Submitted electronically to www.regulations.gov
The Honorable Chiquita Brooks-LaSure
Administrator
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244
Re: Comments on Calendar Year 2023 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (CMS-2022-0021)
Dear Administrator Brooks-LaSure:
The Center for Medicare Advocacy (the Center) is a national, non-profit law organization that works to ensure access to Medicare, health equity, and quality healthcare. The organization provides education, legal assistance, research and analysis on behalf of older people and people with disabilities, particularly those with long-term conditions. The Center’s policy positions are based on its experience assisting thousands of individuals and their families with Medicare coverage and appeal issues. Additionally, the Center provides individual legal representation and, when necessary, challenges patterns and practices that inappropriately deny access to Medicare and necessary care. We appreciate the opportunity to submit these comments to the above-referenced proposed payment policies.
There is consistent, and growing evidence that the Medicare Advantage (MA) program is paid more than the amount traditional Medicare would spend on the same beneficiary, and such spending is growing per person. This has significant implications for Medicare programmatic spending. These overpayments are contributing to the growing inequities between the traditional Medicare program and MA. Further, the quality rating system, and corresponding bonus payments, are flawed, and do not improve quality of care for beneficiaries
While we recognize that Congress must act in order to make fundamental, structural changes to the MA payment system, CMS has certain discretion surrounding MA payment, quality measures and bonus payment. We are disappointed that CMS does not appear to be using the tools at their disposal to rein in excessive MA payment, which exacerbates financial challenges facing Part A Trust Fund – as well as overall Medicare spending – and contribute to increases in all Medicare beneficiaries’ Part B premiums. We urge CMS to reverse course and improve the risk adjustment model to correct these overpayments.
Payment Imbalance Between MA and Traditional Medicare
There is consistent and growing evidence that the Medicare Advantage program is paid more than traditional Medicare spends on a given beneficiary. According to a recent Commonwealth Fund blog[1], due to risk adjustment and quality bonus payments, MA “plans have been paid more than what traditional Medicare would spend for similar beneficiaries every year since 2003.” In other words, this payment imbalance has persisted for almost 20 years.
Similarly, the Kaiser Family Foundation noted in an August 2021 report[2] that the MA program “has never generated savings relative to traditional Medicare” and while higher payments have led to coverage of some limited extra benefits for plan enrollees, “the higher payments have also led to higher Medicare spending than would have occurred under traditional Medicare and higher Medicare Part B premiums paid by all beneficiaries, including those in traditional Medicare.”
A recent Health Affairs article[3] analyzing the debate surrounding MA payment highlights, among other things, that “having the public sector overpay crowds out other governmental services, requires higher taxes, or increases fiscal deficits” and points out how MA sponsors’ supposed efficiencies (based on their bids) can actually work to the detriment of those in traditional Medicare:
Despite MA plans being able to deliver traditional Medicare benefits at an average of 87 percent of what spending would have been in traditional Medicare, MedPAC’s latest estimate is that MA payments exceed what the beneficiaries would have cost in the traditional program by 4 percent. […] A policy that links deliberately overpaying MA plans to the availability of better benefits—by restricting better benefits to MA enrollees—essentially requires Medicare beneficiaries to leave traditional Medicare to share in the added benefits.
Coding Intensity Adjustment
It is evident that the current risk adjustment model incentivizes plan sponsors to code their enrollees with as many conditions as possible, driving up payment rates. As noted in a recent Commonwealth Fund blog[4], “[s]ome research has found that the additional payments driven by risk coding mainly accrue to health plans themselves, in the form of higher profits.” In an effort to quantify this excess payment, the blog notes:
(MedPAC) estimated that in 2020 the risk scores for beneficiaries in Medicare Advantage were about 9.5 percent higher than what they would have been for a similar beneficiary in traditional Medicare, resulting in about $12 billion in excess payments to plans.
CMS has statutory authority under the Deficit Reduction Act of 2005 to implement a coding intensity adjustment for Medicare Advantage (MA) plans in order to adjust for differences in patterns of diagnosis coding between MA and traditional Medicare. Once again, in this Advanced Notice, CMS fails to use its discretion – and follow its obligation – to implement adjustments larger than the statutory minimum.
In January 2020, Richard Kronick estimated that “[u]nder reasonable assumptions about the rate of growth of MA coding, CMS will overpay MA plans by $200 billion over the next decade if the coding intensity adjustment remains at 5.91 percent, its current level.”[5] Kronick continues:
Recognizing the likelihood that MA plans will report diagnostic information differently than is reported in traditional Medicare, […] Congress gave CMS the authority to implement a “coding intensity adjustment” to adjust for differences in coding patterns between MA and traditional Medicare. […] CMS retained the authority and obligation to implement adjustments larger than the statutory minimum if the data indicated that a larger adjustment was needed. However, it has not yet done so, despite strong evidence that a larger adjustment is needed to compensate for differences between MA and traditional Medicare in coding patterns. The measured risk of MA enrollees relative to traditional Medicare increased from 95.0 percent in 2007 to 106.2 percent in 2015.
We fear that Kronick’s statements about “perverse political incentives” are at play: “[t]he main reason that CMS has not implemented a larger coding intensity adjustment is that there is little political gain from doing so, and the decision about the coding intensity adjustment is, ultimately, made by political appointees. If CMS were to implement an adjustment that is larger than the statutory minimum, MA plans would make their displeasure known to members of Congress. Furthermore, an adjustment larger than the statutory minimum might result in higher MA premiums or fewer extra benefits for enrollees, raising the likelihood of constituent dissatisfaction.”
We urge CMS to use its discretion to implement an adjustment above the statutory minimum in order to rein in excessive payments to MA plans.
Quality Ratings System and Bonus Payments
There is convincing evidence that the Medicare Advantage quality ratings system is flawed, and has not improved quality. From a consumer standpoint, with 9 out of 10 MA members enrolled in a plan that earned 4 or 5 stars for 2022, using star ratings as a means of comparison between plans does not appear to actually help consumers make informed decisions.
In addition to the star ratings’ limited utility in providing the public with means of comparing plans, the ratings themselves appear to be unreliable. The Medicare Payment Advisory Commission (MedPAC) has in recent years “discussed the flaws in the 5-star system and the [quality bonus program] and the continuing erosion of the reliability of data on the quality of MA plans” as noted in their March 2021 report to Congress. As a result, the Commission notes, “[t]he current state of quality reporting is such that the Commission’s yearly updates can no longer provide an accurate description of the quality of care in MA.”
As noted in Health Affairs[6] recently, “[m]eaningful measures of quality in MA are limited because of the lack of data to compare enrollees’ experience to that of beneficiaries in traditional Medicare. Despite billions of dollars paid, the meaningfulness of the measures in the star rating system remains in question.” Although the quality ratings are of questionable utility, the same article notes that unlike quality incentive programs for other types of providers, there is a cost associated with the MA quality ratings system in the form of additional payment to plans: “The many Medicare quality incentive programs for providers are budget neutral, meaning the bonuses paid to relatively good performers are offset by the penalties for those that perform relatively poorly. Only the incentive program for MA is not budget neutral; it increases overall spending substantially.”
While the rating system appears to be flawed with respect to measuring quality in plans, despite its significant cost, more importantly, there is evidence that it does not, in fact, improve quality. According to a December 2021 Health Affairs research article[7], “[t]he MA quality bonus program poses a substantial and rising expense of $6 billion annually. Given the paucity of evidence for its effectiveness, our study supports calls from stakeholders […] for CMS to substantially revise the quality bonus program or eliminate it altogether.” We agree, and urge CMS to so act.
Emphasis on Health Equity
As outlined above, we have significant concerns about the MA quality rating and bonus system as a whole. Nonetheless, we applaud CMS for adopting the guiding principle to advance health equity, and correspondingly appreciate the intent behind better measuring social risk factors and the development of a Health Equity index. For feedback relating to implementing these measures, we defer to the thoughtful comments submitted by our partners at Justice in Aging.
If the quality bonus system is retained, and these proposals aimed at addressing health equity are included, we urge CMS to ensure that plan sponsors do not use these measures and criteria simply as a means of further increasing coding intensity and thereby further boosting payment; plans must be held accountable for actually addressing disparities. In addition, while we recognize the value of both screening for and provision of health-related social needs such as food, housing and transportation, we note that MA plans provide such services largely through the excess payment they receive in relation to spending on beneficiaries in traditional Medicare, to whom such benefits remain unavailable. Both Congress and CMS have exacerbated the disparities between MA and traditional Medicare, and we urge CMS to do everything within its authority to reverse this trend.
We appreciate the opportunity to submit these comments. For additional information, please contact David Lipschutz, Senior Policy Attorney, dlipschutz@MedicareAdvocacy.org at 202-293-5760.
David Lipschutz
Associate Director/Senior Policy AttorneyLicensed in CA and CT
[1] Commonwealth Fund, “Taking Stock of Medicare Advantage: Payment” (Feb. 17, 2022), available at: https://www.commonwealthfund.org/blog/2022/taking-stock-medicare-advantage-payment.
[2] Kaiser Family Foundation, “Higher and Faster Growing Spending Per Medicare Advantage Enrollee Adds to Medicare’s Solvency and Affordability Challenges” (Aug. 17, 2021), available at: https://www.kff.org/medicare/issue-brief/higher-and-faster-growing-spending-per-medicare-advantage-enrollee-adds-to-medicares-solvency-and-affordability-challenges/.
[3] Health Affairs Forefront, “The Debate On Overpayment In Medicare Advantage: Pulling It Together” (Feb. 24, 2022) by Paul B. Ginsburg and Steven M. Lieberman, available here: https://www.healthaffairs.org/do/10.1377/forefront.20220223.736815.
[4] Commonwealth Fund blog, “Taking Stock of Medicare Advantage: Risk Adjustment” (Feb 17, 2022), available at: https://www.commonwealthfund.org/blog/2022/taking-stock-medicare-advantage-risk-adjustment.
[5] Health Affairs, “Why Medicare Advantage Plans Are Being Overpaid By $200 Billion And What To Do About It” by Richard Kronick (Jan 29, 2020) DOI: 10.1377/hblog20200127.293799, available at: https://www.healthaffairs.org/do/10.1377/forefront.20200127.293799/full/.
[6] Health Affairs Forefront, “The Debate On Overpayment In Medicare Advantage: Pulling It Together” (Feb. 24, 2022) by Paul B. Ginsburg and Steven M. Lieberman, available here: https://www.healthaffairs.org/do/10.1377/forefront.20220223.736815.
[7] Health Affairs, “The Medicare Advantage Quality Bonus Program Has Not Improved Plan Quality” (December 2021) – see discussion in CMA Alert “Study Published in Health Affairs Finds that Medicare Advantage Quality Bonus Program Has Not Improved Quality” (Jan. 6, 2022), available at: https://medicareadvocacy.org/study-ma-quality-bonuses-dont-improve-quality/.