More from MedPAC’s Annual Report to Congress

By March 18, 2020 March 22nd, 2020 Commentary

The Medicare Payment Advisory Commission, whose annual report to Congress we began reviewing yesterday, also has extensive commentary on aspects of the Medicare Advantage program.  (link in yesterday’s post)   While final numbers haven’t yet been released, it is likely that as of the start of 2020, around 36% of all Medicare beneficiaries were enrolled in an MA plan.  As always, there are concerns about whether CMS is overpaying the Medicare Advantage plans, which is reasonable given profits the plans appear to making on the program.  MedPAC has long advocated that costs for a beneficiary be equalized between MA and the fee-for-service program.  While progress has been made on that goal, according to the Commission the plans could still be overpaid due to risk scoring issues and quality bonus rules.  Plans are reducing premiums and adding extra benefits, indicating that they are adequately paid.  99% of beneficiaries have access to at least one MA plan, and most can choose among several.  Enrollment is somewhat concentrated nationally, as the top ten plans have 76% of all MA enrollment, but in some areas, it can be quite concentrated–in metropolitan areas the top two plans average 43% of all enrollment.

The Commission estimates that before quality bonuses, plan benchmark payments will average 103% of the fee-for-service cost for the same beneficiary, and 107% including quality bonuses.  Benchmarks, however, have dropped in relation to fee-for-service costs.  In addition, the plans are bidding well-under the benchmarks, with the report estimating that bids for 2020 were about 88% of fee-for-service costs, but the plans are paid between bid and benchmark and with quality bonuses added in, the Commission believes a plan will be paid about 100% of fee-for-service cost in 2020.

In other comments, the report expressed ongoing concerns about the adequacy of encounter data submissions.  And it again noted that risk scoring practices lead to about an 8% average greater coding intensity for an MA enrollee compared to a fee-for-service one.  While CMS applies a 5.9% payment reduction for coding intensity, that does not fully adjust for the practice, so the Commission continues to push CMS for a greater adjustment.  Finally the report notes that MedPAC believes the star rating system is so hosed up it is completely useless for evaluating MA quality and comparing it to FFS quality.

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