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Healthcare Costs Vary Across Regions

A new report titled the Health Cost Landscape from the Health Care Cost Institute found that healthcare spending per person with employer coverage was $6,711 but the figure can vary significantly by region. Spending was 70% higher than the national average in Charleston, West Virginia, while costs were 41% below the national average in Bakersfield, California.

The report looked at more than 1.3 billion medical claims submitted from 2018 to 2022, with data from 38 million people. The report also found that the price of services, utilization trends and the types of services used all contribute to the spending figures. Prices were the largest driver in variation.

Most of the metropolitan areas included in the study were highly concentrated hospital markets, with 88% either highly or very highly concentrated.

#healthcare #costs #employercoverage

https://www.fiercehealthcare.com/finance/healthcare-spending-varies-widely-between-metropolitan-areas-hcci

New Drug PA Requirements In Government Programs

Notwithstanding the voluntary prior authorization reforms, the Centers for Medicare and Medicaid Services (CMS) issued a new proposed rule that extends recent non-pharmacy prior authorization requirements to retail drug requests. In the case of retail drugs, urgent requests would have to be fulfilled in government programs within 24 hours, with all others in 72 hours. The requirement is within a broader Interoperability Standards and Prior Authorization for Drugs rule. The PA requirements are effective October 1, 2027.

The rule would also require insurers to publicly report certain metrics around prior authorization, including approval and denial rates, appeal outcomes, and decision timeframes. As well, CMS is proposing to require payers to support three National Council for Prescription Drug Programs (NCPDP) standards—the SCRIPT, Formulary & Benefit (F&B), and Real-Time Prescription Benefit (RTPB) standards–beginning October 1, 2027. The proposed standards allow providers to query formulary information, determine real-time coverage information, and exchange electronic prior authorization requests and decisions for drugs.

The proposed rule would additionally: 

• Update health IT standards and implementation guides to align with current versions adopted by ONC for HHS use.
• Expand existing interoperability requirements to small group market QHP issuers on Exchange.
• Add a regulatory definition for “Failure to Report” to strengthen CMS’ oversight authority under the Open Payments program. 

CMS is also seeking public input through five Requests for Information on: 

• Improving electronic event notifications for care coordination. 
• Strengthening healthcare cybersecurity and system resilience.
• Enhancing oversight of payer APIs.
• Streamlining step therapy processes.
• Improving prior authorization for laboratory tests and durable medical equipment, prosthetics, orthotics, and supplies. 

Additional articles: https://www.fiercehealthcare.com/regulatory/proposed-cms-rule-would-set-prior-auth-deadlines-drugs and https://www.cms.gov/newsroom/press-releases/cms-proposes-major-reforms-speed-up-patient-access-drugs-increase-transparency-reduce-administrative and https://www.cms.gov/newsroom/fact-sheets/2026-cms-interoperability-standards-prior-authorization-drugs-proposed-rule

#priorauthorization #medicareadvantage #medicaid #managedcare

https://www.beckerspayer.com/policy-updates/cms-proposes-extension-of-prior-authorization-rule-to-cover-drugs-6-notes/

Priority Health Overpayment Audit

The Health and Human Services (HHS) Office of the Inspector General (OIG) says Priority Health may have collected at least $4.4 million in Medicare Advantage (MA) overpayments throughout 2018 and 2019. The targeted audit focused on ten high-risk diagnosis groups.

Auditors found medical records did not back diagnosis codes across 252 of 300 sampled enrollee-years, prompting $828,010 in net MA overpayments — an 84% error rate. OIG says many codes were for a previous diagnosis that was no longer active.

#medicareadvantage #radv #riskadjustment #overpayments

https://www.beckerspayer.com/legal/priority-health-estimated-to-have-received-4-4m-in-overpayments-audit/

CMS Understood Rate Impact on MA

More evidence that the Centers for Medicare and Medicaid Services (CMS) understood the potential impact of a zero-rate hike on Medicare Advantage (MA) benefits and cutbacks in 2027. The agency raised the rate hike to about 2.5% by amending its proposal for more aggressive risk adjustment and v28 model changes. This means payments will move from basically a zero increase to $13 billion, just over half of what 2026 will see.

CMS clearly listened to plan complaints about the proposed model changes. Plans argued cost recognition would not be correct if the model were adopted. CMS could still adopt this in the future.

And as I noted, most plans will see more than 2.5% because the unlinked chart change that was adopted hits big plans much more given their risk adjustment practices. Experts say UnitedHealthcare faces a $5 billion reduction and Humana $2 billion.

Still, plans and industry trade groups are not necessarily ecstatic given utilization trends. A fourth year of cutbacks is still likely.

(Article may require a subscription.)

#medicareadvantage #rates

https://www.modernhealthcare.com/insurance/mh-cms-medicare-advantage-payment-risk-adjustment

Insurers Say PA Reforms Taking Hold

The two main insurer trade groups say definitive progress is being made to implement voluntarily agreed-upon prior authorization (PA) reforms. AHIP and the Blue Cross Blue Shield Association released a report that found leading health plans reduced prior authorizations for an array of services by 11% since the pledge was made. This equates to 6.5 million fewer prior auth requests for patients. Reductions in Medicare Advantage were 15%.

The insurers say that PAs were removed where there were clear clinical guidelines and consistent utilization trends for providers. The groups say insurers have introduced more consumer-friendly language and appeals steps.

About 50 plans signed on to the initiative, including all six of the largest, publicly traded plans.

#priorauthorization #healthplans

https://www.fiercehealthcare.com/payers/insurers-have-eliminated-11-prior-authorizations-under-reform-pledge

2027 Final Rates Out! A Modest Increase Added

The Centers for Medicare and Medicaid Services (CMS) released its Final Announcement for calendar year (CY) 2027 rates for Medicare Advantage (MA). I had predicted that rates would end up between 2% and 3% as the Effective Growth Rate (EGR) would increase markedly between the advance and final notices. The EGR rate actually did not increase much — 0.36%. But rates before risk score trends will go up by 2.48% (vs. 0.09%) because CMS will not implement further changes to the v28 risk model for CY 2027.

In its advance notice, CMS proposed to update the Part C risk adjustment model using more recent underlying original Medicare data (updated from 2018 diagnoses and 2019 expenditures to 2023 diagnoses and 2024 expenditures). This would recognize more current costs. Instead, for CY 2027, CMS will continue to use the 2024 MA risk adjustment model which was calibrated with original Medicare 2018 diagnoses and 2019 expenditures data that was fully implemented in CY 2026.

The nearly 2.5% hike will mean about $13 billion in additional payments to plans in 2027. CMS fairly noted that MA plans were hit by the impacts of the v28 model from 2024 to 2026. It is a small recognition of the churn and volatility in the industry right now. CMS officials say that the rule aims to balance immediate challenges in the program with the agency’s goals of promoting long-term stability for MA. CMS said the decision on updating the v28 model is indefinite and it is monitoring plans. The agency said it is still focused on addressing insurer behaviors on risk adjustment upcoding and overpayments.

For risk score calculation for CY 2027, CMS is finalizing the exclusion of diagnoses from audio-only encounters and diagnoses from chart reviews not linked to actual encounters, with an exception to include diagnoses from unlinked chart reviews for beneficiaries who switch from one MA organization to another. Insurers lobbied hard for this.

The industry is not totally happy as the hike is still very low in a very high utilization environment. But roughly 2.5% is better than an approximate zero. And the chart changes do not impact the industry equally, pushing the hike for some to about 4%.

Expect my full analysis next week in a blog.

Additional articles: https://www.fiercehealthcare.com/regulatory/cms-gives-medicare-advantage-rates-248-bump-2027-plan-year-final-rule andhttps://www.modernhealthcare.com/politics-regulation/mh-cms-medicare-advantage-payments-2027/ and https://www.cms.gov/newsroom/press-releases/cms-finalizes-2027-medicare-advantage-part-d-payment-policies-strengthen-accountability-long-term and https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-rate-announcement

#medicareadvantage #rates #margins #cms

https://www.beckerspayer.com/payer/medicare-advantage/cms-hikes-medicare-advantage-rate-2-48-for-2027-6-notes/

White House Wants To Reduce HHS Budget

In a long-delayed budget blueprint for federal fiscal year 2027, the White House is asking Congress for a $15.8 billion discretionary budget cut for the Department of Health and Human Services, which is 12.5% lower than this year and eliminates many programs. Major reorganizations are again proposed. A major change would be the move of the growing 340B program to the Centers for Medicare and Medicaid Services (CMS). That is a fair change given the out-of-control nature of the program and the nexus to government program payments at CMS. A new agency, the Administration for a Healthy America, would be established and oversee health priorities currently managed by multiple agencies. That, too, is not a bad idea and should be considered.

The administration says the cuts will eliminate “bloated, woke and inefficient programs” and refocus on core priorities. But Senate Appropriations Chair Susan Collins, R-ME, essentially declared the cuts dead on arrival, criticizing the proposed eliminations and reductions to domestic program spending. The proposed reductions are about half requested last year.

What is driving the reductions? A $445 billion, or 42%, increase in military spending, bringing it to $1.5 trillion. Overall non-defense discretionary spending reductions amount to $73 billion, or 10%. Healthcare would increase at the Department of Veterans’ Affairs, with a proposed $1.5 billion or 9% increase. Major investments in electronic medical records (EMR), AI, and automation are planned.

MedPage Today, Becker’s and Modern Healthcare do a good job in the articles below of detailing cuts throughout HHS and related agencies. The cuts would reduce $129 million from the Agency for Healthcare Research and Quality.

In addition, Healthcare Dive published two articles on the major staff losses at HHS and related agencies and the impacts as an aggressive overhaul agenda rolls out. It says HHS has lost more than 18,000 employees under Trump 47. Experts complain about too little staff to carry out the mission, but my experience in government suggests staff bloat is a real issue and can often actually work against efficiency. The truth is always somewhere in the middle.

Last, President Trump announced that Vice President JD Vance will become the fraud czar. Main focus: benefit rich Blue states.

Additional articles: https://www.fiercehealthcare.com/providers/white-house-floats-125-budget-cut-hhs-fy2027-reiterates-reorganization-plan and https://www.healthcaredive.com/news/cms-tackles-big-policy-changes-with-diminished-workforce/815937/ and https://www.healthcaredive.com/news/one-year-after-hhs-layoffs-a-department-in-disarray/815906/ and https://thehill.com/homenews/senate/5815864-collins-criticizes-trump-budget/?tbref=hp and https://www.medpagetoday.com/publichealthpolicy/healthpolicy/120647 and https://www.beckershospitalreview.com/hospital-management-administration/trump-budget-targets-15-8b-in-hhs-cuts-9-things-to-know/ and https://thehill.com/homenews/administration/5814748-vance-crackdown-democrat-fraud/?tbref=hp

(Some articles may require a subscription.)

#trump #congress #hhs #cms #budgets #healthcare #veterans #fwa

https://www.modernhealthcare.com/politics-regulation/mh-trump-budget-request-hhs-340b-cms

CMS Finalizes 2027 MA And Part D Rule

The Centers for Medicare and Medicaid Services (CMS) finalized the 2027 Medicare Advantage (MA) and Part D rule. Next week, I will publish a detailed blog on the changes between the draft and final rules. The major Star ratings changes were adopted, including the cancellation of the Excellent Health Outcomes for All (EHO4all) reward while maintaining the Reward Factor as well as the sunset of numerous measures. All of the proposed measure terminations were adopted except the Diabetic Eye Exam measure was maintained. Depression Screening will also be added. Most changes occur in Star Year 2029.

In other news, CMS announced Maximus will no longer be the Part C Independent Review Entity (IRE). C2C will take over, which also is the Part D IRE.

Additional articles: https://www.beckershospitalreview.com/legal-regulatory-issues/cms-finalizes-2027-medicare-advantage-and-part-d-rule-10-notes/ and https://www.beckerspayer.com/payer/medicare-advantage/cms-awards-ma-independent-review-contract-to-new-vendor/ and https://www.cms.gov/newsroom/fact-sheets/contract-year-2027-medicare-advantage-part-d-final-rule

(Some articles may require a subscription.)

#medicareadvantage #stars #quality #cms

https://www.modernhealthcare.com/politics-regulation/mh-cms-medicare-advantage-star-ratings-2027

Elevance Gets A Reprieve

Elevance Health avoided sanctions for now, including an enrollment and marketing freeze, after the Centers for Medicare and Medicaid Services (CMS) granted the Medicare Advantage (MA) plan an extension to make up for incorrect risk adjustment data reporting. Elevance has until May 30 to remediate the issues.

At the same time, a bipartisan group of senators is urging CMS to work with Congress to crack down on overpayments in MA.

Further, a lawsuit alleging Elevance Health’s Carelon Behavioral Health misled beneficiaries about the scope of its provider network was allowed to move forward by a judge.

Additional article: https://www.healthcaredive.com/news/elevance-sidesteps-medicare-advantage-sanctions-cms/816324/ and https://www.fiercehealthcare.com/payers/blue-cross-plan-accused-perpetrated-fraud-ghost-network-class-action-lawsuit and https://www.modernhealthcare.com/insurance/mh-carelon-behavorial-ghost-network-lawsuit-elevance/

(Some articles may require a subscription.)

#medicareadvantage #riskadjustment #overpayments #elevancehealth

https://www.healthcaredive.com/news/bipartisan-senators-cms-crack-down-medicare-advantage-overpayments-upcoding/816336

Gallup Finds Healthcare Affordability Tops Concern List

A new Gallup Poll finds that Americans are more concerned about the availability and cost of healthcare than any other domestic issue. It is now issue number 1 in Americans’ minds. This has not happened since 2020.

About 61% of the 1,000 adults surveyed said they worry a “great deal” about accessing and affording healthcare, while 23% expressed a “fair amount” of concern. About 51% of respondents said they were concerned a “great deal” about the economy and 50% said the same about inflation.

The change comes as premiums surge throughout healthcare and enhanced Exchange subsidies expired.

In other news, healthcare tech company Cedar surveyed 4,150 patients across the U.S. and analyzed 1.5 billion patient interactions. Nearly 40% of healthcare collections now come from uninsured patients, up 54% in the past three years.

Also, states are paying contractors such as Deloitte, Accenture, and Optum millions of dollars to help them comply with the One Big Beautiful Bill Act (OBBBA) new mandates, including work requirements in Medicaid.

Additional articles: https://www.fiercehealthcare.com/finance/uninsured-patients-drive-nearly-40-healthcare-collections-cedar-survey and https://www.fiercehealthcare.com/regulatory/states-pay-deloitte-others-millions-comply-trump-law-cut-medicaid-rolls

#healthcare #coverage #uninsured #medicaid #workrequirements

https://thehill.com/policy/healthcare/5808929-healthcare-concerns-top-issue