Medicare Advantage (MA) critics like to shout about revenue overpayments and this is sure to generate headlines and ongoing controversy. But MA plans need to worry about yet another concern from the Centers for Medicare and Medicaid Services (CMS), investigatory agencies, and Capitol Hill. This surrounds supplemental benefits and whether enrollees are benefiting from the vast amount of dollars supposedly earmarked for their utilization each year.
This is yet another complicated subject so let’s try to break this down a bit.
Rate-setting quick primer
As we have discussed on this website often, the rate-setting process in MA has helped MA plans grow considerably. Plans submit annual bids on how much it will cost to deliver traditional Medicare benefits. It then is paid out a portion of the difference between the county benchmark and the bid amount for traditional benefits. This is called the rate rebate. The amount given back to plans can vary based on their Star score and whether it hit 4 Star and above. But the rebate is considerable.
These rebates must be given back to members in the form of additional benefits. In some cases, these additional benefits can be filling in gaps in the traditional program (e.g., the inpatient benefit) or reducing cost-sharing from the traditional benefit. But a great deal of the dollars are used on supplemental benefits, which are not offered in the traditional program. These benefits have proliferated over the years as more people enrolled, as competition grew, and as CMS itself expanded the possibilities for such benefits.
Supplemental benefits overview
Supplemental benefits have been around for years and have fit into a few different types.
More narrow and traditional supplemental benefits that are primarily health-related – These are the earliest and most prolific of the supplemental benefits. Indeed, the regulations may or may not have clearly spelled out the ability to even include some of these benefits over the years. Plans proposed them and CMS signed off on them along the way. The major ones in this category include the following:
- Vision (exams or eyewear)
- Dental (exams and other services)
- Hearing (exams and aids)
- Fitness
- Over-the-counter (OTC) drugs
- Remote access technologies
- Post-acute meals
- Non-emergency transportation
Expansion and clarification of primarily health-related supplemental benefits – In 2019, CMS clarified (to address existing ambiguities) what supplemental benefits could be offered and expanded the health-related category. It also allowed plans to waive the so-called uniformity mandate (requiring benefits to be offered to everyone in the plan) and allow targeting of supplemental benefits to subsets of the enrollee population based on clinical conditions (e.g., certain transportation and cost-sharing waivers to members with certain disease states).
Some of the benefits clearly spelled out include the following (notice some were already offered):
- Adult day care services (adult day health services)
- Home-based palliative care
- In-home support services
- Support for caregivers of enrollees
- Medically-approved non-opioid pain management (therapeutic massage)
- Stand-alone memory fitness benefit
- Home and bathroom safety devices and modifications
- Non-emergency medical transportation
- Over-the-counter (OTC) benefits
Special supplemental benefits for the chronically ill (SSBCI) – In 2020, CMS allowed the offering of not primarily health-related benefits to eligible chronically ill enrollees. The item or service must have “a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.” A chronically ill enrollee is one that (1) has at least one medically complex condition that is life-threatening or significantly limits health or function, (2) has a high risk of hospitalization or other negative health outcomes, or (3) requires intensive care coordination. By their nature, these benefits are targeted to a subset of the enrollee population as well.
Example of these SSBCI benefits include:
- Food
- Expanded meals
- Expanded transportation
- General supports for living
- Social needs
- Self-direction supports
- Grocery
- Additional home modifications
- Personal care items
- Housekeeping
A 2024 CMS rule effective 1/1/2025 described below requires MA plans to demonstrate, by the time they submit bids, that such items and services meet the legal threshold of having a reasonable expectation of improving the health or overall function of chronically ill enrollees and are supported by evidence-based research.
The supplemental benefits controversy
MA rebates are growing considerably. The 2023 Medicare Trustees Report estimated $67 billion is spent on rebates in 2024. In 2022, over 99% of MA plans offered at least one supplemental benefit. The median number was 23 supplemental benefits. (See the January 2023 Government Accountability Office (GAO) report for more details on supplemental benefit offerings.) That is a lot for a plan and members to keep track of. The fear is that utilization of many of these benefits is very low.
Over the years, numerous groups have documented in analyses that no one is quite sure how much of the rebates are actually spent on supplemental benefits. The January 2023 GAO report below is a worthy read. It points out:
- The various types of supplemental benefits
- Notes that spending on such benefits by plan varies greatly
- States that little is known on spending due to the lack of encounter data submission
- Finds that there is no way right now to accurately tie back bid information on such benefits to actual utilization.
GAO recommended that CMS clarify that supplemental benefit utilization must be submitted as encounter data and that it should have clear directions on how to do so given how different many are from traditional health benefits.
Similarly, in its March 2024 “Report to the Congress: Medicare Payment Policy,” MedPAC, the congressional Medicare policy advisor, took MA plans to task on supplemental benefits. Like the GAO, MedPAC cited major dollars allocated to the benefits and little way to analyze the value actually provided.
MedPAC cited a study by the actuarial firm Milliman. Milliam analyzed 2018 MA claims for 1.9 million beneficiaries who were 65 or older and enrolled in plans that provided dental coverage. Milliman found only 11 percent of enrollees had MA-covered claims for preventive dental care. MedPAC also cited a trade association study that found only 33 percent of eligible beneficiaries used OTC benefits during the year. MedPAC also noted data released by Elevance Health that showed low utilization of supplemental benefits in its plans.
I also include a link below to an article from The American Prospect, a progressive publication, that covered the MedPAC report. I disagree with a great deal that is cited in there, but I refer to it because this is what many on Capitol Hill are reading — not only progressives but conservatives who want greater accountability and hate corporate welfare. It argues against MA on the overpayment issue (citing numerous areas) and links the supplemental benefits controversy to it. It says supplemental benefits are massively subsidized by the government through the rate rebate and that the benefits are used to drive more and more enrollment at no real value. It recounts that all this happens to benefit MA plans and no dollars are allocated to the other half of Medicare beneficiaries for any benefit enhancements.
CMS’ response
In response to the analyses and due to its ongoing concerns, CMS took two steps in 2024 to get their arms around supplemental benefits and ensure value is being delivered.
CMS memo on requirement to submit supplemental benefits utilization as encounter data — While many argued the regulation was clear that all encounters should be submitted as part of encounter data gathering process in MA, the fact is that supplemental benefit data largely was not being submitted. Three factors impacted the reporting:
- MA plans claimed the regulations were not clear on submission of supplemental data as encounter data.
- Sufficient direction as to how to submit supplemental benefit encounters was not spelled out by CMS.
- Many supplemental benefits are not health-related or cannot be reported cleanly as medical services can (e.g., while some supplemental benefits like dental can be easily submitted in HIPAA formats, some benefits do not match traditional encounter structures, do not have procedure codes, etc.).
All three points were fair. Indeed, many MA plans were not submitting encounters at all or not regularly. Further, the encounter system would reject submissions if certain fields were not captured or had accurate values.
CMS tackled all of this in a little-talked-about February 21, 2024 memo as well as supplemental memos issued providing technical details for submissions through the encounter data system. Submission was retroactive to 1/1/2024.
The February 21, 2024 memo made it clear that MA plans had a requirement to submit supplemental data as encounters. I urge plans to thoroughly review the memo as well as the additional submission guidance. CMS says it should cover all benefit types to allow for full submissions, but this is very complex, it still leaves a lot to work through, and I expect numerous updates and changes over the next several years.
Plans will need to master the nuances of submitting for each supplemental benefit type. One of the biggest challenges for plans may be the requirement that plans report each individual utilization instance when a supplemental benefit is used. The guidelines actually make exceptions to this (e.g., the use of debit cards and fitness centers), but this will be a major point of contention well into the future even with the allowances. Default codes for supplemental benefits were published to try to address the difference between healthcare services and non-traditional and non-health-related services. Hopefully, programming related to default codes will take into account that certain submissions will not have other traditional fields filled out (e.g., diagnosis and procedure).
2025 MA and Part D Rule – CMS is very concerned about the lack of use of supplemental benefits and the high cost put in bids by plans. The question being raised is are supplemental benefits “shadow benefits” built into rates but not utilized sufficiently. Plans market such benefits when enticing enrollees to join, but do they essentially pocket the dollars when utilization is low (perhaps even though there is a minimum medical loss ratio requirement)?
Again, CMS supports the provision of supplemental benefits, especially in the area of social determinants and the chronically ill. But it does want to ensure better oversight. To ensure the large federal investment of taxpayer dollars in these benefits is actually making its way to beneficiaries and are not primarily used as a marketing ploy, the 2025 rule requires MA plans to do the following as of 1/1/2025:
- Engage in minimum outreach efforts so that enrollees are aware of the supplemental benefits available to them.
- Issuance of a “Mid-Year Enrollee Notification of Unused Supplemental Benefits” annually, personalized to each enrollee, which includes a list of any supplemental benefits not accessed during the first six months of the year. In addition, the notification must include the scope of the benefit, any cost-sharing required, and network or restrictions, how to access the benefit, and a customer service line if additional help is needed.
- Prevent misleading marketing related to supplemental benefits. The rule makes it a violation to feature benefits that are subset to given populations as available to everyone in the plan.
Conclusion
After significant scrutiny, CMS did respond to criticism on supplemental benefits’ accountability by enacting a number of reforms. CMS will have to deliver on them and ensure it has adequate oversight on the implementation. It will be up to MA plans to not only get supplemental benefit encounters in but meet the new 2025 rules as well.
More to the point, MA plans need to commit to driving supplemental benefit education and utilization. Supplemental benefits are one of the great value differentiators between MA and the traditional program. They could be even more so if utilization is driven to appropriate levels and care and quality increase. On the flip side, a poor record on submission of encounters and utilization of the benefits could backfire on MA plans and add to complaints that MA is not all it is cracked up to be from a cost and quality standpoint.
Sources and additional reading:
https://prospect.org/health/2024-05-30-medicare-advantage-64-billion-supplemental-benefits
https://www.medpac.gov/document/march-2024-report-to-the-congress-medicare-payment-policy/
https://www.gao.gov/products/gao-23-105527
https://www.gao.gov/assets/d23105527.pdf
#medicareadvantage #supplementalbenefits #cms
— Marc S. Ryan
