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.
Dig Deeper
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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