With the 2021 Medicare Advantage and
Part D rule finalized, payers may need to prepare for higher Medicare Advantage
spending due to new ESRD enrollees.
June 25,
2020 - Medicare Advantage plans may see higher healthcare spending on
end-stage renal disease (ESRD) populations when the new Medicare Advantage and
Part D rule goes into effect, an Avalere study found.
Earlier in 2020,
CMS finalized a
rule that allowed patients with ESRD to enroll in a Medicare Advantage
plan. The rule was controversial for its reimbursement policy, which many plans
and organizations found to be too low to cover the costs of ESRD treatment.
As part of the
changes, outpatient facilities were no longer included in the list of provider
types for which Medicare Advantage plans must ensure patient proximity. In
response to stakeholder objections, CMS said that this would incentivize
Medicare Advantage plans to contract with a wide variety of dialysis providers.
This would, however,
force Medicare Advantage plans to pay a fee-for-service rate if patients use
out-of-network dialysis providers that are closer to their home, along with a
number of other factors that may increase healthcare spending.
One factor is that
the new calculation for Medicare Advantage reimbursement did not account for
cost variation by location. Thus, ESRD beneficiary enrollment could spur higher
healthcare spending depending on where the beneficiary live.
For example,
metropolitan areas see high Medicare Advantage penetration. But plans in these
areas would also see a greater disparity between the payments they receive and
the costs that ESRD treatments for these populations demand, a separate
Avalere study from
December 2019 found.
Metropolitan Medicare
Advantage plans are not the only ones that could see higher spending. Plans in
rural areas would also take a hit, according to the same December 2019 study.
When the 2019 study compared new reimbursement levels with previous ESRD cost
benchmarks, states like Iowa and North Dakota still were underpaid in some
areas by as much as five percent.
Payers will also want
to take increased enrollment and shifting demographics into account for next
year’s healthcare spending projections. The 2020 Avalere study found that around
300,000 Medicare beneficiaries with ESRD will become eligible for Medicare
Advantage plans.
“Understanding the
differences between the MA enrollees and the FFS population will help both
health plans and providers better prepare for the 2021 transition,” the Avalere
study emphasized. “In addition, understanding what proportion of ESRD patients
enrolled in FFS today is likely to enroll in MA in 2021 in specific markets
will help assess the impact of the coming change.”
The new enrollees
will dramatically change Medicare Advantage plan demographics for beneficiaries
with ESRD.
At present, Medicare
Advantage beneficiaries with ESRD tend to be around 69 years old, with less
than a third of them being younger than 65. A little over one in three of these
beneficiaries (36 percent) is dually eligible. Over half are white while only
32 percent are Black or African American.
In contrast, patients
with ESRD in fee-for-service models of care tend to be about a decade younger
at 60 years of age with a majority of beneficiaries (57 percent) being under
the age of 65. Nearly half of them are dually eligible. Racially, the
population is fairly split between white and Black with 46 percent of the
population being white and 38 percent Black.
“Differences in
patient characteristics among ESRD patients enrolled in MA and those in FFS may
result in differences in costs, comorbidities, and the types and intensity of
services used,” the Avalere study suggested. “Avalere’s analysis did not look
at utilization patterns of the 2 groups. However, the differences in the
proportion of duals status suggest the underlying costs of the 2 populations
may differ.”
As payers brace
themselves for higher
healthcare spending in 2021, it will be crucial to take these
costs into account for Medicare Advantage plans.
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