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Managed Care

This is designed to provide easy access to updated news and information on Managed Care in Michigan. We are hopeful that these resources, collected in one area, will assist members in analyzing their business model and planning for the future. If you are looking for a particular article or title, please scroll through and and locate the topic of interest. 

CMS Continues to Work to Modernize Medicine
February 15, 2019

Earlier this month, CMS issued its proposed changes for Medicare Advantage and Part D Plans, focusing on efforts to maximize competition. As plan enrollment continues to rise, the proposals work to increase plan options for member benefits and flexibility to better meet patient needs.

The rule extends the 2019 option for health plans to provide supplemental benefits to offer chronically ill patients a broader range of services that would be individually tailored to meet their specific needs, such as providing home-delivered meals or transportation for non-medical needs.

CMS notes that average Medicare Advantage and Part D premiums are their lowest in three years and plan choices have increased. Current plans can expect an average change in revenue of +1.59% over 2019. However, CMS also expects the coding trend to increase risk scores by 3.3%. Additionally, the proposed rule implements requirements from the 21st Century Cures Act to take into account for risk adjustment the number of conditions a beneficiary may have, and to make additional adjustments as the number of conditions rise. These changes will be fully phased in by 2022.


CMS Value Based Insurance Design (VBID) Model
February 1, 2019

Beginning in January 2017, VBID began testing the impact of providing eligible Medicare Advantage Plans the flexibility to offer reduced cost sharing or additional supplemental benefits to enrollees with select chronic conditions – with a focus on those services that are of the highest clinical value to them.

The model was tested in seven states (Michigan was added in 2018 for only a commercial insurance provider) for diabetes, congestive heart failure, chronic obstructive pulmonary disease, past stroke, hypertension, coronary artery disease, and mood disorders. In order to implement this program, CMS had to waive the uniformity requirement that all beneficiaries had to be offered a uniform premium, with uniform benefits, and uniform cost sharing throughout the plan’s service area.

This program varies a bit from the expansion of supplemental benefit options for Medicare Advantage Plans and focuses on gaining improved outcomes by decreasing barriers to care and prescriptions for persons with select chronic conditions.


The Balanced Budget Act of 2018 required that the model be revised to include all 50 states and territories by 2020. VBID introduces financial incentives to encourage health plan enrollees to use high value services, such as reducing prescription drug co-payments for persons with chronic conditions to support medication adherence. The goals include improved patient health through better disease control and to save money by reducing costly complications.

For 2020, CMS is testing certain health plan innovations in Medicare Advantage Programs through this model:

  • Value Based Insurance Design by Condition and/or Socioeconomic Status - beginning in 2020, plans may propose offering reduced cost sharing or additional supplemental benefits for 'non-primarily health related items or services' for enrollees with certain chronic conditions, low socioeconomic status determined by qualifying for the low income subsidy and/or dual eligible status. Plans may also propose additional supplemental benefits for all enrollees by disease state regardless of socioeconomic status. 
  • Rewards and Incentives - CMS will be testing the impact of broadening rewards and incentives for Medicare Advantage and Part D plans. Plans may propose incentives that more closely reflect the expected benefit of the health related service or activity, up to an annual limit, to better promote improved health, prevent injuries and illness, and promote the efficient use of health care resources. 
  • Telehealth Networks - CMS will be testing how innovations in telehealth can be used to complement the current network of providers and expand their service area. Enrollee choice must be preserved in use of telehealth services in lieu of in-person visits. Plans would have the opportunity to enter underserved markets.
  • Wellness and Health Care Planning - Plans participating in the VBID will be required to offer improved, timely access to Wellness and Health Care Planning, including advance care planning. Each participating plan must submit is proposed approach as part of their annual application.

For 2021, VBID will test inclusion of the Medicare hospice benefit within Medicare Advantage Plans. CMS will be releasing additional guidance on this program for interested stakeholders in the near future. 

On January 18, 2019 CMS posted the first year evaluation report. However, because outcome data are not yet readily available, the report has very limited usefulness at this time.


Part D Plans Taking on Risk
February 1, 2019

As part of the VBID design described above, Medicare Part D Plans can voluntarily work to address high pharmacy expenses. Currently patients will hit a catastrophic level of drug expense and then Medicare will step in to cover 80% of the drug costs, patient’s pay for 5%, and the Part D plan pays for 15%. Under the new voluntary option, plans will cover more of the financial risk for the catastrophic phase and share in the savings if the total spend comes in under target.

CMS anticipates that plans would have incentives to tougher negotiations with drug companies. Currently, government spending for the pharmacy catastrophic phase has spiked to $37.4 billion over the past decade, with an annual average increase of 17%. Over 3.2 million persons have reached the catastrophic phase in Part D plans.


Medicare Advantage Penetration in Michigan
February 1, 2019

CMS just released penetration rates for Medicare Advantage Plans by state. For January 2019 (reflective of enrollment in December), Michigan hit a high of 37.6%. The graph below reflects the number of Medicare eligibles in Michigan for the past year, reflecting the growth in the 65+ population – an increase of 4.4% over the past calendar year, with a 5.3% increase in Medicare Advantage participants.


Continuing enrollment growth in Medicare Advantage Plans is expected for 2019 and beyond.


In total, 2734 plans will be available to consumers nationwide in 2019 – an 18% increase from 2018 (about 417 more plans). The average Medicare beneficiary has access to 24 Medicare Advantage Plans in 2019. Plans are attractive to consumers because out of pocket costs are generally less and many plans include additional benefits. The average monthly premium has continue to steadily decline, with a 6% drop in 2019 to about $28. Approximately 46% of enrollees in their current plans will have a zero premium. Many insurers continue to note a healthy profit margin even with decreasing premiums.

Although health plans are attractive to consumers, a recent survey indicated that nearly six in 10 seniors said they would consider switching their current Medicare Advantage Plan in the near future. Cost, prescription drug coverage, and access to quality providers were cited as primary factors. Also noted is that younger seniors are looking for programs and resources that address total health and well-being. About half of surveyed seniors believe their plan is not offering relevant services or personalized support.

Additionally, many health systems are considering to launch their own Medicare Advantage Plans.


Medicaid Managed Care Changes
January 18, 2019

With the change in federal administration leadership in 2016, came a plan to revise recent Medicaid Managed Care revisions to streamline administration. CMS plan to update the rules was proposed in November, and comments were due on January 14. A summary of significant changes is noted below.

Network Adequacy – Removes requirements that states use time and distance standards to ensure health plan networks are accessible and adequate. Instead, states would be allowed to choose another standard. The 2016 Final Rule required time and distance standards for specific provider types starting in 2018. The proposed rule allows alternative methods such as –

  • Minimum provider to enrollee ratios 
  • Maximum travel distance to providers 
  • Minimum percentage of contracting providers accepting new patients 
  • Maximum wait times for appointments 
  • Hours of operation requirements 

The proposed rule also allows states to use any quantitative network adequacy standard for long term services and supports providers, eliminating the requirement for time and distance standards.

Beneficiary Protections – The proposed rule relaxes requirements for accessibility of written materials for persons with disabilities or those with limited English proficiency. Additionally, plans:

  • Will not have to publish providers who have completed cultural competence training.
  • Would now have 30 days to notify enrollees that their provider is leaving the network.

Appeals - States can shorten the timeframe for enrollee requests for a state fair hearing to appeal a health plan decision to deny or terminate covered services. The state can set the maximum time frame between 90 – 120 days, consistent with the timeframe for Medicaid Fee-for-service.

Quality - Under the 2016 rule, states were required to ensure that the quality rating system for Medicaid managed care plans was in alignment with that provided by CMS. This would allow meaningful comparisons between all managed care plans. The revision states that this is required “only to the extent feasible”. States can continue to direct plans to develop certain requirements for provider payments, such as specific value based purchasing models, performance improvement initiatives, or minimum – maximum fee schedules as long as payments are based on the utilization and delivery of services – and are not a pass-through (see below). These state directed payments must advance the goals and objectives in the state quality strategy and include an evaluation plan.

Pass-Through Payments – the new revisions specifically do not alter the elimination of pass-through payments. The 2016 Rule requires actuarial soundness and that payments must align with the provision of covered services. That means that pass-through payments cannot be provided to providers that are generally not linked to delivered services or outcomes of those services. These pass-through payments are not consistent with actuarially sound rates.

A pass-through payment is any amount required by the state to be added to the contracted payment rates to the provider that is not for the following purposes:

  • A specific service or benefit covered under the contract and provided to the enrollee
  • A specific permitted provider payment methodology in alignment with certain rules 
  • A subcapitated payment arrangement for services provided,
  • GME payments or FQHC payments.

The rule then phases out the ability for MDHHS to provide QAS payments to nursing homes, as well as hospitals, in the next several years. CMS has found no linkages between these types of payment to services, utilization, quality, or outcomes. Managed care plans are expected to cover all reasonable, appropriate, and attainable costs associated with providing services under the contract. CMS is also concerned that pass-through payments may limit a managed care plan’s ability to effectively use value based strategies. States must transition out pass through payments for hospitals in 10 years (2027) and for nursing facilities by 2022.

Members should note then, that QAS payments must be eliminated by 2022 for patients served under MI Health Link. Based on the 2016 rules, MDHHS will not be able to provide a QAS payment pass-through in any newly developed Medicaid Managed LTSS program. Thus, it is not clear at this point how the state will address this, or the nursing home provider tax that assists in funding it.

MDHHS, before the transition to the new administration, was developing a report that identified the options for managed LTSS. We are still awaiting that report or communications about the program moving forward. LeadingAge Michigan will continue to advocate for an adequate payment mechanism considering these new rules.

Narrow Networks - Problem or Opportunity?
January 18, 2019

In a recent report covered in Health Services Research, a study of resident outcomes for persons in nursing homes covered under Medicare Advantage Plans was summarized. The report identified that although Medicare Advantage Plans steered patients to certain skilled nursing facilities, no significant difference in patient outcomes could be found in facilities with high percentages of specific plans. They call into question the benefit of using such narrow networks.

Researchers reviewed outcomes of patients in facilities with high concentrations of a specific Medicare Advantage Plan compared to outcomes in facilities with low concentration of patients covered under the same plan. The study reviewed discharge to an acute setting within 30 days, discharge to a non-acute setting within 30 days, length of stay in the facility, and 180 day survival. The study worked to adjust for several demographic and diagnostic characteristics.

Nursing home characteristics were also included: RN FTEs, staffing, bed size, proportion of Medicaid patients, profit status, chain-related, occupancy rate, and CMS Five Star Rating.

It is important to note that differences in outcomes in Medicare Advantage Plan enrollees have already been documented compared to those covered under Medicare Fee for Service. SNF length of stay is five days shorter for post-hip replacement compared to fee-for-service patients in the same facility. However, it is not clear that longer term outcomes other than length of stay have been achieved. Clearly, the shorter length of stay is related to patient discharge coordination and expectations by the Medicare Advantage Plan.

Also, a 2016 study by the same authors (Momotazur Rahman, David J. Meyers, and Vincent Mor) has shown that Medicare Advantage enrollees tend to be enrolled in lower quality SNFs based upon the CMS Five Star system than is the case for FFS beneficiaries from the same residential neighborhoods.

As to how Medicare Advantage Plans ‘steer’ patients to certain facilities, it is more likely that in-network SNFs are used almost exclusively because of the higher patient co-payments for out-of-network providers. In this study, the two key predictors of nursing home choice were 1) geographic proximity and 2) the concentration of their specific Medicare Advantage Plan in the vicinity.

With the likelihood that the nursing home industry may well contract in the next several years, it is critical that payers understand the cost of quality. What might be more telling is comparing the potential savings from facilities with low lengths of stay, low readmission rates, and excellent outcomes with the real cost of care from facilities willing to take bargain rates.

Member attention on their overall value proposition continues to be critical as the post-acute care industry evolves.


Bi-Partisan Budget Act of 2018
January 18, 2019

Although the Bi-Partisan Budget Act of 2018 creates the ability for Medicare Advantage Plans to include services that are non-medically related starting in 2020, CMS has issued rules for these plans to initiate such services in CY2019. CMS believes that providing non-medical supports and services may delay use of Medicaid- funded LTSS later.

At this time, there are no plans in Michigan who will be providing these more flexible benefits in 2019. Only a small number of plans nation-wide will be offering these more flexible services at all. Nicotine replacement therapy tended to be the most popular new benefit, followed by family supports (respite care-counseling-training services) and in-home support services (home-making and personal care services).

Stakeholders can expect to see more expanded services from Medicare Advantage Plans in 2020. There may also be a broader expansion of previously allowed services, such as pill crushers under the ‘over the counter medication’ benefit.

Plans were challenged in responding to the CMS changes within a very limited time frame. Many of the plans that did include such services had experience with this population through their associated special needs plans. Medicare plans do not generally have relationships with home and community based service providers who have experience in providing these types of services, and would have had to ensure that there were enough quality providers available.

LeadingAge Michigan will continue to monitor the development of these potential services in the next several years. Stakeholders should note that plans do have the ability to make these services available only to persons with specific conditions, and not necessarily all their enrollees.


AARP 2019



AARP 2019




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