William MacBain, Senior Vice President, Gorman Health Group

The newly minted ACO regulation from Medicare has some zingers hidden in its 696 pages. Okay, to be fair, the actual regulation is only 70 pages long, double spaced. The rest is all preamble, where CMS describes the 1200 comments on the proposed rule, and how they have responded (or not) in the final rule.

The first zinger has to do with the Physician Quality Reporting System, known to its friends as PQRS. Since 2007, CMS has paid a bonus to physicians who report quality data. Under current rules, CMS will pay physicians ½% of allowed charges from 2012 through 2014. BUT, docs in an ACO will only be able to participate in the PQRS through the ACO. The ACO will report as if it were a group practice. If the ACO fails to report in compliance with the PQRS rules, its docs won’t get the PQRS bonus. This could be an issue in recruiting doctors who may not see a clear advantage to the ACO to begin with, given all the other requirements.

A second zinger is the approach to risk adjustment. CMS has agreed to use the Medicare Advantage HCC risk adjuster for newly assigned beneficiaries. They won’t use HCCs for continuing beneficiaries – people who were assigned to the ACO last year. HCCs are based on diagnosis codes on last year’s claims. CMS reasons that an ACO would improve coding accuracy in year one, to get the best risk adjustment they could for continuing beneficiaries in year 2. So only new-to-the-ACO beneficiaries will get risk adjusted for higher HCC scores. BUT, if the average HCC score for continuing beneficiaries goes down in year two, then CMS will risk adjust and reduce the benchmark accordingly. The inference is that reduced scores could only reflect reduced average risk. So ACOs that are not diligent in keeping their risk scores up could be docked a chunk of money for apparent losses resulting from poor coding, not from poor care management.

On 04/04/2011 CMS announced the final MA capitation rates and to our industry’s surprise the final rates were quite different from those projected in the initial February notice. The highlights from the final call letter are as follows:

1. 2012 MA capitation rates will increase a mere 0.4%, a staggering1.2 % less than projected 45 days ago. Health plan CFOs are already working on strategies to trim benefits and remain competitive with market competitors, this will enable plans to either reduce or eliminate the impact on their earnings.  
2. Please note that the above rate increase does not include any Risk Adjusted premium increases perceived by plans, so those of you who have been working hard will begin to reap tremendous competitive advantages in 2012.  
3. The Final Call projects a negative growth factor for MA of -0.16%. A far cry from the well-received growth projection of 0.7% given 45 days ago. This based on lower physician rates that are also announced in the Call Letter. After all it’s the providers who truly market MA products based on their overall satisfaction with plan benefits and compensation.  
4. CMS will conduct Integrity Audits on plans with members’ share of cost at or above 10% after 7/1/2011. Expect to see plans try to stay below the 10% to avoid CMS audits 
5. RADV Audit Methodology has remained unchanged.  While CMS received a tremendous response rate from the letter sent out in December 2010, it has decided not to implement method changes for the time being.  Expect the method announcements later this year.  
6. STARS – CMS will be paying Quality bonuses for plans with higher than 3 Stars in 2012; these plans will also be given competitive advantages during enrollment periods in an attempt to increase highly rated plans’ growth year round. The key here will be plans’ ability to work with providers, since a large number of the STAR measures are directly dependent on the Provider offices.   

   In short this ride of ups and downs continues; the survival skills for MA remain constant: excellence in HCC, and your plan’s ability to develop long term partnerships with providers to yield the high quality equitable healthcare delivery experience we all want for ourselves in the not too distant future!

    

   Kenneth Persaud CEO, Precision Healthcare Systems  

Sure we all want to maximize our Medicare Star Rating. Consumer satisfaction and HEDIS measures we know affect our rating. But did you know that your ability to be compliant with CMS regulations also affects your rating. In addition to quality measures of how well we are taking care of our Medicare members, Star rating will also be affected by CMS audit results. Taking this one step further compliance audit results can indirectly affect financial results.

Information presented at the recent Managed Care Compliance Conference sponsored by Health Care Compliance Association (HCCA) annual health plan conference Elizabeth Lippincott, JD, of Elizabeth Barrett Lippincott, PLLC, presented this relationship. Starting in 2012, Medicare Advantage Plans with higher Star ratings will bid against higher benchmarks than their lower-rated competitors. Star rating level will also determine what percentage of the rebate, for Medicare Advantage plans with bids below benchmark, can be used to supplement benefits.

In addition, regulatory compliance can impact future business opportunities, specifically ability to expand service areas or offer additional Medicare Advantage and Part D products. Compliance program audit results factor into annual CMS performance reviews, as described in the CMS HPMS memorandum, "2010 Application Cycle Past Performance Review Methodology," December 12, 2010. CMS is considering past performance in deciding whether to approve applications for service area expansions or applications for new product offerings for current plan sponsors as described in 42 CFR 422.502(b) and 423.503(b).

With this in mind, are you and your organization ready for these new CMS audits? Being ready is more than putting together the "audit books" of audits in the past. With short notice, just a few weeks, auditors from various locations, not your regional office managers, will arrive at your doorstep and request volumes of information. They will be looking for the effectiveness of your compliance program, your risk assessments and your progress in implementing these corrections. Audit areas include formulary administration (transition support, utilization management and protected class drugs), prescription drug coverage determinations, and associated appeals and grievances. Other areas include premium billing, enrollment and disenrollment, and the organization’s Compliance Program. Being ready, compliant, and being able to tell your story and show these results will be imperative to your audit success and indirectly – or perhaps not so indirectly – to you financial success.

Ann U. Greenberg, CHP, CCEP, AG COMPLIANCE GROUP, LLC