Will CMS Policy Changes Have an Impact on the Healthy Age-in Market?

by Richard Hamer, Founder and Chief Strategy Officer

21-Sep-2018

Will CMS Policy Changes Have an Impact on the Healthy Age-in Market?

For many years Deft Research studies have shown that persons who are aging into Medicare coverage are equally likely to gravitate toward Supplemental Medicare (aka, Medsupp) products and Medicare Advantage (MA) products. The primary reasons for Medsupp remaining attractive despite its price disadvantage are its unrestricted access to doctors and hospitals, and the simplicity of coverage terms leading consumers to feel more certain about what they are buying.  Suspicion and lack of trust in Medicare Advantage’s detailed list of provisions and restrictions drives many away. 

But in coming years, Medicare Advantage product designers will have opportunities to restore trust among consumers.  And if they do, they will steer more market share toward these plans.  For the MA 2019 contract year, the Centers for Medicare and Medicaid Services (CMS) has promulgated new policies allowing MA plans to offer more supplemental benefits and allow more flexibility in how benefits are offered.  The new policies create opportunities for MA plans to meet a wider set of consumer needs.  However, getting consumers to react to the term “coordinated care” and communicating health care value to consumers is difficult. It remains to be seen whether those new to Medicare – the age-ins – will recognize the value and be more likely to select MA over Medsupp.   

From a high altitude, the new policies enable MA plans to include supplemental benefits in their health plan designs.  This conjures visions of greater care coordination, more differentiated products, stronger relationships with providers, and increased opportunities to promote wellness and reduce costs. 

CMS outlines two sets of criteria for supplemental benefits to be accepted as health-related and appropriate for inclusion in an MA package. A supplemental benefit must be “used to diagnose, prevent or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and health care utilization.”  Secondly, the benefit must be “medically appropriate, focus directly on the enrollee’s health care needs and be recommended by a physician or licensed medical professional as part of a care plan.” 

In advance of the June bids, there were several areas of supplemental benefits that CMS stressed (and no doubt these were subsequently emphasized in the health plan bids submitted).

·         Adult Day Care Services – these are services for adults who need a safe place to be during the day when other caregivers may not be available.  The health status of the consumers using ADCS varies, but the service tends to be used by persons with some health problem that requires at least monitoring or assistance.

ADCS can improve health-related quality of life and is an opportunity for health plans to use the services provided to reduce unnecessary hospitalizations and control the progression of disease.

As of 2014, there were 4,800 ADCS providers in the US serving 282,000 people.
 

·         In Home Support Services and Home-based palliative care – are services performed by personal care attendants to help persons with activities of daily living, and/or provided by health professionals to diminish pain and other symptoms in very ill persons, and/or enhance bathrooms and other areas of the home to reduce the risk of injury.

Home services also improve health-related quality of life by helping people stay in their homes and avoid the expense of nursing homes and other facilities.

In 2014, 12,400 home health agencies served 4.9 million persons.  Most agencies do not provide the full array of services discussed here.  The new policies give these agencies an opportunity to expand services under a new reimbursement umbrella.  

·         Transportation – must be used to accommodate an enrollee’s heath care needs and, for this discussion, is not an emergency service.  

Missing appointments and failure to fill prescriptions are common signals that health problems are not managed, prevented, or addressed as well as could be.  By making travel more convenient, a transportation service can contribute to better health.

In 2016, 1.8 million persons used non-emergency transportation services for medical appointments or trips to a pharmacy. 

MA executives are excited about the CMS allowance of greater flexibility on offering benefits. 

For health plans, this means benefits can be offered to targeted populations, and generate a greater return on investment. This prompts greater sustainability of programs.  Health plans will be able to reduce cost sharing for certain covered benefits, offer tailored supplemental packages targeted for specific populations, and reduce deductibles for beneficiaries that meet specific medical criteria.  

Other supplemental benefits exist beyond what is outlined here.  Many of the supplementals and new flexibility CMS address the needs of consumers who are quite ill.  So how could these changes affect the broader Medicare market?  There are three ways that new age-ins’ can be made more likely to consider a Medicare Advantage plan. 

·         By being different.  The changes are enough to signal to age-ins that MA is no longer the same old deal.  The new offerings change the old value proposition. 

·         By presenting higher value.  Studies show that presenting a “Cadillac” plan containing extended benefits generates more attractiveness even though consumers may not need the benefits at the time of purchase. 

·         By generating more trustworthiness.  Extended supplemental benefits can be positioned to support the promise that, “we will take care of you if the worst happens.”  They help reduce the worry that a managed care plan limits services and won’t deliver in a time of greatest need.  They show that the health plan is organized to provide a complete package to meet every need, thereby offering a proof of trustworthiness. 

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