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Letter From CMS to Providers

Dear Health Care Professional:The new Medicare Part D prescription drug program is the single biggest change to Medicare since the program began 40 years ago and one which has been long overdue. But adding a benefit as significant as the new Medicare prescription drug program, which affects millions of individuals, involves some start-up challenges.

We’re writing today with the objective that, during this initial period, CMS and providers keep lines of communication open. Physicians may occasionally need to help a patient by filing a prior authorization for a medication or appeal a medication’s tier. We want to make it as easy as possible for you to help your Medicare patients, as well as to ensure that you get the support you need if questions arise. Here’s a brief glossary of terms that may assist you in working with your patient’s prescription drug plan:

Continue reading Letter From CMS to Providers…

Budget Neutrality Factor 101

Background on Payments for Medicare Advantage Plans

Medicare advantage plans are private managed care plans that offer typically offer benefits beyond traditional fee for service Medicare. Plan bids outline the benefit packages offered to an area and the beneficiary contributions, if any.

By law, CMS is required to publish the Medicare Advantage payment rates for each county, which are used to compute the benchmarks, in April of the preceding year. The Medicare Advantage payment rates are based on a formula that reflects costs in the fee-for-service program and other adjustments.. Actual payments to each plan are further adjusted based on the reported health status of plan enrollees – “risk adjustment” – so that plans who enroll beneficiaries with chronic illnesses receive increased payments reflecting their higher expected costs.

Figure 1: Risk Adjustment Calculations

The payments to Medicare Advantage plans are also adjusted by a “budget neutrality” factor that was implemented to prevent health plan payments from being reduced overall while, at the same time, directing higher, risk adjusted payments to those plans whose enrollees had more chronic diseases. Congress intended to move to a clinically based risk adjustment model but not reduce the overall payments to Medicare Advantage plans. Knowing that the transition would require stakeholders in the current system to make adjustments in how information is captured and reported they implemented a budget neutrality factor that would give back the “saving” that the government would have realized because of the inefficiencies in the current system of capturing and reporting diagnosis information.

Smaller Expected Costs of Medicare Advantage Payment Adjustments for Budget Neutrality

There has always been a phase-out of the budget neutrality adjustment. The phase-out will begin in 2007 and will be completed by 2011, when plans will receive no budget neutrality payment adjustment. The reason why the Medicare Actuaries now expect the budget neutrality adjustments to be less costly over the 5-year phase-out period is because newer data shows a much smaller difference in the reported health status between enrollees in Medicare Advantage and those in traditional Medicare. The adjusted phase out has accelerated the step down in the budget neutrality adjustment as indicated in the chart below:

In Summary

The basis for accelerating the phase out of the budget neutrality factor is a result of higher reported diagnosis scores for beneficiaries than originally expected. Those organizations who have implemented a risk adjustment program that identifies missing or mis-coded diagnosis scores stand to survive and thrive in the new Medicare market. Those who are not maximizing risk scores and are not reimbursed the dollars thay deserve will struggle and likely not survive.

Highlights From January 26 Region IX Stakeholder Call

Following is a brief overview of the stakeholder conference call lead by Jeff Flick today:

States On Track To Federal Part D Reimbursement – The Federal Government is moving to quickly provide a process to reimburse states who have stepped up to be the payer of last resort for duel Medicare beneficiaries who have had problems accessing the medications they need during the transition to Part D coverage. (Newsday.com Story)

Clarification On The First Fill Rule – According to CMS the first fill rule is applied to all new members regardless of when they enroll in the system. The rule is NOT applied to January 2006 only.

Managing Beneficiary Expectations – The letter of the MMA law states that a beneficiary can enroll in to a new plan on the 31^st of the month and receive the plan benefits on the first day of the next month, the next day in this case. New language is being drafted by CMS to help plans manage the expectations of beneficiaries who submit elections near the end of the month.

Pharmacy Exceptions Communication Challenge – Beneficiaries are not generally educated on their specific plan’s pharmaceutical exception and prior authorization process, resulting in confused, frustrated and at risk beneficiaries with out an understanding as to why they can not access their medications and how to resolve their problems. Plans are encouraged to reach out to their beneficiaries directly and through advocacy groups to help them sort through the challenge and resolve the conflict.

In the News…

WSJ article on Part D Enrollment

In this article The Wall Street Journal outlines the aggressive land grab going on right now in the Medicare marketplace as plans use Part D enrollment to capture new applicants and then attempt to migrate them to a full Medicare Advantage program.  Also, the article discusses AARP’s influence on the senior population and the success some plans are having with enrollment despite the challenges of implementation by CMS.

 WSJ Article 

Part D Conference Call Encore

On Tuesday, January 24, the Centers for Medicare and Medicaid Services hosted a call to discuss coverage of Medicare Part B drugs as it relates to Medicare Part D. Drugs excluded from coverage under Part D were also discussed. CMS provided an overview of the Medicare Parts B/D Issues (http://www.cms.hhs.gov/Pharmacy/) and followed by answering questions for over one hour. Due to the extension of the original conference call, the encore presentation will not be available until after 4:00 EST. To access the encore presentation, please call (888) 286-8010 passcode: 70165156. The encore presentation will be available through Sunday, January 29.

2006 Medicare Advantage Congress Kicks Off Today!

Look for news, updates and front row coverage of the 2006 Medicare Advantage Congress in Phoenix, AZ. If you get a chance find me and say hello. I will post updates from the breakouts and the event floor later today.

Can 2007 Institutionalized SNPs Survive?

Can 2007 Institutionalized SNPs Survive? 2006 Is the Year of the Medi-Medi SNP in the hopes of plans capturing as mant auto-assigned Part D enrollees at a low acquisition cost and then sign them up in to their duel-eligiable SNP. 2007 is the year of the institutionalized and chronic condition SNP…however will changes in the Long-Term Acute Care Reimbursment formula make this SNP a non-starter? The current proposed changes would reduce payments to Long-Term Acute Care Hospitals by 11.1% read on…

New Medicare Legislation Considered…

bipartisan group of at least five senators plans to sponsor legislation that would reimburse states that are covering the costs of drugs for Medicare beneficiaries who have had difficulty obtaining medications under the new Medicare drug benefit, AP/Long Island Newsday reports. The legislation — co-sponsored by Sens. Norm Coleman (R-Minn.), Dianne Feinstein (D-Calif.), Frank Lautenberg (D-N.J.), Charles Schumer (D-N.Y.) and Olympia Snowe (R-Maine) — would reimburse the states for 100% of their costs plus interest. In addition, the bill would require the HHS secretary to recover overpayments to Medicare drug plans and return the money to Medicare (Freking, AP/Long Island Newsday, 1/18). Lautenberg is expected to introduce the legislation (Campbell, Newark Star-Ledger, 1/19). Lautenberg said, “While there are many problems that need to be dealt with regarding the implementation of this drug plan, it is critical that we pay these states back as soon as possible” (AP/Long Island Newsday, 1/18). On Tuesday, CMS Administrator Mark McClellan said the government will not reimburse states covering the costs of beneficiaries’ prescriptions, adding that CMS does not have the authority to pay states directly. The Bush administration has instructed insurers offering Medicare drug plans to provide beneficiaries with a 30-day emergency supply of any drugs they were taking before the Medicare prescription drug benefit began Jan. 1. In addition, the administration said insurers must take steps to ensure that no low-income beneficiary is charged more than $2 for a generic drug and $5 for a brand-name drug. McClellan said the agency will assist state agencies in compiling and filing claims with Medicare drug plans (Kaiser Daily Health Policy Report, 1/18).

Source: Kaiser Foundation

CMS: Medicare Beneficiary Ombudsman’s Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) announces the establishment of the Medicare Beneficiary Ombudsman’s Open Door Forum (ODF). Daniel J. Schreiner, the Medicare Beneficiary Ombudsman, coordinates with CMS to oversee beneficiary concerns including appeals, complaints, grievances and requests for assistance.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), Section 923, , mandated the creation of the Medicare Beneficiary Ombudsman position to ensure that people with Medicare get the information and help they need to understand their Medicare options and to apply their rights and protections.

The Medicare Beneficiary Ombudsman’s ODF will provide an opportunity for beneficiaries, their caregivers and advocates to publicly interact with the Medicare Beneficiary Ombudsman to discuss issues and concerns regarding ways to improve the systems and processes within the Medicare program.

Each ODF will focus on one or two specific topics, at the Ombudsman’s discretion, based on issues that advocacy groups and others bring to his attention. CMS subject matter experts will participate in the ODFs to give status and engage in discussion on key issues, as appropriate.

To subscribe to the new ODF’s listserv, visit http://www.cms.hhs.gov/apps/mailinglists/default.asp?audience=4 and follow the instructions. Listserv subscribers will receive notifications of the first and subsequent Medicare Beneficiary Ombudsman’s ODFs and other communications from the Ombudsman.

For more information on the Medicare Beneficiary Ombudsman’s role and responsibilities, read the press release, CMS Hires Medicare Ombudsman Dan Schreiner to be “Voice” for Medicare Beneficiaries (March 22, 2005).