Value-based system is still a worthwhile endeavor

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In this time of uncertainty, some things are still clear. Transitioning from fee-for-service medicine to a value-based system is still a worthwhile endeavor supported across the aisle.

By paying for better — instead of simply more — care, the government highlights and rewards high-quality health plans, hospitals and physicians.

{mosads}But a glitch is causing unintended consequences for millions of seniors, leaving 2.5 million Medicare beneficiaries in 18 states without the improved benefits, reduced premiums and lower cost-sharing Congress intended to provide.

Medicare Advantage, the program now enrolling more than 30 percent of seniors and other Medicare beneficiaries in private health insurance options, seeks to improve quality, in part, by offering bonuses to health plans receiving 4, 4.5 or 5 stars in the 5-star rating system.

As authorized by Congress, Quality Incentive Payments (QIPs) are designed to serve not only as financial incentives for plans to work closely with providers to increase quality, but also to improve benefits for seniors.

Every dollar awarded via a QIP must be returned to beneficiaries in the form of reduced premiums or increased services. These include medication therapy management, case management, care coordination and hospital readmission avoidance.

Yet, in some counties, a 5-star plan receives the same payment as a 3-star plan down the street. Because at the same time quality payments were enacted, Congress imposed a cap on MA payment benchmarks. The effect of this provision is to reduce or, in many places, eliminate quality incentive payments. Nowhere else in Medicare are quality incentives arbitrarily cut this way.

When, contrary to the intended goals of the government, plans are being denied the promised rewards to distinguish high-quality care, they also lose the ability to reinvest in enhanced service for beneficiaries in their communities by lowering premiums or offering additional services such as dental coverage, transportation to and from doctor’s’ appointments and gym memberships.

Sadly, the real losers in this odd interpretation are America’s seniors. Millions, including more than 230,000 in California, nearly 40,000 in Oregon, more than 45,000 in Florida — and the list goes on and on — miss out on Medicare benefits and, as a result, incur higher-than-expected out-of-pocket costs. This translates to an estimated loss of hundreds of millions for our nonprofit, community health plans and the enrollees they serve.

Among the many stories from Alliance of Community Health Plans members, UCare,based in Minnesota, withdrew its Medicare Advantage offerings in Wisconsin when the benchmark cap made it financially impossible to continue to provide services to the MA plan’s 7,000 enrollees.

In a letter to Health and Human Services (HHS) Secretary Sylvia Mathews Burwell last month, UCare CEO Jim Eppel noted that the Obama administration’s narrow legal interpretation of the benchmark cap has caused serious consequences to seniors.

With more than half of the counties in Minnesota affected by the cap, there has been “significant revenue loss that could and should be used to enhance enrollee benefits and lower enrollee premiums and cost-sharing,” Eppel wrote. For its projected 2017 enrollment, the organization anticipates a loss of $14 million in revenue for its UCare for Seniors plan.

The Obama administration’s interpretation has handed Security Health Plan of Wisconsin a $17.2 million loss in revenue to date — and the organization estimates it will take another $14.7 million hit in 2017. So instead of receiving a 5 percent bonus to reward quality, the 4.5-star plan is getting just slightly more than a 3-star would. Had the glitch been corrected for 2017, some of Security’s most vulnerable members could have seen as much as a $25 per month reduction in monthly premiums, adding up to more than $300 in annual savings.

Geisinger Health Plan of Pennsylvania saw a $19 million revenue loss this year, which translated to as much as $200 per member. For Group Health Cooperative of Washington state, the government’s calculation reduced revenue by more than $6 million in 2015 and 2016 and the plan anticipates an additional $6 million loss in 2017 — or $6.00 per member per month. Note: these plans already operating on razor-thin margins.

The revenue loss for these plans and others translates to higher member premiums, fewer benefits and higher cost-sharing for seniors.

Fortunately, there is bipartisan support in Washington to fix this problem, including a bill (H.R. 4275), introduced in the U.S. House of Representatives.  We are not advocating for the elimination of the benchmark cap itself. We are simply asking for quality to be rewarded as Congress intended so the highest-performing health plans in the nation can continue to engage in exceptional work and return those benefits to Medicare beneficiaries.

By taking appropriate steps now, Medicare can meet the promise of a quality-based system nationwide.

Ceci Connolly is president and CEO of Alliance of Community Health Plans.


 The views expressed by contributors are their own and not the views of The Hill. 
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