The Future of Medicare: Medicare 101
April 22, 2022
This event was Part I of the Alliance’s The Future of Medicare series.
Download a summary of this event »
During this session, panelists reviewed the basic mechanisms and facets of Medicare. Panelists provided a high-level introduction to the benefit design of each program; reviewed the mechanisms used to determine payments to providers and health plans under each program; and explored the implications of Medicare payment policy for the delivery system and health care quality.
Speakers:
- Amy Bassano, MPP, Managing Director, Medicare, Health Management Associates
- Matt Kazan, MPP, Managing Director, Avalere
- James E. Mathews, Ph.D., Executive Director, Medicare Payment Advisory Commission (MedPAC)
- Arielle Mir, MPH, Vice President of Health Care (Complex Care), Arnold Ventures (moderator)
- Gretchen Jacobson, Ph.D., Vice President, Medicare, Commonwealth Fund (moderator)
This series was made possible with support from Arnold Ventures and the Commonwealth Fund.
Presentation: The Future of Medicare: Medicare 101
Event Resources
Key Resources
(listed chronologically, beginning with most recent)
“Enrollment in MA Plans with SSBCI Nearly Quadrupled Since 2020.” Fix, A., Neumann, A., Kazan, M. Avalere. April 6. 2022. Available here.
“March 2022 Report to the Congress: Medicare Payment Policy.” The Medicare Payment Advisory Commission (MedPAC). March 15, 2022. Available here.
“Taking Stock of Medicare Advantage Blog Series.” Jacobson, G., Mir, A., Socker, E. The Commonwealth Fund. February 17, 2022. Available here.
“Payment Basics.” The Medicare Payment Advisory Commission (MedPAC). November 2021. Available here.
“Podcast Episode 45: The Innovation Revolution with CMMI’s Deputy Director Amy Bassano.” Wedi. July 21, 2021. Available here.
“Health Policy Handbook, Chapter 2: Coverage.” Rawal, P., Whitlock, R. Alliance for Health Policy. July 20, 2021. Available here.
Additional Resources
(listed chronologically, beginning with most recent)
“Medicare Part B Drugs: Cost Implications for Beneficiaries in Traditional Medicare and Medicare Advantage.” Cubanski, J., Sroczynski, N., and Neuman, T. Kaiser Family Foundation. March 15, 2022. Available here.
“Medicare Advantage in 2022.” Capretta, J. American Enterprise Institute. March 1, 2022. Available here.
“CMS Redesigns Accountable Care Organization Model to Provide Better Care for People with Traditional Medicare.” Centers for Medicare and Medicaid Services. February 24, 2022. Available here.
“How and Why the Value Based Payment (Pay for Performance) Model is Trending in the Healthcare Industry.” Meola, A. Business Insider. February 26, 2021. Available here.
“Fact Sheet: Understanding Medicare Advantage.” Better Medicare Alliance. February 2022. Available here.
“CMS Equity Plan for Medicare.” Centers for Medicare and Medicaid Services. December 1, 2021. Available here.
“The Next Step in Medicare Reform.” Miller, B., Wilensky, G. The Heritage Foundation. September 16, 2020. Available here.
“Medicare Health Quality Measures Get Closer Look in Pandemic.” Reed, A. Bloomberg Law. September 7, 2021. Available here.
“Medicare Advantage in 2021: Star Risings and Bonuses.” Biniek, J., Freed, M., Damico, A., et al. Kaiser Family Foundation. June 21, 2021. Available here.
“Commonwealth Fund Task Force on Payment and Delivery System Reform.” The Commonwealth Fund. November 17, 2020. Available here.
“The Promise of Value-Based Health Care in a Pandemic.” Axelsen, K., Grinstead, J. American Enterprise Institute. July 21, 2020. Available here.
“Medicare Advantage.” Kaiser Family Foundation. June 6, 2019. Available here.
Experts
Panelists
Session 1: Medicare 101
Amy Bassano, M.A.
Managing Director of Medicare, Health Management Associates (HMA)
abassano@healthmanagement.com
Matt Kazan, MPP
Managing Director, Avalere Health
MKazan@Avalere.com
James E. Matthews, Ph.D.
Executive Director, Medicare Payment Advisory Commission (MedPAC)
jmathews@medpac.gov
Gretchen Jacobson, Ph.D.
Vice President, Medicare, The Commonwealth Fund
gj@cmwf.org
Arielle Mir, MPA
Vice President of Health Care (Complex Care), Arnold Ventures
AMir@arnoldventures.org
Session 2: Understanding the Medicare Population and Consumer Affordability
Lindsey Copeland, J.D.
Federal Policy Director, Medicare Rights Center
lcopeland@medicarerights.org
Tricia Neuman, Sc.D.
Senior Vice President; Director, Program on Medicare Policy, KFF
TriciaN@kff.org
Eric Roberts, M.D., Ph.D.
Assistant Professor, Health Policy and Management, University of Pittsburgh School of Public Health
eric.roberts@pitt.edu
Loren Saulsberry, Ph.D.
Assistant Professor, Health Policy and Health Services Research, The University of Chicago Department of Public Health Sciences
lsaulsberry@uchicago.edu
Brandon Wilson, DrPH, MHA
Director, Center for Consumer Engagement in Health Innovation
bwilson@communitycatalyst.org
Session 3: Policy Options to Promote Medicare Sustainability
Adaeze Enekwechi, Ph.D., MPP
Operating Partner, Welsh Carson Anderson & Stowe (WCAS)
AEnekwechi@WCAS.com
Bowen Garrett, Ph.D.
Economist; Senior Fellow, Health Policy Center, Urban Institute
agarrett@urban.org
Josh Gordon, Ph.D.
Director of Health Policy, Committee for a Responsible Federal Budget
gordon@crfb.org
Harriet Komisar, Ph.D.
Senior Strategy Policy Advisor, Public Policy Institute, American Association of Retired Persons (AARP)
hkomisar@aarp.org
G. William Hoagland
Senior Vice President, Bipartisan Policy Center (BPC)
gwhoagland@bipartisanpolicy.org
Experts and Analysts
Joseph Antos, Ph.D., M.A.
Wilson H. Taylor Scholar in Health Care and Retirement Policy, American Enterprise Institute (AEI)
JAntos@aei.org
Juliette Cubanski, Ph.D., MPP, MPH
Deputy Director, Program on Medicare Policy, KFF
jcubanski@kff.org
Robert E. Moffit, Ph.D.
Senior Fellow, Health Policy Studies, The Heritage Foundation
Bob.Moffit@heritage.org
Solvency Experts
Robert Berenson, M.D.
Institute Fellow, Urban Institute
rberenson@urban.org
Cori Uccello, MAAA, FSA, MPP
Senior Health Fellow, American Academy of Actuaries
uccello@actuary.org
Beneficiaries
Christine Aguiar Lynch
Vice President for Medicare and MLTSS Policy, Association for Community Affiliated Plans (ACAP)
clynch@communityplans.net
Judith Stein, J.D.
Executive Director, Center for Medicare Advocacy
jstein@medicareadvocacy.org
Georgia Burke, J.D.
Directing Attorney, Justice in Aging
gburke@justiceinaging.org
Micki Nozaki, MBA
State Director, Senior Medicare Patrol (SMP)
Director, California Health Advocates
mnozaki@cahealthadvocates.org
Sophia Tripoli, MPH
Director, Health Care Innovation, Families USA
STripoli@familiesusa.org
Government
Jonathan Blum
Principal Deputy Administrator & Chief Operating Officer, Center for Medicare and Medicaid Services (CMS)
jonathan.blum@cms.hhs.gov
Hannah Katch
Senior Policy Analyst, Centers for Medicare and Medicaid Services (CMS)
hannah.katch@cms.hhs.gov
Jeff Wu
Deputy Director for Policy, Center for Consumer Information and Insurance Oversight, Centers for Medicare and Medicaid Services
Jeff.Wu@cms.hhs.gov
Stakeholders
Greg Gierer, MPP
Vice President of Policy and Research, Better Medicare Alliance
GGierer@bettermedicarealliance.org
Justine Handelman
Senior Vice President, Office of Policy and Representation, Blue Cross Blue Shield Association (BCBSA)
Justine.Handelman@bcbs.com
Leigh Purvis, MPA
Director, Health Services Research, Public Policy Institute, American Association of Retired Persons (AARP)
lpurvis@aarp.org
Cheryl Wilson, R.N., M.A., LNHA
Chief Executive Officer, St. Paul Senior Services
cwilson@stpaulseniors.org
Transcript
This is an unedited transcript.
0:06
Hello, everyone. Thank you for joining today’s Medicare 101 webinar.
0:10
My name is Jill O’Brien and the Assistant Director of Policy here at The Alliance.
0:15
For those who are not familiar with the Alliance, welcome, We’re a non partisan resource for the policy community, dedicated to advancing knowledge and understanding of health policy issue.
0:26
Today’s webinar is the first event, in a three part series about the future of Medicare. Please join us again on Friday, May second session of this series, which will provide deeper insight into the Medicare population and Affordability considerations for beneficiary. And, again, for the final event in the series, which will explore the tradeoff of policy options to promote Medicare sustainability. You can find more information about the theories on our website.
0:53
This series is made possible with support from Arnold Venture and the Commonwealth Fund.
0:59
You can join today’s conversation on Twitter using the hashtag all help live, and join our community at all health policy, as well as on Facebook and LinkedIn.
1:11
Today’s panel has a Q and A section during the second half of the event.
1:15
We want you all to be active participants. So, please, get your questions ready.
1:19
You should see a dashboard on the right-hand side of your web browser that has a speech bubble icon with a question mark.
1:25
You can use that speech bubble icon to submit questions you have for the panelists at any time. We will collect these and address them during the broadcast.
1:33
Throughout the webinar, you can also chat about any technical issues you may be experiencing, and someone will attempt to help you.
1:40
Now, to kick off today’s session, I’m going to introduce our moderator, who will be guiding discussion.
1:46
Gretchen Jacobson serves as the vice president of medical of the Medicare program at the Commonwealth Fund where she is responsible for developing strategy and program plan for Advancing Medicare Initiative.
1:58
Arielle Mir is the Vice President of Health Care for our new Ventures, where she develops and oversee and strategic investment initiative to improve care for individuals with complex needs.
2:08
Thank you both so much for leading today’s discussion. Now, I’ll turn it over to you to introduce our panel.
2:17
Thank you so much, Jill, it’s truly an honor to be here today, and to partner with the Alliance and the Commonwealth Fund to bring you this series.
2:28
If you’re here today or listening to the recording later on, I’ll give yourself a pat on the back.
2:34
I might be biased, but I don’t think it’s an overstatement to say that understanding the Medicare Program is one of the more important things a policymaker or policymakers staff can do.
2:46
The Medicare Program is the largest single health insurance, the largest single health insurer in the nation, with over 64 million enrollees and accounting for over $800 billion in spending.
3:00
Understanding how it’s structured.
3:03
to organize and deliver care to older adults. Individuals with disabilities, and other eligible beneficiaries is critical for running an effective, sustainable program for today’s beneficiaries and those in the future.
3:18
We’re lucky today to have three season experts to take us through how Medicare works, and the top issues the program is grappling with.
3:27
And Gretchen will introduce them in a moment, But before she does, just one last note, the alphabet soup of Medicare can be dizzy. But the good news is, there are some fantastic resources available, whether you’re just starting out or you’ve been, you’ve been working with the program for awhile, starting with the resource list that the Alliance has put together, and this set of briefings. And I’ll put in a special plug for recent series of blogs on Medicare Advantage that Arnall Ventures and the Commonwealth Fund recently collaborated on.
3:59
So, now I’ll turn it to you, Gretchen, to introduce our panelists.
4:02
Terrific.
4:03
Thank you, And so, first we have Amy Bassano, is the managing director of Medicare Services at Health Management Associates.
4:13
Prior to joining, …, Amy served as a Deputy Director for the Center for Medicare and Medicaid Innovation at CMS.
4:21
Then, next, we’ll have Matt Kazan. Matt as a managing director at … where he provides strategic advice to health plan and life sciences clients with particular expertise in Medicare Advantage and Part and and Part D.
4:37
Prior to joining Avalare, Matt spent over a decade as part of the Health Staff and Senate Finance Committee.
4:44
And the third member of our panel will be doctor Jim Matthews who is the Executive Director of the Medicare Payment Advisory Commission known as Med Pac.
4:53
Prior to his tenure, medpac, doctor Matthew served as a Senior Career Official in the Office of Health Policy, under the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services.
5:08
So, after the panelist presentations, we’ll come back together for discussion for the remaining tapping. And please remember to put your questions in the chat, so we can turn to them during that time.
5:18
So, with that, I will turn it over to Amy to start us off.
5:24
Thank you, Gretchen. I’m very excited to be here today with you, and the panel. This should be a really interesting discussion.
5:32
I normous topic of Medicare and hope to do it some justice in the few minutes we have, so to started off on the next slide, just a reminder that Medicare was created in 19 65 signed into law by President Lyndon Johnson in that picture there.
5:52
It’s a some of the things picture with her, him and President, Harry Truman, who had all worked for this health care coverage insurance for senior citizens for for many years. And we could spend lots of time just on the, the history and politics of how, how that came to be. But that’ll be a conversation for another day for those who are interested in the history of these things.
6:17
But now, I think that the important part, though, is that as President Johnson there flipped through the many pages of the legislation, is to remember that there are many, many hundreds and hundreds of pages of legislation now guiding the Medicare program, and the variety of payment systems and benefits that are available to those who are in Medicare. And just as a reminder, Medicare is a program for people aged 65 and older.
6:45
People with certain people with disabilities, those who qualify for Social Security Disability Insurance, and have 24 months of that.
6:52
And they get Medicare eligibility, people with end stage renal disease.
6:57
There are some, exceptions on, on the disability, 24 month as well, but those are relatively small, and so I’m going to spend my time giving you a overview of some of the, the Medicare payments fee for service payment systems and how they work. This, again, a topic we could spend many, many hours on, but I hope to just touch on some of the concepts and sort of set up some of the issues that you may be confronting as policymakers and thinking about some of these things as that, you know, going forward in the future of Medicare.
7:31
So, with the next slide, we’ll jump right in. Oh, actually forgot about this slide.
7:36
This is, I think, slightly to the, our friends at Commonwealth Fund, did a very good job here of putting together some of the basics of Medicare, I sort of already touched on that Medicare, who, who’s eligible for Medicare, and then the, the bottom.
7:51
Part of it shows that, you know, there’s 62 million plus Medicare beneficiaries in the program, continued to grow to many, millions more as the US population ages, as well.
8:04
And so, there are four main parts of Medicare Part A, B, C, and D, I will focus on parts A and B, and then turn it over to Matt, Focus more on C and D, But Part A covers inpatient hospital stays, skilled nursing facilities, hospice care, health, home health.
8:25
More of these are facility based services. Most people pay no premium for this because they’ve determined gotten their eligibility based upon pain in their payroll taxes paying in while they were working.
8:40
Part B is more acute care, I’m sorry, outpatient care, doctor services, outpatient hospitals, medical supplies, preventive services. Certain prescription drugs. And so, this is a slightly different eligibility here. You can age in and then you have to pay a premium.
9:00
And so it’s funded by the premiums and general revenue and the premiums are income related. So, there is not a set premium, it will depend upon what your income is. And then for most services that you pay get under Part B, there is a 20% cost sharing requirement.
9:17
And so, with that, and I’ll go to the next slide in terms of spending some time talking about the way Medicare pays for these different services. And, as I said at the beginning, it’s all driven by the law.
9:32
The law is very prescriptive about how, you know, what Medicare will pay for, you mean types of services because there are many services it does not pay for. It did not pay for prescription drugs for a long time, but that was changed.
9:45
Doesn’t pay for eyeglasses, hearing aids, other services like that, under the fee for Service Program.
9:52
But it does talk about what is covered and how Medicare should pay for that. So, there’s many pages of legislation that have been modified many, many times over the years. in addition to regulatory process and structure that also fills in the details on these payment systems And CMS, who runs the Medicare Program.
10:14
They put out, for most of these payment systems, will talk about annual regulations that explain what the payment rates are going to be, how Medicare is going to implement certain provisions of law if they are new, and, you know, puts out a specific payment rate for any individual service. These, you’ve probably heard of prospective payment systems. They were adopted in the early 19 eighties, initially when costs were growing quite high in Medicare and payment have been on cost based systems.
10:47
And these were designed to help bring in some of those costs and establish parameters around what, you know, what should be spent for any given service. And so, inpatient hospitals is the biggest one of all. You’ll see here. It’s more than 3000 hospitals are paid under the IPS. And with more than $100 billion in spending, it is broken down into what they call … or payment rates as prospectively set or the particular stay. So it covers all of the services. There are a variety of adjustments to that, though, and you’ll hear me sort of talk about this. Because it’s a familiar theme over many of these payment systems that there are a geographic adjustments, potential adjustments for new technology, annual updates to reflect inflation often using a market basket.
11:37
And then hospitals have, there are certain types of hospitals that it’s disproportionate Share hospital is providing uncompensated care or Medicare also pays for Graduate Medical education for physicians and training under IPS payments.
11:54
and that, in addition, sort of in within movement to value, there has been some statutory programs that adjust the payments based upon certain outcomes, such as re-admissions, hospital acquired conditions, or other value arrangements.
12:11
And so, before I move on to the next slide, just one point is that, as I said, there’s 3000 hospitals here. But there’s also a thousand other hospitals who do not get paid on this, and are still on cost based reimbursement.
12:22
The most notable one or type of being critical access hospitals that serve rural areas, and they get paid cost, which is a 100% cost.
12:32
And so, that’s a more straightforward way. But on the next slide, I won’t dwell on this, but it’s really a reference to show how the payments are calculated. And all of the adjustments that go into it. You have sort of a national base rate for any particular service, like a hip replacement or an admission for pneumonia or congestive heart failure. Or heart transplant. Or, you know, all sorts of different procedures. That, Or, reasons you could be admitted to the hospital. Then, you adjust for labor costs, case. Mix, meaning that certain different severity. I talked about the Graduate Medical Education, or disproportionate share. If you transfer out of the hospital before a certain period of time, then there’s another adjustment new technology. If you have something that CMS is deemed knew that could have been particularly costly.
13:24
And then, if you’re extra extra extra costly, there are outlier cases.
13:30
And there’s additional ways to help the hospitals up for that.
13:34
So the main takeaway is there’s all these different factors that get adjusted to come up with a specific hospitals payment or a specific service.
13:44
And this is similar across the other prospective payment systems.
13:49
So we go to the next slide focusing on the outpatient system and outpatient hospitals are paid under Part B, IPS inpatient, or paid under Part A This is a similar system, and that there are groups that are called ambulatory payment classifications, your APCs that are based on cost and clinical similarity. The services provide an outpatient departments are very broad much broader than inpatient. Because it could be surgical. It could be the emergency department. It could be clinic visits, which, you know, looks like just a physician’s office. It could be observation stays. There’s a whole variety of different services. You have a lot more different things you, you’re paying for in outpatient departments. But CMS has tried to classify them together for things that are similar costs and similar types of services.
14:43
And again, these are paid, there’s also payments for new technology. They’re updated annually. There’s adjustments for geographic locations.
14:52
And one of the trends, though, that has been coming out over the past number of years, is a site neutrality, or paying the same for the same services, regardless of where the care is delivered. So, you could have a surgery, done an outpatient department, ambulatory surgery center, or even potentially a physician office, or, or a different type of procedure, and so incentivizing, making sure that their payment is equivalent. Or equivalent services across those sites of care.
15:19
As opposed to creating incentives for you, the care being provided in a more expensive setting, that may not be the best for the patient, may not achieve the best quality.
15:29
So those are some of the issues that outpatient hospitals are facing now, especially as they purchased a lot of physician clinics, purchase ASCS, and expand further out into the community.
15:41
Next slide, please.
15:43
Then, just one more example of a prospective payment skilled, skilled us system, and that is a girl, skilled nursing facilities. These are, you know, nursing homes, but the skilled nursing part is when a patient needs active medical care, it’s not just custodial or sort of, housekeeping type of care, then they’re just living there, but they need active medical care and Medicare pays for this under circumstances. Again, I’ll requirement of the law where you’ve had to have spent three days in the hospital before you can accessing the eligible for the SNF services.
16:19
And one of the other interesting parts of the system is that there’s no co-insurance for the first 20 days of your say there. After 20 days, 21 to 100, there is a, you know, almost $200 per day co-insurance, and after 100 days there’s no Medicare coverage.
16:34
And so, there’s a lot of evidence to suggest that many people are in the nursing SNPs for up to 20 days, given that there’s different financial incentives for that. Although, with sort of the movement to value and move into more services in the home. There’s a lot of rethinking how to utilize skilled nursing facilities and who should be using them. But the payment here is a per diem.
17:01
So on a per day base that covered covers all of the costs. And again, case mix adjustment to reflect the severity of the patient needs and geographic adjustments, market basket for inflation and then some value based adjustments based upon outcomes.
17:19
And then, next slide, I’m going to part B services.
17:23
The big one is the physician fee schedule, And so, to the extent that the server at the programs we talked about before, how large, all encompassing payment for services that are sort of consolidated, the physician fee schedule is much smaller chunks of service. The payment is based upon individual units at the coat, the CPT coding level. So, there’s a service that may be an office visit. It may be an injection, it could be, you know, an inter, some type of intervention, or the, you know, a surgical procedure, but the physician part of the work, or that effort. And then, there’s a separate payment to the facility. And so, there, the physician fee schedule is calculated on relative value units. And so, it’s a budget neutral system, and that, you know, as it says, relative to each other. So, there’s three parts of it.
18:16
The physician work, what actually, the physician is doing.
18:21
What they know if they’re operating, if they’re examining you, if they’re injecting, if they’re whatever they’re doing, the practice expense, so how much does it cost to keep on the lights in the facility, where they’re working. Do they need, you know, what? what other nursing services?
18:36
Or how many tongue depressed there’s, you know, there’s a whole variety of things there that are covered under practice expense and there’s a specific methodology for that and then the smallest part also counts for the malpractice for them.
18:48
And so you add them altogether, or there’s a specific relative values for each of those components. There’s a conversion factor, which you multiply to get to actually the dollar payment.
18:59
And there are geographic adjustments here, but there are no adjustments for inflation.
19:05
There’s no Market basket for this, which has been a point of contention. And there’s been a variety of legislating over the years about how to update physician services and contain the growth in those services. Right now, there is a sort of value arrangement called the MIPS Program, the merit based Incentive Program that consolidates the different quality reporting programs for physicians. And so, on the next slide, I’ve sort of been using physicians as a very general term, but there are more than just … that bill under this. It’s, you know, you can see the list there, nurse practitioners, physician assistants, physical therapists, and on, but it’s really for the professional services, it’s called the physician fee schedule. And as I also alluded to, there’s payments for an all of the different settings.
19:51
And those settings are adjusted, I’m sorry, the payments are adjusted regarding the settings. So, if something is provided in a hospital setting, the physician, they get paid less than if it’s provided in his or her office setting, because of the need for the overhead, because the hospital, there’s a separate hospital payment.
20:10
Next slide, please.
20:13
And so, just a couple other, I’ll very quickly run through these. Home Health is another major, a payment system, This is based upon the prospective payment system based on 30 day episode of care. You have to meet certain eligibility requirements to receive home health services, but, and then it’s re assessed regularly. Hospice hospice is a benefit for beneficiaries who their position has determined that they probably have less than six months of life.
20:43
And the patient alecks into hospice, essentially saying they will no be no longer be getting curative care, but getting more health care and other care to manage their, their symptoms related to their terminal illness and this is a daily payment rate and the services we provide in the patient’s home or an inpatient setting.
21:03
Next slide, please.
21:06
And so just a few others. Ambulance services, Medicare pays for those transport to a hospital or other settings. There’s a base rate. So, you sort of standardize. And then, depending upon your mileage, it gets adjusted for that Part, B drugs are drugs that are administered in a physician office. So, mostly chemotherapy type products or other infusion drugs. And this is based upon an average sales price, so the, the, the manufacturers report to CMS, how much they’re selling the drugs for. And then, CMS calculates it and it’s based on that, again, this is something that has had a rapid growth in the number of products and the spending. And there’s been legislation over the years to refine this payment rate.
21:49
Then, durable medical equipment, Wheelchairs, crutches, all sorts of different diabetic supplies or other supplies for orthotics prosthetics, for certain of those, They’re competitive bidding, which has helped bring down some of the costs of the products because they are so more commoditized and you can easily more easily sort of bid for what you, Medicare should pay for it.
22:15
But other products are still paid off of a fee schedule for those.
22:19
And I think that was my last slide and just make sure I not missing something.
22:25
That’s the next slide that, turning over to Matt?
22:28
Oh, no, I forgot value. How can I forget? Value.
22:31
So, the Innovation Center was created in the Affordable Care Act as a way to test different ways of paying for services. And really looking at value based care. As given you, I’ve talked about the inflation of, that has happened in Medicare, and that the statutory provisions are very strict about how services can be provided. And so looking for ways alternative ways to pay for these services. And so that CMS charge to test alternative payment models.
23:04
And, over their tenure, they’ve tested a number of services in our number of models and airy, different areas, Accountable Care Organizations, or broader population, health, total cost of care approaches, Bundled payments on primary care, improvements, a state based initiatives, or other models based on health conditions.
23:24
They, they’ve tested more than 50 different models, some of which are successors to each other. So you’ll see that the number of different primary care models there are based upon the particular learnings.
23:35
There is specific expansion criteria in the law, meaning if it meets you, reducing costs improving quality, the the actuaries and the Secretary of Health and Human Services can deem it, a model or expansion to be broadly applied more broadly in there. Today, there have been four models that have met that. The Pioneer ACO, which is one of the very first accountable care organization models.
24:00
The Diabetes Prevention Program, which now is a program for pre diabetics to work on weight loss and other health improvements that has shown to decrease the chances of people becoming, moving onto being diabetic from pre-diabetic.
24:17
The Home Health Value Based Purchasing Program, which is very similar to, I mentioned, sniff or hospital, but there was no provision for the specifically in the law. So CMS tested that.
24:26
And then the repetitive schedule, non emergent ambulance transport. This is something that CMS ran through their program integrity area, where there were there sometimes when you can have ambulance services that are non emergency situations.
24:40
And, but there was, CMS found that there’s a lot of realization there and they through this. This test they found that they can save money and better manage that care.
24:50
There’s also the Quality Payment Program which is related to MIPS, which you mentioned earlier, which incentivize physicians to participate in certain NCUA models.
24:58
And so, there’s a lot of interest in intersection between the fee for service payment systems and what CMI is doing in their particular models, and trying to bring more organizations, more providers, into value based purchasing.
25:14
And, on the next slide, which this one is my last one, I know CMS had a recent effort, you know, 10 years in, to think about what’s working and what’s not worked, And so, they have created some strategies and strategic goals. one of its one of which is to bring patients on Medicare beneficiaries and Medicaid beneficiaries, will tell you that conversation for another day into a care relationship with accountability for quality and Total Cost of Care by 2030. And so, there’s the Medicare Shared Savings Program, which is a different type of ACO. And then there is CMI is testing out a number of different models to try and bring patients into those arrangements. Also, with a huge focus on health equity, and using this to my authority to get to improve health equity, and you’re trying to address price and affordability for health care, getting more value out of care.
26:10
And then, having relationships with the partners, whether it be the providers or beneficiary groups or others. Other payers, because one of the goals of the patient center is, is, is to scale value.
26:22
And it’s not something just for Medicare.
26:26
No other payers. And so there’s a lot of multi payer efforts to ensure that everyone’s driving in the same direction on this movement to value and away from fee for service systems, which may not be providing the best care to beneficiaries.
26:41
And so there’s a lot of effort there in terms of, you know, what let’s you might be able to do and what their partners can do as well to sort of get the providers to work in that direction. And with that, Medicare Advantage is considered one of those areas that help manage the patient’s care. So, I will turn it over to Matt to talk about that, and look forward to taking your questions at the end. Thank you.
27:09
Thank you very much, Amy.
27:10
That was a really fantastic overview of Parts A and B, and C And now, Matt will cover Medicare Advantage and Part D Thank you.
27:23
Thank you, Amy. Thank you, Gretchen, and thanks to the alliance for having me. I’m thrilled to be able to speak to you all today. I know, during my time working on the Hill, I found all the Alliance Sessions very helpful in my day-to-day work. So I hope, boy, attendees feel the same after today.
27:41
So, as I said, I’m going to talk about Medicare Advantage and Medicare Part D the Medicare’s Outpatient Prescription Drug Program.
27:49
My goal is to give a little bit of an overview of both programs, as well as highlight some of the more interesting and or relevant topics that are timely that policy makers are focusing on right now.
28:02
So, let, let us dive in.
28:07
We’ve got one more slide.
28:12
Perfect. So, I’m gonna start with Medicare Advantage. Right, at its basic level, beneficiaries have a choice between enrolling in fee for service Medicare, which is much of the program that Amy just went over, or Medicare Advantage, or also known as Medicare Part C, which is the benefit that is administered through Health Health Plan.
28:33
So, the Managed Care about it, the benefits themselves are generally the same in terms of the required benefits. Medicare Advantage plans must offer all benefits, with the exception of hospice through that health plan.
28:48
But there are some key differences that matter in terms of beneficiary experience, as well as the types of things that policymakers are focused on.
28:57
First and foremost, the payment structure is different. As Amy went over under the fee for service side, CMS, the federal government, pays providers directly under the, under the fee for service program, whereas, in Medicare Advantage, the government pays the health plan, a per member per month payment structure that is based on a host of different factors that we can get into.
29:21
Um, the, another key difference is around network’s fee for service.
29:25
Beneficiaries can really see, basically, any Medicare, any provider that’s willing to take Medicare beneficiaries whereas, much like, commercial insurance, Medicare Advantage plans have a network of in network and out of network providers that limits the beneficiaries a little bit in terms of who they can see.
29:44
Cost sharing can be different and Medicare advantage. Sometimes cost sharing for services will be lower under Medicare Advantage. Sometimes it will be higher on net it needs to be actuarially equivalent.
29:55
But unlike fee for service, Medicare Advantage has an out of pocket cap or their enrollees and those out of pocket limits vary by plan, but essentially once a beneficiary hits that out of pocket limit, they have no more exposure And health plan provides the remainder of those costs.
30:14
Another big key difference is what’s known as supplemental benefits. Unlike fee for service, Medicare Advantage can provide, basically, out of their own pocket, and we can get into more of the details there.
30:25
Certain benefits that are not provided through fee for service, much of much of these benefits people have heard of, dental, vision, hearing, but, as we’ll talk about later in the presentation, those types of supplemental benefits are really expanding to kind of non health social related.
30:44
So, those are, at a high level, the really kind of key differences between the two parts of the larger Medicare program.
30:51
So, we dive, We can dive in a little bit more on the details of the advance, to the next slide.
30:57
So, as I said, Medicare Advantage is paid different in fee for service and, essentially, Medicare Advantage Plans receive a capitated payment, or essentially a monthly payment, for each beneficiary that’s based on a whole host of factors. And, this gets complicated really quickly. So, I’ll call it boil it down at a very high level.
31:17
And, essentially, there are two big factors.
31:18
There is the benchmark, which essentially think of as the maximum amount that Medicare will pay a Medicare Advantage plan, to provide Part A and Part B services to those beneficiaries.
31:33
Medicare Advantage plans then submit a bid every June to CMS, which is essentially their estimate of how much they think it’s going to cost to provide these benefits. And these benchmarks and bids take into account the characteristics of potential enrollees in a Medicare Advantage Plan. This is known as risk adjustment, and the types of things that risk adjustment takes into account demographic, data, age, of the beneficiaries. How gender, race, age, et cetera. Dual status, For instance, and it also takes into account health status.
32:08
Every diagnosis, or many diagnoses of the beneficiaries are taken into account, all with the goal of trying to pay health plans a bit more for beneficiaries that are potentially higher cost and a bit less for beneficiaries who are likely to have lower than average costs.
32:29
So, as I said, health plans submit these bids every June, generally speaking, and in most cases, these bids are below the benchmark, and the government and the health plans share in that difference between the bid and the benchmark. And this is often referred to as the savings.
32:48
And the share in which the Health Plan gets to keep is known as the rebate, the percentage of which the health plan keeps is based on a couple of different factors. 1 big 1 is the quality rating of the health plan, which we’ll get to here in a second. But essentially, the higher the quality rating, the more rebate the health plan gets to share to provide either lower premiums, lower cost sharing, or more of these supplemental benefits.
33:17
So, again, in the aggregate, taking all these factors into account, this is basically how Medicare Advantage plans are paid. And it’s an important distinction, important kind of financial incentive, where fee for service is paid based on a per service amount, whereas Medicare Advantage is paid on a per member amount. And there’s kind of different financial incentives that we could talk about in terms of what incentives the programs are driving between the two parts of the program.
33:47
So let’s go one, step deeper on the quality program within the Medicare Advantage program, which has a very significant impact on planning payment. So, similar to other payment systems, in the Medicare program, Medicare Advantage plans are rated by CMS based on a lot of quality measures, upwards of 40 plus quality measures, Both on the Part C side, measuring things on the medical side, as well as on the Part D side, on the, on the drug side.
34:20
Each each contract, which is an aggregation of a handful of plans, receive a star rating measure between 1 through 5, 1 being low, and five being the highest on each of these individual measures. And there’s a bunch of, kind of math formulas that ultimately get you to a overall star rating of that contract.
34:42
again, Between 1 and 5 star ratings, Plans are really trying to hit at least four stars, because at, at four stars, both the statute, and the regulations allow for health plans to receive an increase in their benchmark, and essentially, a payment increase.
35:02
If they receive more stars or higher. And so, over the years, we’ve seen more and more enrollees enroll and plans that have four stars and higher. And … data shows that, in 20 22, a probiotic high of nearly 90% of beneficiaries have selected a plan. with four stars are higher. And there’s a bunch of reasons for that, that we can get into. But that is a significant number, in terms of beneficiary benefits, that are receiving premiums that are receiving, but also the payment consequences of that as well.
35:38
So, let’s advance one more slide and talk about some of the benefits. This is an area that policymakers have been fairly active in recent years. So, as I said at the top, Medicare Advantage plans are required to offer all benefits that are provided under Parts A and B, but they also have added flexibility to offer benefits that are not provided by traditional Medicare. And as I said, these are known as as supplemental benefits. And the definition of supplemental supplemental benefits has evolved over time. In 26, starting in 20 18, CMS really started to evolve this and expand the types of things that plans can offer.
36:16
And, essentially, it comes down to this definition of what primarily Health related Watson, prior to 2019, that definition was relatively narrow and had to be directly related to, to one’s health. So, think of dental, vision, hearing, those types of benefits. CMS started in 20 19, expanded this to be a little bit broader, to focus on things that, um, you know, primarily, you know, are used to diagnose or prevent illness. And so, that, that kind of scope of these benefits expanded to a little bit broader.
36:51
Congress, Things stepped in in the Bipartisan Budget Act in 20 18 as part of the Chronic Care Act passed by a bipartisan instead of members created a new type of supplemental benefit known as the special supplemental benefits for the chronically ill.
37:07
This similarly expanded quite a bit the types of benefits that outweigh its could offer but only towards folks with specific chronic conditions. So this really gets us into the realm of kind of non health related benefits. So think meals beyond meals that are provided to treat you after you leave the hospital. Think social related risk factors like home, safety, transportation, pest, control event and so we’ve seen a huge uptick in the number of beneficiaries that are receiving these special supplemental benefits, even in the first couple of years in which this authority has been on the books. And so something Certainly for policymakers and beneficiaries to be on the lookout for.
37:55
So we advance one more slide on a host of different types of issues that are notable, especially as we are living and continuing to live with a coven 19 Pandemic.
38:09
Medicare Advantage has had kind of unique experience throughout the pandemic.
38:14
With stay at home orders and other factors, we’ve seen really uneven levels of care throughout the US healthcare system and that’s driven a. Lot of interesting dynamics within Medicare Advantage. Medical medical Loss ratios have been a bit unpredictable as kind of the ebb and flow of people’s interaction with the healthcare system.
38:34
CMS has provided some flexibility as it relates to telehealth and risk adjustments, yet those flexibilities, fate, and future, potentially up in the air, depending on what policymakers decided to do.
38:50
Then within that within the pandemic, a separate piece of law went into effect. The 21st Century Cures Act that was passed several years ago, allow for the first time in 20 21. All beneficiaries with kidney failure or end stage renal disease to enroll in Medicare Advantage. Prior to this year, if you had kidney failure, you are not allowed to enroll in Medicare Advantage. And so, that barrier was broken down recently, and … data shows that about 40,000 beneficiaries switched in the first open enrollment period, who had kidney failure and moved from fee for service to Medicare Advantage.
39:25
So, just as we receive Medicare Advantage starting to become a bigger chunk of the Medicare population overall, we’ll start to see this pretty high cost, high need patient population also shift to the Medicare Advantage program.
39:40
As I said, we’re seeing a lot of creativity and evolution around the types of supplemental benefits the plans are offering, but we’re also seeing a lot of growth in the program.
39:51
As I said, maybe this year, next year, we’re going to hit where half of Medicare beneficiaries receive their benefits through the Medicare Advantage Program. And that’s a very important milestone for the program, but it’s also going to provide a bit of scrutiny on the program. And we’ve seen this from CMS medpac, the IG and others in terms of payment and the level of payments. And are they correct and should policymakers make any adjustments there?
40:20
So a lot of, a lot of kind of overarching macro issues to follow on the Medicare Advantage program, a couple of niche areas that I think are interesting that I think deserve a couple of minutes of attention. So we go to the next slide.
40:37
Drilling down a little bit on this issue around kidney failure. So, as I said, 21st Century Cures Act passed by Congress, Mostly an FDA reform bill. Congress kind of snuck in some Medicare Advantage reforms, allowed everyone with kidney failure in the Medicare Program to have the option that every other beneficiary has, which is to enroll in Medicare Advantage if they like.
40:57
And, you know, when we took a look at some of the data, along around the enrollment shifts, we saw before this change went into effect, out little less than 23% of patients with kidney failure, where a Medicare Advantage. And the following month, when that open enrollment period became effective, over 30% of beneficiaries chose to switch so 40,000 beneficiaries again, in that first open enrollment period. So, you know, policymakers certainly have the intent of allowing folks to move here. And we did see a pretty significant jump in enrollment among this population.
41:38
Another area that we’re drilling down a little bit more on the next slide is supplemental benefits. This slide. The text is very small here, but this list, some of the notable, special, supplemental benefits for the chronically ill that health plans are offering. Starting in 20 21, we see a really big approach, and things like meals, food, and produce, right, 40, almost nearly half of beneficiaries have access to plans that are offering these benefits. And, again, things that you wouldn’t think that health plans may be interested in, we’re seeing them put these types of benefits into the market. Things like pest control and other types of benefits, where the, you know, running hypothesis is that, you know, offering these types of benefits are going to have positive outcomes on beneficiaries, health, outcomes, or costs related to those beneficiaries.
42:33
So, a really interesting kind of evolution of the Medicare Advantage Program and health plans using the new authority that both CMS and Congress have given them.
42:44
So, we advance to the next slide. I’m going to shift a little bit towards the Part D Program, Again, giving a little bit of an overview, and then we’ll dive into some kind of more interesting dynamics.
42:57
As I said at the top, Medicare Part D is an optional benefit. That provides outpatient drugs. Think of drugs that you fill at the local pharmacy. That’s, generally speaking, what Part D covers. Similar to Medicare Advantage, the Part D program is administered through private health plans.
43:14
Beneficiaries have essentially two choices on how to receive their party benefit. They can receive their part D benefit through a Medicare advantage plan if they choose to go that route. Or if they stick to fee for service, they can enroll in a standalone part D plan, which is known as a prescription drug plan, or a PDP.
43:35
The federal government subsidizes premiums for these health plans at around 75% and that’s that financing mechanism mechanism is funded by general revenue. And again, the beneficiary premiums make up the difference.
43:50
There’s a bunch of regulations both at the statutory and regulatory level in terms of the rules of the road for health plans. In terms of types of benefits, they must offer cost sharing limits, pharmacy networks, enrollment mechanisms, things like that. Much of those regulations mirror a lot of what the Medicare Advantage regulations state.
44:17
So we advance one more slide on the beneficiary side. There’s essentially kind of three categories of part D enrollees, kind of the standard standard enrollees to receive that. The standard benefit that Part D offers cost sharing limits. There is a kind of base benefits that CMS and the law dictates. But the plans can be a little creative and various benefits again.
44:42
So long as the the benefit is actuarial actuarially equivalent to the standard benefit, beneficiaries are also allowed to enroll and enhance plans that maybe offer more robust benefits. But they there is oftentimes a higher premium that is charged in exchange for those higher.
45:00
A substantial piece of the Part D Program and beneficiaries are what’s known as the low-income subsidy enrollees or lower income enrollees. These beneficiaries by law and regulation receive some combination of lower cost sharing for Part D drugs and or lower premiums to enroll in Part D plans.
45:21
LIS enrollees are low-income. Subsidy enrollees are automatically enrolled in specific types of Part D plans, but they do have the option to switch plans if they would like.
45:33
Then there is a smaller chunk of beneficiaries who receive their Part B benefits Through employer plans, often referred to as ….
45:41
These benefits are oftentimes more robust as a result of the negotiation between an employer or a retiree union and things like that, that set up these egret plans. And so there’s some interesting and unique dynamics around these beneficiaries. Again, a minority of the party enrollees, however.
46:06
So, if we advance one more slide, looking at what has turned out to be a relatively complicated benefit structure, through a bunch of different changes that both Congress in CMS have made to the program. And so, you think of this slide as a beneficiary moving from the bottom to the top, in terms of progressing through the benefit structure as, as a beneficiary spends more on drugs, They progress through the benefit structure and the various phases. And so this is the benefit parameters for this. For next Year, 20 23 benefit, I was just recently finalized by CMS about a $500 deductible until a beneficiary reaches what’s known as the initial Coverage phase, where the beneficiary pays about 25% of the costs of those drugs, and the health Plan provide pays for the remaining 75%.
46:59
Then the beneficiary reaches what’s known as the coverage gap, or often referred to as the donut hole, the Affordable Care Act, and then subsequent legislation filled in this donut hole.
47:10
It used to be where beneficiaries were on the hook for quite a bit of a cost associated with drugs in this phase, and through a combination of increasing the discount paid paid for by brand-name manufacturers, as well as a small phase in of health plans. Beneficiary is really see no difference here that continue to pay that 25% co-insurance and manufacturers pay the remaining 70 70 percent of the costs through this mandatory discount.
47:41
And the health plans pay a very small amount, 5%, until we get to what’s known as the catastrophic phase of the benefit, where spending is reached a pretty high amount.
47:52
Again, the, the contributions of each of the stakeholders within the program shift a little bit.
47:57
Beneficiaries pay 5% of the costs are all spending beyond this catastrophic phase for the remainder of the year. Medicare comes in and steps in, and start, and end pays what’s known as re-insurance costs at about 80% of the costs. And then the health plan pays about 15% remainder of the costs. And as you can see from the slide, manufacturers do not pay a discount for drugs in this phase. And this phase goes on into perpetuity for the rest of the calendar year.
48:27
And a lot of folks in Congress is contemplating a bunch of changes to the benefit structure. In response to some issues that folks have raised, Medpac and others included about the current benefit structure. So we’d go to the next slide.
48:44
Some of that gets illustrated here.
48:46
And so, this is a slide that shows the per member per month spending in the kind of different buckets of spending that I just went over. And so, as you can see from the beginning of the program starting in 2006, the highest part of the cost was the plan did, essentially, what the plans are responsible for. And we stopped premiums hit, you know, in the mid $30 range and re-insurance costs that cost that Medicare was stepping into pay for. At the very high end of the spend was relatively low. Again, about $34 per member, per month.
49:25
But, as time has gone on through a variety of different factors that, you know, I’m sure folks are happy to get into. The. The the amount of the amount has gone down and that re-insurance amount has gone up again. The amount that Medicare is paying has gone up substantially. The premiums does remained relatively stable.
49:45
So, that’s been one of the impetus towards some about policy reforms that Congress has focused on around Part D benefit redesign, where the government’s liability and the re-insurance would decrease health plan and manufacturer liability would increase. And then, importantly, beneficiary out of pocket costs would be kept, so that 5% co-insurance that beneficiaries pay in perpetuity would no longer be there. And their limit, their cost sharing obligations, would end at that catastrophic limit.
50:18
So to be determined how Congress will work out those policy reforms, but this is a little bit of the background in terms of why folks are talking about party benefit redesign, and some of the numbers behind that.
50:32
So, if we advance to the next slide, just wrapping up very quickly in terms of some of the issues that, you know, I’m interested in watching over the next few months. We’ve hit on some of these before. How does the continued enrollment shift of patients with kidney failure effect Medicare Advantage, as well as, what impact does Medicare Advantage enrollment have on this very high complex patient population?
50:58
Again, what does the continued evolution of supplemental been I’ve been offerings? And what’s the utilization utilization of those supplemental benefits for these beneficiaries?
51:09
CMS and other stakeholders have talked quite a bit about social determinants of health and social risk factors, and potential proposals to integrate those concepts into the MA star rating system, as well as the risk adjustment system. And so where where our stake, where our policymakers going in that space is something certainly to fallout.
51:29
Again, the AMA star rating system. Certainly important to monitor the program’s quality of care, but also this kind of shift towards enrollment and more high quality plans.
51:43
And will that shift continue or will CMS or plans make adjustments on that end as Amy spoke to? CMMI is obviously very active across the Medicare program to CMMI models.
51:56
Actually one model that has two components related to the Medicare Advantage program relates to value based insurance design, basically allowing plans to vary both Part C and part D benefits based on characteristics of beneficiaries that’s undergoing a current test. And then, as I said in the office, at the top, Medicare Advantage plans generally are not required to offer the hospice benefit, although CMMI is testing health plans, Medicare Advantage plans that are offering the hospice benefit under this be bid model. And that’s kinda get it at its beginning stage of the test. Is certainly a very interesting concept. And if CMMI were to expand that, program wide could have potential ramifications there. So that’s something certainly to watch.
52:42
On the Part D side things to watch, this year, for the first time, more beneficiaries are receiving their Part B benefits through an MA plan rather than a standalone Part D plan. And there’s nothing that tells us that that shift is not going to stop. And so, thinking about the ramifications of someone receiving the Part D benefit through a health plan that’s responsible for all Medicare benefits is something certainly to think about.
53:07
And think about the ramifications there.
53:11
And then finally, a lot of swirls around the potential reforms around part D, both on the legislative side, as well as on the regulatory side, whether that’s through the annual rulemaking process or through CMMI. And it will be interesting to see how some of those reforms, if they move forward, will interact. So, for instance, an out of pocket cap that could be legislated through a Part D benefit redesign, as well as the ongoing senior savings model, which places and had a monthly cap on insulin out of pocket costs in the Part D, So a lot of interesting interactions to work through as those reforms, potentially, advance.
53:54
So, happy to answer any questions around your vantage, or Part D, through the Q&A function, and the session in the lab here. But I think I’m going to pass it back to Gretchen and Jim for the next part of our presentation.
54:07
Terrific. Thank you so much, Matt, and just upon people’s radar, we are aware that we’re running a bit behind time, and we will try to go through the questions at the end to make sure we have time for questions. So, to now turn it over to Tim. Thank you very much.
54:25
Thank you, Gretchen, and thank you also, Amy and Matt.
54:30
I appreciate the foundation. To begin, my works, my remarks here, and I also want to thank the alliance for the invitation to participate today. And I’m going to take gretchen’s comments as an order to speak fast.
54:46
So in order to make sure we have enough time for Q&A, I’d like to skip to the third slide in my deck.
54:54
one more, please.
54:57
I would normally do a commercial for Medpac at this point in my presentation, but all I’m gonna ask is that folks focus on the first bullet on this slide. Medpac’s mission, for those of you who are not familiar with us, is to provide independent, non partisan policy advice to the Congress on issues affecting the Medicare program.
55:18
Today, I am going to talk about three particular areas where medpac has made substantial recommendations to the Congress over the last half decade or more. If I could skip two more slides ahead, please.
55:35
I will talk about recommendations and analysis that we have done in Part A, Part C and Part D Next slide, please.
55:47
I’m going to start out with work that medpac has done on evaluating the efficacy of Medicare’s hospital quality programs.
55:57
Amy mentioned a few of these in her remarks in the first session today. Prior to around the year 2000 or so mid Medicare’s payment systems were largely indifferent to the quality of care and patient outcomes that were provided to Medicare beneficiaries and would typically make the same fee for service payment irrespective of the patient outcome.
56:25
Beginning with the Modern Medicare Modernization Act in 2003, that started to change, and Medicare implemented a number of hospital quality improvement programs over the course of the next decade.
56:37
The Inpatient Quality Reporting Program, the re-admissions Reduction Program, The Hospital Acquired Condition Reduction Program, and the value based Purchasing Program.
56:48
All of these were definitely steps in the right direction, and most of them tried to use payment as an incentive to get hospitals to focus on patient outcomes related to the care that they provided.
57:03
So, that all sounds like a positive development. Next slide, please.
57:11
However, in the course of our evaluations, as these four programs were layered onto each other, med pact came to the conclusion that there were a number of flaws that manifested collectively that detracted from the efficacy of these four programs. So, among them, we determined that they contain too many overlapping measures of performance. There was a focus on condition specific re-admission and mortality measures.
57:46
Many of the measures that are used in these programs are process measures. Did you do merit medication reconciliation on discharge, as opposed to outcomes measures, Did The patient die, was the patient re-admission re-admitted. And then, many of these measures scored hospitals using tournament models, where they are scored relative to one another. And hospitals were not given clear and prospectively set performance targets.
58:14
These measures initially, also did not account for the social risk factors of patient populations, a factor that both Amy and Matt mentioned in their remarks.
58:26
Next slide, please.
58:29
Several years back, Med Tech developed a set of principles for measuring quality of care provided under the auspices of the Medicare Program. And we have applied these principles across our evaluations of a number of Medicare Quality Programs. We assert that quality measurement should be patient oriented and cord and encourage co-ordination of care.
58:54
It should not unduly provider burden providers.
58:58
Um, again, as I mentioned on the previous slide, we should be measuring outcomes and patient experience, as opposed to processes of care.
59:08
We should make sure that providers have clear prospectively set performance targets so they know what goals they need to hit in order to be rewarded under these programs.
59:19
And we believe that all of Medicare’s quality measurement programs should take into account as warranted differences in providers, patient populations.
59:31
So, I’m taking these principles and implementing them or executing them. Next slide, please.
59:37
We recommended to the Congress a couple of years back that Medicare Medicare’s current quality problems be, uh, stopped for lack of a better word and replace with a single hospital value incentive program that would do a couple of different things.
59:58
First, it would focused on a very small set of outcomes, measures, re-admissions, mortality, patient experience, hospital acquired conditions, and Medicare spending per beneficiary.
1:00:10
We would set clear performance targets, again, so hospitals know what thresholds they need to meet in order to be rewarded under our HVAC Program.
1:00:22
We would also account for patient social risk factors by using peer groups where hospitals are compared to other hospitals that treat similar patient population.
1:00:36
So, if you’re treating a population of low socio economic status, your performance on quality measures would be assessed based on similarly situated hospitals.
1:00:49
Lastly, we would distribute a pool of dollars to hospitals, based on their performance, on this small set of outcomes and patient experience measures.
1:01:01
Shifting gears then, next slide, we’ll turn to the Medicare Advantage Program that Matt talked about at some length.
1:01:09
Um, here, the issue that one of the many issues that medpac has been concerned about, is that there are incentives and infrastructures within Medicare Advantage that give plants the incentive to code patient diagnoses in a way that is much more robust than happens under fee for service.
1:01:34
Under fee for service Medicare, there’s relatively little incentive to code diagnoses, whether it’s a hospital claim, make sufficient claim, a home health claim.
1:01:43
Whereas under Medicare Advantage, there is a financial incentive in that each qualifying diagnosis results in a coefficient that adjusts that capitated payment rate that Matt mentioned, and Medicare Advantage plans have the infrastructure to be able to collect these diagnoses and curate them over time.
1:02:06
This results in Medicare Advantage enrollees having risk scores that are higher than fee for service, even when you do an apples to apples comparison of their actual health status.
1:02:20
In 20 20, MA risk scores were about 9.5% higher than fee for service.
1:02:27
CMS is required to make a minimum payment adjustment to Medicare Advantage plans of 5.9% to recapture some of that excess coding.
1:02:39
But there is still a differential in 20 20 of just over 3.5% that results in about $12 billion in excess payments to Medicare Advantage plans just on the basis of the coding differentials.
1:02:55
Next slide.
1:02:56
What we are observing in 20 20 is not unique.
1:03:00
You can see the, um, the impact of coding differentials over time on this slide, going back to 2007, and, in fact, Medicare has paid Medicare Advantage plans more for their enrollees than it would have paid, had those enrollees remained under fee for service, for the entire duration of Medicare Managed Care.
1:03:26
And given the sustainability issues facing the Medicare Program, including Part A solving see, clearly, this is a problem, as more and more of the Medicare population elects Medicare Advantage as the vehicle through which to receive their Medicare benefits.
1:03:45
Medpac has recommended, next slide, a couple of ways of addressing the coding intensity, that we’ve observed over time.
1:03:55
one source of the diagnoses that Medicare Advantage plans are incentivized to collect, or chart reviews and Health Risk Assessments.
1:04:07
These are vehicles through which Medicare Advantage plans can collect diagnoses from their enrollees, whether those diagnoses are resulting in current incurred costs for those patients or not.
1:04:23
And we estimate that these types of vehicles account for the majority of the excess coding that we’re observing in Medicare Advantage. And so, we recommended in 20 16, a couple of ways, too.
1:04:37
mitigate this differential.
1:04:39
one, we would remove health risk assessment diagnoses from the risk adjustment model that is used to pay Medicare Advantage Plans.
1:04:48
And we would use two years worth of Medicare Advantage and fee for service diagnostic data to calibrate the risk model and mitigate some of the year over year incentives that we observe with respect to increases in coding intensity among Medicare Advantage plans.
1:05:07
Once these measures would be implemented, we would recommend that CMS recapture any remaining coding intensity through an adjustment not dissimilar to the current statutory minimum 5.9%.
1:05:25
So, that’s one of several substantial recommendations that we’ve made over the last several years related to Medicare Advantage.
1:05:35
Shifting gears to the next slide, we have also looked at the benefit structure of Medicare Part D that again, Matt spoke about in detail.
1:05:47
Here you see a schematic of how the benefit structure works for both the low-income subsidy population on the right as well as the non LIS population on the left.
1:06:01
And the key takeaways from this slide that that you should note is the blue bars on each of these tranches represent the plan liability for covering the cost of the Part D benefit.
1:06:17
Whereas, the orange bars at the top of the each stacked bar represent the Medicare re-insurance that is basically a cost based reconciliation for expenses incurred by beneficiaries that reach the out of pocket threshold.
1:06:38
Um, I’m going to stick with the re-insurance thing for just a minute on the next slide.
1:06:44
Over time, re-insurance has become Next slide, please.
1:06:50
The largest and fastest growing component of the Medicare program. Again, this is the part, or, sorry, the Part D program.
1:07:00
Again, this is the part of the program that covers extremely high cost enrollees.
1:07:06
Medicare pays 80% of those costs whereas the plan has relatively little liability and the enrollee pays 5% co-insurance throughout the duration of time that they are in the catastrophic phase of the benefit.
1:07:25
Again, this is the fastest growing component of Medicare Part D and it stands in contrast to the original philosophical underpinnings or foundation of the Part D benefit which was predicated on the idea that private plans would negotiate with pharmaceutical manufacturers on the basis of, you know, desire to gain market share in order to keep premiums low for Part D enrollees.
1:07:55
In contrast to that philosophical vision, Here, we see Medicare paying for the bulk of the Part B benefit on the basis of cost based re-insurance.
1:08:06
Again, this has been the fastest growing component of a party in 20 20, over 4,443,000 enrollees filled the prescription for which a single claim was sufficient to reach the out of pocket threshold, up from just 33,000 enrollees in 2010.
1:08:31
So, next slide, please.
1:08:34
In light of these trends, In 20 20, medpac recommended a major restructuring of the Part D benefit in order to restore a couple of the original philosophical foundations of the Part D benefit.
1:08:53
A first and foremost, we would have plans be liable for a consistent 75% of cost sharing in the initial phase of the benefit, and here are the mix of drugs taken by part D enrollees.
1:09:09
Are often products that have multiple manufacturers or generic equivalents to brands, such that Medicare Part D plans can use utilization management techniques in order to effectively manage utilization.
1:09:26
In this phase of the benefit, above the catastrophic phase, or into the catastrophic phase, We would shift the obligations among the different actors in ways that are designed to do a couple of things.
1:09:42
one, we would reduce the Medicare re-insurance liability from the current 80% down to 20% and make this truly a re-insurance function.
1:09:55
The second thing we would do is increase the planned liability from the current 15% to 50%, recognizing that the plan still has some obligation and ability to manage the cost with the Part D benefit, even in the catastrophic phase. And then, lastly, we would move the manufacturer discount that Matt mentioned, which is currently in the initial phase of the benefit.
1:10:24
This is a manufacturer discount for brand name drugs.
1:10:27
We would shift that up into the catastrophic phase, and make this sort of an open ended liability to make manufacturers sensitive to the effect of prices on beneficiaries and the Medicare program.
1:10:42
In contrast to the current benefit structure, where the manufacturer liability is contained within the original initial benefit phase, and there’s a finite block of dollars that can be accounted for, and is a further incentive among plans and manufacturers, to get beneficiary spending into the catastrophic phase, where Medicare is shouldering the majority of that burden under the current benefit structure.
1:11:14
Again, given the sustainability issues that the Medicare program is facing, we have taken the position that this type of structural reform to part D is very urgently needed.
1:11:28
With that, I will go to my last slide here and wrap up.
1:11:33
We do try to, in the course of all, of our analytic work and policy advice, improve the Medicare program for beneficiaries, providers, and taxpayers.
1:11:45
You can find much, much more information about what we do and how we do it, and, you know, the whole portfolio of recommendations that we’ve made.
1:11:54
On our website, I would urge you to consider that as a resource, And at this point, that concludes my remarks, and I’ll turn it back over to Gretchen, I believe, to moderate the Q&A.
1:12:09
Perfect.
1:12:10
Thank you so much. That was really helpful, and very speedy. Really informative. And we really appreciate it. So, thank you, everyone for today’s conversation, has had to kickoff there.
1:12:22
Question answers, sessions. We have a fair number of questions, and we’ll try to get to as many as we can, So, everyone shared so much that they know about the program. What are the key gaps in our knowledge about the Medicare Program, including Medicare Advantage? What are the, What’s the real information that we’d like to have, that we just on at this point?
1:12:47
Whoever wants to start us off.
1:12:54
I’d be happy to jump in.
1:12:56
First, I would say one thing we don’t know, much about is the extent to which utilization management techniques, or other ways, of managing the care provided to Medicare Advantage enrollees is, no, resulting in the efficiencies that we observe in the form of Medicare Advantage plans.
1:13:19
Bid’s, currently, MA plans are bidding at about 85% of fee for service.
1:13:26
Medicare continues to pay plans more for MA enrollees and it would have under fee for service. But there is that 85% of fee for service bid that suggests, plans are able to provide the AB benefit more efficiently than ambient fee for service. But we don’t know the forms through which that efficiency manifests itself.
1:13:50
plans are required to submit encounter records to CMS, and Medpac has been working diligently with those encounter records, but they are still incomplete or sufficiently incomplete for us to really do a comprehensive analysis of what plants are doing differently compared to fee for service. And I think that would be an invaluable thing to know more about.
1:14:15
Thank you, Amy or Matt, if you have anything else to add to the list.
1:14:20
I would just add very briefly, sort of the value, the sort of, testing these alternative payment models: are they, will they achieve the broader goals of really saving the program money?
1:14:32
Improving quality and sustainability, or are they things that really can changed the direction of what Medicare, Medicare is going?
1:14:43
Yeah, OK. Obviously, quickly in the Vein of Jim, right on the Medicare Advantage front, right plans, right, do submit this encounter data for Part A and Part B claims? But on the supplemental benefits side, right, Congress, CMS, they provided a lot of flexibility to plans, and we know what plans are offering in the marketplace. We don’t know utilization around the number and types of beneficiaries that are using those supplemental benefits, right? A hypothesis that you are addressing some of these social risk factors makes sense. I think some data analytics and support around that would go a long way to know the full effect of this added flexibility plans and received.
1:15:26
Thanks, Matt. Amy, you mentioned a value is a good segue to the next question. You know, as as you discussed and Jimmy touched on as well, you know, CMS has been testing value based models, alternative payment models, at scale, you know, for over a decade now. And so, I’m curious to hear you talk a little bit about what you think that program has learned about, you know, what happens and how payment shapes care delivery.
1:15:59
Yeah, so a couple things on that.
1:16:01
one, the nature of the voluntary models is that the participants are those often who are either want to be sort of at the vanguard of things. And so they will jump in, regardless, But then also, mostly, are those who find it.
1:16:19
You know, they know that they can be successful from, especially from a financial perspective, and so bringing in of all variation of different types of providers, it’s hard to achieved, and you really get those answers.
1:16:34
I think there’s also a sense of, know, how sustainable is it? It’s hard when organizations maybe, and only for part of their business or part of their market.
1:16:47
And sort of, you know, have, like, but in both camps are the can multiple.
1:16:50
Can, you, know, if you’re still in fee for service for a lot of your revenue, how do you really fully move to value?
1:17:00
And it has to be something I think we’ve seen, you know, the evidence has shown that those who are like, it’s a leadership, the leadership of organizations, really needs to drive it, because it is such a systemic change for these organizations to move into value. It’s also very hard to do, and you have small providers. You need additional resources to do it. I think you see that sort of the focus right now, and some of the Safety net providers are trying to move them into value. And they have not sort of come in because they may not be resourced to do it seemingly. Similarly, we have small primary care practices, and others may not have need, some additional incentives, or assistance.
1:17:37
Even though they want to do for them to be, serves as a successful into, or make those no infrastructure or tech changes. And really rethink the way they’re, they’re organized.
1:17:52
Jim, did you have anything they wanted to add to that?
1:17:56
Sure, I’m not not to comment on the CMMI models but to shift back to some of the value based purchasing programs that have been implemented more broadly in fee for service.
1:18:09
one takeaway for our audience might be that payment policy is an extremely powerful tool to be able to motivate desired changes in provider behavior.
1:18:21
And Medpac has done some fairly substantial evaluations of the Hospital re-admissions Reduction Program, which aimed at reducing rates of avoidable hospital hospitalizations that are traumatic to Medicare beneficiaries and result in excess spending on the part of the Medicare program.
1:18:42
We’ve come to the conclusion that the re-admissions Reduction Program has been quite successful in that regard by giving hospitals a financial incentive to focus on this particular outcome and so properly designed, including things that are tested in the CMMI laboratory.
1:19:02
You can transplant changes in payment policy into, you know, the regular fee for service or potentially even Medicare Advantage worlds And achieve desired increases in quality increases in patient outcomes.
1:19:22
So, let’s get a great overview of the Medicare Advantage program, and that has been, as he noted, one of the largest changes, and less substantial changes over the past decade in the Medicare program is, So rapid growth. What do you think has driven this growth?
1:19:38
And bigger picture, what does it actually mean for the Medicare Program to have most Medicare beneficiaries covered by Medicare Advantage in the future?
1:19:53
I’d say there’s probably a couple of things, you know, driving the growth rate. We saw as a result of the ACA overall payment reductions were pretty substantial, right?
1:20:01
Benchmarks went from about 114% of fee for service to ride around where a fee for service sensing and plans responded in terms of their behavior, as Jim noted, bids are definitely much lower than what they were around the time of the ACA and other kind of plan behaviors have adapted. So that plans are able to still offer a pretty robust benefit package in terms of these supplemental benefits, out of pocket cap, as well, in most cases, a zero dollars premium.
1:20:33
So, beneficiaries still have this, be significantly different choice between fee for service, and many beneficiaries have found that attractive. And then it becomes kind of a self fulfilling prophecy where we see areas of the country with lots of MA penetration. We see lots of new enrollment into the MA program. And then it just kind of continues from there, and Gretchen, as you notice, right, at some point very soon, and we’re going to have half of beneficiaries in the Medicare Advantage program. And, and, you know, that, that’s remarkable, kind of just from where the Medicare program is, but then thinking about where that goes. I think you need to think about kind of population, health related quality measurement, right, or not for lots of beneficiaries.
1:21:18
We’re not measuring there individual hospital quality measures, and pack measures, and all the good topics that Amy and Jim and Overripe, we’re measuring quality at the plan, and they at the aggregate level. And are we doing that correctly? And are we providing the proper financial incentives there?
1:21:37
Then, I think, going back to that, the notion of the of the Medicare Advantage program and how it treats different subpopulations right. When we have a program that represents more than half the program writ large, you need to start thinking about, does the Medicare Advantage program? Is it position to serve dually eligible beneficiaries beneficiaries with disabilities beneficiaries under the age of 65 beneficiaries in rural areas, really, have to start thinking about it as a national program. And, are there changes that need to occur to make sure, that, you know, all beneficiaries are getting the benefit of a Medicare Advantage Program? And that choice between fee for service?
1:22:22
Does anyone else want to? Weigh in at all.
1:22:26
Yeah. I could add two things on to what Matt said.
1:22:30
First and foremost, I think there is more of an ambient acceptance among the near Medicare population with respect to Managed Care. Many of them, in the course of their employment, have become accustomed to receiving healthcare services through a managed care type of organization. And as they age into the Medicare Program, and they see a plan sponsor, or a plan that is sponsored by the same sponsor as their employer sponsored plan, I think that helps the transition into Medicare in that regard.
1:23:07
The second thing I would say is, I believe that the cap on out of pocket spending under Medicare Advantage, which is a statutory cap, is an extremely attractive component of Medicare Advantage. I agree with Matt completely, with respect to his remarks about, there’s not a lot that is known about the uptake of extra benefits provided through the rebates and the efficacy of those rebates. I think we need to do more work to understand.
1:23:39
those elements of Medicare Advantage, both.
1:23:42
A cap on out of pocket spending has got to be a tremendous attraction for beneficiaries, especially with lower incomes.
1:23:56
While we’re winding down on time, we thought we’d end with a little lightning rounds. Get everyone. one last word, and we touched on a lot of topics, but if you could prioritize one issue as kind of a critical matter, to be addressed for the future of the program and its beneficiaries, what would it be, And briefly why? Let’s start with Amy?
1:24:19
Oh, boy, I would say the solvency is if it’s just going to, we can’t afford the program or just taking up, but then there is no program. So, I think it’s really been under appreciated where the financial situation of the program and sort of where we’re going on that, and to encourage folks to think about a little bit more.
1:24:40
Great. Already, you Matt?
1:24:43
I would say health equity, right? This is a long standing issue that covert has exacerbated in so many terrible ways, and the program needs to perhaps do a lot more in terms of trying to erase some of the inequities in health and healthcare system has to lead.
1:25:04
Jim, I’m going to echo the solvency point, given that payment is in mid packs name. You know, clearly, we are facing substantial solvency and financing problems.
1:25:19
I always point to chart 1 8 in mid packs annual data book that shows the ratio of workers to Medicare beneficiaries that is going to be tremendously impactful on sustainability, and then as more and more Medicare beneficiaries elect to enroll in Medicare Advantage plans. Medicare needs to better capture some of the efficiencies that MA plans have demonstrated, that they are able to deliver.
1:25:54
Terrific, Any last burning words we have? We have two minutes before or after class.
1:26:02
OK, so, I’ll take moderator’s prerogative and remind everyone again about the terrific resources on the Alliance’s website. There’s much more to dig in on all the topics that you heard about today, and as a, as a medpac alumna. About all the amazing resources that are available to the public and there, too. So, thank you, again to our terrific panel and for all your insights today.
1:26:37
For the audience, thank you so much for coming. And, please, if you could take just a moment and complete a brief evaluation survey that you’ll receive immediately after the broadcast ends, as well as via e-mail later today. And that’s really helpful to the alliance for improving our program, their program going forward. A reminder, also that on May sixth at 10 0 AM, there will be the next briefing in this series, in the Future of Medicare series, understanding of the Medicare Population and Consumer Affordability.
1:27:12
And, as always, a recording of this webinar, and the materials will be available on the Alliance website. So, this concludes our program and Medicare 101 Today. I’m Amy, Match, and thank you so much for your work, and your insights, and for joining us today.
1:27:31
Thank you, everyone.
1:27:34
Thank you.