By Kevin Mowll, Executive Director, RISE Association | March
12, 2020
A
February 2020 proposed rule from the Centers for Medicare & Medicaid
Services (CMS) regarding the 2021 Medicare Advantage (MA) program included an
important change that could have a significant impact on plans as it could
increase membership of beneficiaries who are diagnosed with end-stage renal
disease (ESRD).
The proposed rule states:
since
the beginning of the MA program, individuals with ESRD have not been
able to enroll in MA plans subject to limited exceptions. Section 17006(a)
of the Cures Act removed this prohibition effective for plan years beginning on
or after January 1, 2021.
This
change to the MA program could have significant impact on plans if you think
about all the ways in which it could increase the membership of beneficiaries
whose health conditions include ESRD. While MA plans have been required to care
for members with ESRD all along, the big question is how many new members with
ESRD status will enroll in plans. For some plans with a lot of experience and
established processes, this may not be so consequential from a cost-of-care
point of view if it does not result in a significant increase in ESRD
membership. For other plans without that background expertise, it raises a lot
of questions that must be thought through.
Nonetheless,
even experienced MA plans, may find that changes in the rate payment
methodologies and the ramifications of the risk adjustment models and bidding
elements could alter the end effects on their resulting financial
performance.
The
implications include wide ranging considerations for MA organizations, such
as:
·
Projected enrollment levels of new members with these diagnoses
·
The expected costs of health care claims and the consequences to
the medical loss ratio (MLR)
·
The requirements for population health management strategies and
care pathway development
·
Provider network contracting strategies
·
CMS bid elements, such as network adequacy
·
The validity of CMS payment levels in the benchmark
·
The validity of the ESRD risk adjustment model
·
Product design challenges around maximum out-of-pocket (MOOP)
levels and related trade-off factors of cost-sharing in the plan benefit
packages (PBPs) and consequences to the overall membership’s value
proposition
·
The net impact on member satisfaction globally, as well as
within the ESRD member cohort specifically
·
Member onboarding and engagement strategies, tools, and
techniques for transition of care
·
The effective deployment of Special Supplemental Benefits for
the Chronically Ill (SSBCI) for social determinants of health
(SDoH)
During
this comment period before the final rate announcement on April 6, many MA
organizations have submitted feedback to CMS and RISE has heard from member
health plans about their concerns. No matter the final outcome of this input
process, RISE believes that the larger issue is that CMS is challenging MA
plans to come up with best practices to manage the complex chronic health
conditions of this particular cohort of beneficiaries who not optimally managed
under the Original Medicare program.
It is
important to note, however, that CMS recognizes the extraordinary cost of organ
acquisition, and as such, is proposing to carve out this cost from
the financial responsibilities of the MA organizations. Instead, like the cost
of hospice for example, those expenses will be paid through the Medicare fee
for service (FFS) program and will be eliminated from the benchmarks and
capitation premiums.
Expected
costs of caring for members with ESRD
In
a commentary published by the US Renal
Data System (USRDS)*, the assessment of the costs involved in caring for ESRD
patients is disproportionately high, albeit for a relatively small percentage
of the total Medicare population. As noted in the second paragraph below, the
transplant costs are far lower than the ongoing dialysis expenses for either
peritoneal dialysis (PD) at home or in facility-based (HD) dialysis.
…total
Medicare fee-for-service spending in the general Medicare population increased
by 2.1% in 2016 to $500.5 billion. The spending for ESRD patients of $35.9
billion accounted for 7.2% of the overall Medicare paid claims in the
fee-for-service system, a share that has remained approximately constant during
the current decade. (p. 53)
Between
2016 and 2017, total spending on PD increased by 3%, as the share of patients
receiving PD continued to rise. However, while growth on PD spending on a PPPY
basis also increased slightly between 2016 and 2017 (1.6%), it remained less
costly on a per-patient basis in 2017 ($78,159) than HD ($91,795). Finally,
transplant spending in 2017 increased from 2016 levels by 3.8% in total and
2.1% in PPPY expenditures. In 2017, the PPPY cost for transplant patients,
$35,817, remained far lower than spending for either dialysis modality. (p. 57)
Given
this backdrop, even after the CMS proposal to carve out the costs of
transplantation, there remains an extremely high net level of expected annual
costs per member with ESRD. Having robust care pathways and population health
strategies in place are indispensable.
In
addition, individuals with chronic kidney disease have always been eligible to
enroll under the provisions of the regulations governing the MA program. The
bigger picture here is that it is incumbent on MA plans to anticipate the progression
of those health conditions to avert as much suffering and deterioration as
possible. The stages and phases of advancing chronic kidney disease (CKD) and
the associated costs and care management required for co-morbid conditions are
enormous and predictable. As a progressive disease, USRDS notes
that CKD advances in stages and is noted below as a “multiplier” of costs when
combined with other chronic conditions such as hypertension (HTN), heart
failure (HF), and diabetes (DM).
USRDS
also notes the following information regarding spending for CKD and related
chronic comorbidities:
Beneficiaries
aged 65 and older examining FFS Medicare spending reinforces CKD’s reputation
as a cost multiplier. Beneficiaries with recognized CKD represent 14% of the
point prevalent aged Medicare population, yet accounted for 25% of total
expenditures (Table 3). We examined 2017 costs in relation to beneficiaries’
CKD stage, age, sex, race, and concurrent disease, focusing on DM and HF. These
conditions, in addition to CKD, represent some of the costliest chronic disease
populations for Medicare. For example, HF affects 9% of beneficiaries in the
FFS Medicare population, but accounts for 20% of expenditures. Thirty-five
percent of overall expenditures were directed toward the 24% of beneficiaries
with DM. In those aged 65 and older, per-person per-year (PPPY) costs were 87%
higher for patients with CKD only, versus those with no CKD, DM, or HF ($16,112
vs $8,620). Costs for those with CKD and DM were 51% higher than for those with
DM only. Similarly, expenditures for those with CKD and HF were 47% higher than
for those with HF alone. For beneficiaries with CKD, HF, and DM, costs were 43%
higher than for those with only HF and DM. Overall, people with diagnoses of
any condition of CKD, DM, and/or HF accounted for one-third of the Medicare
aged 65 and older population, but over half of total programmatic costs.
It is
obvious that care coordination and the population health management
capabilities of MA organizations are better suited to rise to the challenges of
managing these populations than a setting that lacks these types of tools. The
crucial factor is to intervene earlier in the disease cycles of the patients
with these health conditions to improve their health status and the prospects
of averting some of the predictable consequences of more
advanced morbidity and mortality.
To the
extent that the MA industry can use some of the new benefit tools available to
them through recent CMS regulatory changes (the introduction of health-related
supplemental benefits in 2019 and SSBCI supplemental benefits for 2020),
Medicare plans are better positioned to adapt, innovate, and develop new models
of care.
Implications
for data capture and reporting for risk adjustment, Stars, and population
health management
As
mentioned above, it would be a mistake to only focus on the needs of the
members already diagnoses with ESRD. In practical terms, moving “upstream” to
identify and intervene earlier in the natural progression of the CKD conditions,
is critical. Data capture and reporting will necessitate having processes in
place to monitor lab data and values, going beyond limited encounter streams,
and instead looking at nutritional levels (eGFR lab values, serum albumin
levels, dietary care), anemia scores (hemoglobin, ESA use), lipids levels(total
cholesterol, LDL), and diabetes (HbA1c) values.
This
emerging requirement, in turn, has implications for adoption of sophisticated
technologies to capture, read, and report unstructured data in medical records
(e.g., machine learning, natural language processing, and artificial
intelligence). The next logical requirement, of course, is how this
information is shared, interpreted, reported, and stored.
Issues
for payment rates and risk adjustment
The 2020 Rate Announcement and Call Letter makes
the following statement regarding the 2020 Part C risk adjustment model:
The
21st Century Cures Act requires CMS to make adjustments to the risk
adjustment model to take into account the number of conditions an individual
beneficiary may have, and to make an additional adjustment as the number of
conditions increases. For 2020, CMS is finalizing implementation of the
alternative payment condition count model that includes additional condition
categories for pressure ulcers and dementia, as well as additional variables
that count the number of conditions a beneficiary may have (among those that
are in the risk adjustment model, or “payment conditions”), and makes an
adjustment as the number increases.
CMS
began implementing the risk adjustment requirements in the 21st Century Cures
Act in Payment Year (PY) 2019, by utilizing a risk adjustment model with
additional factors for substance use disorder, mental health, and Chronic
Kidney Disease (CKD) diagnoses. Further, the 21st Century Cures Act requires
that CMS fully phase in the required changes to the risk adjustment model by
2022. We are therefore beginning the phase in of this new model in 2020,
starting with a blend of 50 percent of the risk adjustment model first used for
payment in 2017 and 50 percent of the new risk adjustment model.
The
ESRD risk adjustment model and Rate Normalization elements involve ESRD
dialysis and ESRD functioning graft models. The dialysis rates are set at
statewide levels, so there is some concern about the impact on local plans
because the rates are averaged across a much larger geography than their local
service areas. Also, it is not yet completely transparent to plans how
these risk adjustment models were developed and what their use will do to the
ultimate payment rates.Page BreakWhat does this mean for the annual CMS
bid calculation?
As
mentioned earlier, risk adjustment models hold some unknowns for plans as well
as the ultimate benchmarks used in the
bid process. Beyond these, of course, there are other important
factors to consider while building the models for the bids:
·
Assumptions about enrollment of new membership with ESRD
diagnoses. What are reasonable assumptions to make? With only
1 percent of total eligible Medicare beneficiaries currently having
the ESRD diagnosis, will the enrollment level be low? Or will the
favorable out-of-pocket costs of MA plans become a magnet for adverse
selection?
·
Network adequacy requirements. it is not yet certain what
CMS will require in terms of provider networks for the bid. While current
networks contain dialysis services, will an unknown level of increase in ESRD
incidence boost the bar for network adequacy?
·
Duopolistic dialysis providers. How will the fact that two
large national dialysis chains hold so much market share impact
pricing?
·
How to deal with the CMS regulation raising the maximum level of
out-of-pocket costs? While setting the MOOP levels every bid season
requires careful thought and calculation, the ESRD factor takes this concern to
a higher level. No MA plan wants to be positioned as the most attractive option
for new members with ESRD, so what impact would raising the current MOOP level
have on the other current members without ESRD and potential new members also
without ESRD?
·
How to use available supplemental benefit options to manage
care? This is an opportunity to collaborate with care management to
employ new flexibility provided by CMS in the way that was envisioned to
improve care outcomes for certain population cohorts enrolled in the
plan.
Are
there strategies to cope with these considerations that will mitigate against
some of the potential risks of product design decisions? For example, are there
options to put together capitation contracts or carve outs for dialysis, or are
there alternative providers coming to the market?
One of
the thorniest care management issues is the fact that the nephrologist at the
dialysis center is the one physician that the ESRD member sees most
frequently, yet most nephrologists are not prepared to fully serve as primary
care providers in the traditional sense. However, there are best practice
examples in certain geographies where alternative management scenarios have
developed. In the longer term, the change in the eligibility of ESRD
beneficiaries to enroll in MA plans might be the impetus to change the
paradigm of traditional management patterns for dialysis patients.
Satisfaction
levels of MA Plan members with ESRD
It
remains to be seen how Medicare beneficiaries with ESRD diagnoses will act on
the new opportunities available to them to enroll in MA plans. However, that
turns out to be, the MA plans are obliged to consider their processes and
workflows from the very beginning in the marketing and sales cycles, to
onboarding of new members, ongoing customer service, population health
management services, and ultimate retention. If the new members feel that they
are receiving high quality care, that they were brought on board as members in
a caring and supportive manner, and their plan is providing top-notch service,
there will not be any problems with the CAHPS scores. As CMS plans to
further elevate and weight customer satisfaction in the Stars Bonus Program,
the investment in this end-to-end process review will earn rewards in Stars
scores. However, failures in this area could have particularly damaging impact
on Stars, given the policy direction now contemplated by
CMS.
Conclusions
From
the comments and opinions expressed above, it should be clear that RISE
considers the policy shift around ESRD represents an important public policy
development that calls on the MA program to step up to the plate and come up
with better care and financing models for challenging sub-populations in our
U.S. health care system. As managed care organizations have become increasingly
favored by states struggling with the cost and quality of care for the Medicaid
populations, we have also witnessed a continuing desire to create models of
care for the dually eligible populations, as well. The ESRD policy does not
come out of nowhere: it is part of a trend in government sponsored health care
to turn to coordinated care plans to solve what is so obviously broken in the
old FFS model.
Some
worry that recent CMS pronouncements mean that the Medicare Stars program will
be drastically weighted toward customer satisfaction. However, the combined
HEDIS®/HOS/CAHPS/ administrative scores still uphold the public
accountability of MA plans to provide high-quality health care that is also
cost effective while maintaining high levels of satisfaction. In the long run,
this accountable model represents a dramatic demonstration of an alternative to
what is wrong in American health care.
RISE
believes this industry will figure out the puzzling parts identified in this
article and then will innovate to show that this approach can ultimately
deliver on the promise of value-based care for some of the neediest and
deserving patients we have among us.
*United
States Renal Data System. 2018 USRDS annual data report: Epidemiology of kidney
disease in the United States. National Institutes of Health, National Institute
of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2018.
The data reported here have been supplied by the United States Renal Data System (USRDS). The interpretation and reporting of these data are the responsibility of the author(s) and in no way should be seen as an official policy or interpretation of the U.S. government.
The data reported here have been supplied by the United States Renal Data System (USRDS). The interpretation and reporting of these data are the responsibility of the author(s) and in no way should be seen as an official policy or interpretation of the U.S. government.
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