June 24, 2020
Summary
With the release of the 2021 Medicare Advantage (MA) and Part D
Final Rule, the details of the upcoming policy change that allows beneficiaries
with end-stage renal disease (ESRD) to enroll in MA are set. Stakeholders need
to adapt quickly to be prepared.
Beginning next year, more than 300,000 Medicare beneficiaries
with ESRD, who have been previously limited to fee-for-service (FFS) will have
the opportunity to enroll in MA—impacting a wide range of parties including
patients, health plans, dialysis facilities, and physician practices.
Changes to Network Requirements
The Centers for Medicare and Medicaid Services (CMS) finalized a
significant shift in how MA plans contract with outpatient dialysis facilities.
Prior to this regulation, MA plans needed to include a sufficient number of
dialysis facilities in their networks to ensure enough providers are located
reasonably near most enrollees (often referred to as “time and distance”
requirements).
In the final rule, the CMS departed from this policy
and removed outpatient dialysis facilities from the types of providers that
must meet time and distance requirements and instead will require each MA plan
to attest “that it has an adequate network that provides the required access
and availability to dialysis services, including outpatient facilities.” The
CMS stated in the final rule that they received comments from stakeholders who
are concerned that “providers in concentrated areas may leverage network
adequacy requirements in order to negotiate prices well above Medicare FFS
rates,” and by finalizing this change argued that MA plans will be encouraged
to contract with all types of dialysis providers.
In practice, this change will still allow MA plans to contract
with outpatient dialysis facilities, but if an enrollee receives dialysis
services from a facility that is not in-network, the MA plan would be required
to pay the facility FFS rates. As a result, plans are more likely to reimburse
facilities at lower rates than anticipated before this change, but the lack of
formal network could raise questions about availability of dialysis services.
Stakeholders should examine how this change may impact access to both facility
and in-home dialysis services, the financial impact to both plans and
providers, and any change in the expected number of beneficiaries with ESRD who
may enroll in MA starting next year.
Medicare Advantage vs FFS:
Differences in Payment and Patient Populations
A recent examination of the ESRD enrollment in both Medicare FFS
and MA, under a research-focused data use agreement with the CMS, revealed
significant financial and demographic insights relevant to payers and
providers. The data reflects the potential financial pressure plans may face,
depending on their geographic locations, as well as demographic differences of
future ESRD enrollees compared to those currently enrolled in MA plans through
several long-standing Medicare exemptions.
MA Payment Adequacy
Currently, MA plans receive payment for their existing ESRD
patient populations through a methodology that differs substantially from that
used for non-ESRD enrollees. Payments to MA plans for ESRD patients are
established at the state level rather than at the county level. As a result,
ESRD payments do not consider cost variation within a state—e.g., at the local,
county, or regional level. Additionally, changes in the MA ESRD payment rate
vary significantly from year to year, creating uncertainty over time.
Avalere analyzed CMS data from 2018 to assess how
payments to MA plans set by the current MA payment methods in metropolitan
statistical areas (MSAs) with higher numbers of ESRD patients compare to FFS
costs of ESRD patients. The study determined that in the top 15 MSAs with the
most ESRD patients enrolled in FFS, 10 had ESRD FFS costs that exceeded the MA
payment rate. Across the MSAs, MA payments fell below FFS costs by amounts
ranging from 2% to 12%. Conversely, 5 MSAs had a MA benchmark that exceeded FFS
costs by 1–9%.
Many of regions reviewed are among the most populous in the
country and have high overall MA penetration rates. Significantly, the MSAs
with the most ESRD beneficiaries enrolled in FFS—New York, Los Angeles, and
Chicago—all had FFS costs that exceeded the MA ESRD benchmarks. This trend also
was present in other large, urban MSAs, including Philadelphia, Houston, and
Miami.
The payment deficits were not limited to urban settings: Rural
areas in Iowa, Minnesota, North Dakota, Nebraska, and Ohio also were paid
between 2% and 5% below the benchmark. Of the total number of beneficiaries
living in MSAs included in this analysis, 45.6% live in MSAs where FFS costs
exceed the benchmark payment amount.
Stakeholders should consider how these payment differences are
relevant to the recently announced changes to network adequacy. Further, in
stating why the agency did not make major changes to payment in the Final Rate
Announcement in April, CMS stated major changes should be proposed and be
subject to a public comment period. If stakeholders are advocating for changes
to how MA plans are paid for ESRD patients, proposals should be finalized and
presented to the CMS well before the plan year 2022 regulatory cycle.
Demographic Differences
Along with
examining reimbursement rates, Avalere also made demographic comparisons between ESRD
patients enrolled in MA plans and those enrolled in FFS during the 2015 plan
year. The comparisons revealed some key differences:
|
Demographic Characteristic
|
ESRD Patients in FFS
|
ESRD Patients in MA
|
|
Average
Age
|
60
|
69
|
|
Under the age of 65
|
57%
|
29%
|
|
Age
65 or older
|
43%
|
71%
|
|
Dually eligible for Medicare and
Medicaid
|
49%
|
36%
|
|
Race:
White
|
46%
|
52%
|
|
Race: Black or African American
|
38%
|
32%
|
While some MA plans have experience managing the ESRD population
because of current enrollment, 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. 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.
Understanding the differences between the MA enrollees and the
FFS population will help both health plans and providers better prepare for the
2021 transition. 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.
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