also known as Medicare Advantage (MA) plans, by an estimated $3.1 billion in 2010 alone. The GAO found that MA plans categorize beneficiaries as less healthy than they would be categorized if they were enrolled in Original Medicare. The Centers for Medicare & Medicaid Services (CMS) pays MA plans higher rates for beneficiaries that are in poorer health. As a result, these classifications have resulted in higher reimbursements to MA plans.

CMS determines physician payment rates under Original Medicare and payments to MA plans based on a risk score for each beneficiary enrolled. CMS calculates these risk scores by examining beneficiary diagnostic codes included in Original Medicare claims or submitted by MA plans. Sicker beneficiaries have higher risk scores. The GAO found a significant difference in the codes used by Original Medicare compared to MA plans. MA plans include more diagnostic codes in their claims than Original Medicare does. As a result, certain beneficiaries enrolled in MA plans appear less healthy. According to the GAO, risk scores for beneficiaries in MA plans were around 4.8 to 7.1 percent higher than they would be if the same beneficiaries were enrolled in Original Medicare. The GAO states that risk scores should be the same for beneficiaries with the same characteristics across the Medicare program, regardless of whether they are enrolled in an MA plan or have Original Medicare. To prevent future overpayments, the GAO recommends that CMS continue to adjust risk scores to better reflect coding differences between MA plans and Original Medicare.

Read the GAO report, “CMS Should Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding Practices.”

 

Medicare Reminder

Every winter, some people with Medicare discover that their Medicare private drug plans will no longer cover a medicine they need. People who are affected include members of drug plans that dropped medications from their list of covered drugs in 2012 or imposed new restrictions on a covered drug for the new year.

Every Medicare prescription drug plan must have a transition policy. Transition policies ensure that new members have uninterrupted access to medications they were taking before they joined the plan, and that existing plan members do not experience interruptions in drug therapy when their plan imposes new coverage restrictions or changes the list of covered drugs. Transition policies are effective for the first 90 days that you are enrolled in the new plan, or the first 90 days of the calendar year if you are an existing member. Transition policies require that plans cover at least one 30-day supply of drugs that are not on the plan’s list of covered drugs, or that have restrictions on them, such as step therapy or prior authorization.

When you use your transition fill, your plan must send you a written notice within three business days informing you that the supply was temporary. The transition fill gives beneficiaries enough time to ask their doctors to switch their prescription to a drug that is covered by the plan. If that is not clinically appropriate, the transition fill should give beneficiaries enough time to appeal the plan’s denial.

Learn more about the rules for transition fills and your right to appeal a drug coverage denial at www.medicareinteractive.org.

Spotlight

This week, Medicare Rights joined five other aging advocacy groups in filing a friend of the court brief with the Supreme Court. The brief argues that the Affordable Care Act (ACA) contains numerous provisions designed to improve the health of Americans aged 65 and older, and that the implementation of these provisions should continue regardless of the Court’s decision on other parts of the ACA.

Read the press release about the amicus brief.