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Republicans Ask GAO If CMS’ Proposed Part D Premium Stabilization Program Is Legal

A group of House and Senate Republicans are asking the congressional Government Accountability Office (GAO) if the Centers for Medicare and Medicaid Services’ (CMS) proposed additional premium stabilization program for standalone Part D (PDP) plans is legal. CMS announced the creation of the program after it received bids that showed premiums would skyrocket despite some protections in the Inflation Reduction Act (IRA).

The Part D changes in the IRA were much touted as protecting consumers by lowering out-of-pocket (OOP) costs. It also shifted huge costs to plans. These changes were not adequately funded by the government and thus plans had to reduce benefits in other areas and increase premiums. CMS was caught flat-footed and quickly created the program recently to avoid an October Surprise during open enrollment. I have issues with whether CMS has the statutory authority to do this despite broad waiver authority. It will further deplete sparse Medicare funds.

The GOP lawmakers asked the GAO whether the new demo is consistent with the law, to investigate what budgetary analysis CMS did when developing the program, to determine the projected costs, and whether it meets budget neutrality requirements.

See my earlier blogs on this subject: https://www.healthcarelabyrinth.com/part-d-premium-woes-due-to-the-inflation-reduction-act/ and https://www.healthcarelabyrinth.com/will-democrats-be-victim-of-an-october-surprise-of-their-own-making/ .

(Article may require a subscription.)

#medicareadvantage #pdp #partd #cms #ira

https://insidehealthpolicy.com/daily-news/gop-asks-gao-whether-cms-part-d-premium-stabilization-demo-legal

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Another Devastating Piece From The Wall Street Journal On Medicare Advantage

Yet another piece from The Wall Street Journal (WSJ) is bound to generate huge attention on Capitol Hill and among regulators. In its latest expose on Medicare Advantage (MA) finances, WSJ finds that MA home visits’ diagnoses for risk adjustment generated $15 billion in extra pay from 2019 to 2021. WSJ says nurses are pushed to make diagnoses the patient does not have and such diagnoses are never treated by hospitals or physicians. A July article found that $50 billion in overpayments occurred from 2019 to 2021 tied to risk adjustment submissions not treated by healthcare providers.

I am a supporter of MA, but I have made the case that a small number of bad actors are generating a huge amount of overpayments and giving all plans a bad name. I have told plans to expect that the Centers for Medicare and Medicaid Services (CMS) will eventually bar health risk assessment visits as well as manual chart review submissions for encounter data. I think this is fair and reasonable. See my blog on the subject here: https://www.healthcarelabyrinth.com/will-cms-rein-in-risk-adjustment-submissions/.  And my related podcast here: https://www.healthcarelabyrinth.com/25-ma-plans-should-ready-for-changes-to-risk-adjustment-submissions/ .

WSJ article (needs subscription): https://www.wsj.com/health/healthcare/medicare-extra-payments-home-visits-diagnosis-057dca8b

Additional article: https://www.beckershospitalreview.com/care-coordination/insurers-push-diagnoses-during-at-home-visits-bringing-in-billions-wsj.html

(Some articles may require a subscription.)

#medicareadvantage #riskadjustment #radv #overpayments

https://www.beckerspayer.com/payer/medicare-advantage-plans-collect-billions-through-home-visits-wsj.html

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State Affordability Boards Taking On Drug Makers Where The Feds Have Failed

Frustrated by high drug prices and inadequate policy changes at the federal level (save for slow-moving Medicare drug price negotiations), states are setting up drug affordability boards that can have vast powers to reduce drug costs. This includes setting an upper limit for sales in their state for certain coverage and the uninsured. This is similar to the Medicare drug price negotiations.

Due to federal pre-emption, these boards only apply to commercial plans. Medicaid has a federal rebate law that allows for federal and state rebates. Medicare is not covered as private plans negotiate prices with drug makers through pharmacy benefits managers or directly. Under the self-insured employer ERISA law, employer groups appear to be able to opt in and thus this has been built into some state laws.

 So far, eleven states have approved establishing drug affordability boards, and about a dozen more are considering doing so. Drug makers are suing, claiming the boards are unconstitutional and override several federal laws and due process.

#drugpricing #ira #branddrugmakers #employercoverage #erisa

https://www.managedhealthcareexecutive.com/view/states-are-setting-up-affordability-boards-to-rein-in-drug-costs

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Cigna Exceeds Expectations for Q2

The Cigna Group reported Q2 earnings that exceeded expectations, driven by growth in its services business. Total revenue in Q2 was $60.5 billion, up 24.6% year over year. It reported $1.5 billion in net income, up 6%.

Cigna is more isolated from Medicare pressures (small line being sold) and Medicaid pressures (no line). Evernorth’s services revenue rose nearly 30% year over year to $49.5 billion. Pharmacy service revenues grew more than 41% to $26.6 billion. In great measure this was due to the migration of Centene from CVS Caremark to ESI.

CEO David Cordani also committed to more aggressive defense of the value of its pharmacy benefit manager, ESI.

In related news, Cigna says its GLP-1 weight-loss program has enrolled two million.

Additional articles: https://www.healthcaredive.com/news/cigna-aggressive-pharmacy-benefit-manager-defense/722638/ and https://www.beckerspayer.com/payer/cigna-posts-1-5b-profit-in-q2-2.html  and https://www.fiercehealthcare.com/payers/evernorth-drives-double-digit-revenue-growth-cigna-q2 and https://www.beckerspayer.com/payer/cignas-glp-1-program-enrolls-2-million.html

(Some articles may require a subscription.)

#healthplans #cigna

https://www.modernhealthcare.com/insurance/cigna-earnings-call-evernorth-health-services-revenue-growth-medicare-medicaid

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Humana Meets Expectations in Q2 But With Some Mixed News

Medicare Advantage (MA)-dominant Humana released its Q2 2024 results. It had $679 million in profit for the second quarter, down from $959 million a year ago. It had $29.5 billion in revenue for the quarter, compared to $26.7 billion in the second quarter of 2023. It affirmed its already conservative guidance.

It revealed that MA rates have complicated its financial performance and that it would shutter some plans in geographies and has reduced benefits in others. It expects to lose about 5% of its projected 2024 enrollment next year, or about a few hundred thousand. It will increase its enrollment this year by about 225,000. Only Humana and CVS Aetna performed well on the enrollment front recently.

Its medical loss ratio (MLR) was 89.5% in the quarter, compared to 86.8% in the second quarter of 2023. Humana blames the increased utilization on the recent 2024 rule regarding prior authorization. MA plans must now follow traditional Medicare program rules, including honoring physicians’ certification for inpatient admission that someone needs a hospital stay and will remain in the hospital for at least two midnights.

Humana says that the changes will allow it to get back to a target 3% MA margin over time. It is basically flat right now.

Additional articles: https://www.modernhealthcare.com/insurance/humana-medicare-advantage-costs-jim-rechtin and https://www.healthcaredive.com/news/humana-membership-losses-medicare-advantage-plan-cuts/722619/ and https://www.beckerspayer.com/payer/humana-2-midnight-rule-driving-up-inpatient-costs.html and https://www.beckerspayer.com/payer/humana-expects-medicare-advantage-membership-to-decline-by-a-few-hundred-thousand.html and https://www.healthcarefinancenews.com/news/humana-logs-679-million-q2-profit

(Some articles may require a subscription.)

#medicareadvantage #humana #rates #margins

https://www.fiercehealthcare.com/payers/humana-posts-679m-q2-profit-it-faces-continued-medicare-advantage-headwinds

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Biden Administration Will Accelerate 2026 MA and Part D Rule Before Leaving Office

Interesting article in Modern Healthcare on plans of the Biden administration to accelerate the Medicare Advantage (MA) and Part D rule for 2026. The draft will be published in September, with the final rule sometime before President Biden leaves office. This could mean huge new policy changes for MA and Part D. Trump did something similar.

On one hand, Biden may want to leave office proposing some major reforms. On the other hand, the striking of the Chevron deference precedent could complicate enacting major changes.

The possible list of changes I see — they can’t do all of them, could they?:

  • MA rate savings
  • Further risk adjustment reform
  • Overpayment reform
  • Changes on drug pricing
  • More prior authorization changes
  • Fixing the federal court stay of agent-broker compensation
  • More changes on supplemental benefits
  • More health equity reforms
  • More Special Needs Plan (SNP) changes and Medicare-Medicaid integration
  • Star changes, including guardrail reforms, quality improvement hold harmless changes, and fixing TukeyGate

Separately, will he do more on antitrust and horizontal and vertical integration?

(Article may require a subscription.)

#election2024 #biden #healthcare #regulations #medicareadvantage #partd

https://www.modernhealthcare.com/policy/health-rules-2024-medicare-pay-prior-authorization

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CMS Releases Part D Data For 2025; Sets Up Premium Stabilization Program

The Centers for Medicare & Medicaid Services (CMS) released preliminary technical Medicare Part D bid information for Contract Year 2025. The Part D base beneficiary premium is capped at 6% growth in 2025 due to a stabilization fund set up in the Inflation Reduction Act (IRA). This was because of all the transfers of costs to plans from the government and caps on out-of-pocket (OOP) costs. The anticipated enrollment weighted-average premiums were not released in part because CMS has proposed to create an additional voluntary premium stabilization demonstration program for standalone Part D (PDP) plans.

Many critics of the IRA reforms have suggested that premiums in 2025 could go up 50% to 100% (or more) due to the transfer of liabilities. The stabilization subsidy in the IRA only caps the base premium. Plans enhance benefits and will either have to cut enhancements, raise premiums, or both.

The proposed new premium stabilization program for PDPs features a number of caps and reductions to premiums and enhances risk corridor protections. It seems too good to be true – perhaps a sure sign that 2025 premium hikes filed were high and CMS is trying to find ways to mitigate impacts around election time so there is no October Surprise for the incumbent administration.

The potential premium hikes for Medicare enrollees are a huge problem for sure. CMS has some broad demonstration authority under statute, but the proposal does not seem to fit the normal parameters for a demonstration. CMS says it is testing “whether additional premium stabilization and revised risk corridors for stand-alone prescription drug plans (PDPs) increase the efficiency and economy of services. …” I am not convinced this is anything other than a massive additional subsidy to PDPs to deal with the unintended consequences of the IRA changes.

See my earlier blogs on this subject: https://www.healthcarelabyrinth.com/part-d-premium-woes-due-to-the-inflation-reduction-act/ and https://www.healthcarelabyrinth.com/will-democrats-be-victim-of-an-october-surprise-of-their-own-making/ .

#medicareadvantage #partd #pdp #medicare #ira

https://www.cms.gov/newsroom/fact-sheets/cms-releases-2025-medicare-part-d-bid-information-and-announces-premium-stabilization-demonstration

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What If Exchange Premium Subsidy Enhancements Lapse?

A new Kaiser Family Foundation (KFF) analysis determines the potential effects of the lapsing of the enhanced premium subsidies in the Exchanges after 2025.

KFF concludes that enhanced subsidies have cut premium payments by an estimated 44%. It says if the enhancements lapse, individuals in twelve of the states that use HealthCare.gov would see their annual premium payments at least double on average. Enrollees with low incomes would see the greatest jump in their premium payments, but all income groups would be hurt (including middle-income earners). 

The Congressional Budget Office (CBO) said that Exchange enrollment would drop from an estimated 22.8 million in 2025 to 18.9 million the following year if the subsidies lapse. It would drop to 15.4 million in 2030. This would send our uninsured rate up. I expect it to continue to increase now due to the Medicaid redeterminations and losses of coverage.

The lapse in the enhanced subsidies would be tragic for the nation. The problem is that an enhancement renewal would need to occur in 2024 to ensure no interruption to rate filings for 2026. Rates begin to be filed in the first half of 2025. With an election, that won’t happen.

Press release:  https://www.kff.org/affordable-care-act/press-release/aca-marketplace-enrollees-will-see-steep-increases-in-premium-payments-in-2026-if-enhanced-subsidies-expire/

#aca #exchanges #obamacare #premiumsubsidies

https://www.kff.org/affordable-care-act/issue-brief/inflation-reduction-act-health-insurance-subsidies-what-is-their-impact-and-what-would-happen-if-they-expire/

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Paragon Proposes Medicaid Reforms

The conservative think tank Paragon Institute proposes to phase out the current 90 percent federal matching rate for the Affordable Care Act’s (ACA) Medicaid expansion and begin applying the regular federal match after eight years. It would also reduce the 50% Medicaid reimbursement floor to 40% for the richest states, also phased in over eight years. It says spending would be reduced by $600 billion from 2026 to 2034. Trump is known to pay attention to Paragon. While radical and it threatens to reduce coverage nationally, the proposal is less disruptive than the fundamental remake of the ACA and Medicaid attempted by Republicans during Trump’s first term.

#aca #medicaid #coverage #reimbursement

https://finance.yahoo.com/news/paragon-proposes-bold-medicaid-funding-100000986.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJzUe6HiQKz3okVpdso7A0yLeZAIPW1Ub2ostzrg7ZONyQ8z1KWrDGM859gWDHSx-g-178HChmqc40o8i1lMq0Z0f8O1tXErWp6qrflxRiOQ5GwC6iEyxQ2Yhd9fdz-o9EckMhY6Yljg3gA_7GDG6JdxppPhxUpCV_1324WzFyBd

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Medicare Advantage Inpatient Days Rising

Hospitals cry foul at every pass over Medicare Advantage (MA) plans’ efforts to control inpatient hospital utilization. But a new analysis from the Kaiser Family Foundation (KFF) shows that inpatient days attributable to MA have increased considerably over time.

Medicare Advantage’s share of inpatient days grew from 13% to 23% from 2015 to 2022. As of 2022, nearly half (48%) of all Medicare inpatient hospital days were attributable to MA. The MA penetration in that year averaged just short of 46%. There are numerous other great statistics in the analysis. This year, MA plans are required to follow traditional program standards for deciding whether a stay is required and thus the share will increase more.

#medicareadvantage #hospitals #priorauthorization

https://www.kff.org/medicare/issue-brief/medicare-advantage-enrollees-account-for-a-rising-share-of-inpatient-hospital-days/

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