The Future of Medicare…Medicare Managed Care
J Clin Pathways. 2022;8(2):24-25. doi:10.25270/jcp.2022.03.1
Clinical pathway developers need to be aware of a growing dominant user of resources—Medicare managed care. In the next year, it is highly likely that Medicare managed care will represent over half of the Medicare market and, as such, become a leader not only for Medicare care but also a guide for the Medicaid and commercial markets. Due to this situation, it is important to have an appreciation of where Medicare managed care is going.
The importance of Medicare managed care is illustrated by the announcement that Humana is spending $1 billion to fund growth and investment in its Medicare Advantage business. Human and United Healthcare own more than half of the Medicare Advantage (MA), which makes them the dominant players in this space. This large investment is, in part, a response to the Centers for Medicare and Medicaid Services (CMS) plans to increase payments to MA plans by 7.98%.1 Beyond this increase in reimbursement, there continues to be growth in those new to Medicare who are most familiar with managed care through their previous employer sponsored plans. The membership pool is significant; each day, 10,000 Americans become eligible for Medicare.2
The enrollment of older adults into MA over traditional Medicare was further safeguarded by the failure of recent legislation to add vision, hearing, dental, and long-term care to traditional Medicare coverage. Adding these benefits to traditional Medicare would remove a major advantage of MA plans over traditional Medicare.
There also is a push by governments to move their retirees to MA plans. New York City recently announced that its retirees would be primarily covered by MA plans. According to Mayor Eric Adams, this will provide premium free coverage with enhanced benefits at a savings of $600 million annually to the city.3 As a result, Medicare managed care is experiencing a tremendous increase in revenue both from increased enrollment and increased reimbursement, providing a double hit to profitability.
Beyond Medicare Advantage…Direct Contracting Entities
Medicare Advantage is not the only form of Medicare managed care, there are Accountable Care Organizations a proposed vehicle—Direct Contracting Entities (DCEs). Direct contracting were set to privatize and manage the remainder of traditional Medicare. Drawing on the MA experience, DCEs would serve as intermediaries between traditional Medicare beneficiaries and their medical-care providers. The DCE would receive an MA-like monthly payment for a specific population. These entities would contract with networks of providers, manage care and costs, and pay the bills.
CMS announced on February 24th 2022 that it was immediately canceling the Geographic Direct Contracting Model (also known as the “Geo Model”). The Geographic Direct Contracting Model, which was announced in December 2020, was paused in March 2021 in response to stakeholder concerns. If future administrations choose to move forward on direct contract, DCEs would further the move away from traditional Medicare, which is viewed as antiquated, dysfunctional fee-for-service reimbursement system, to a clinically integrated, value-based health care system where physician groups are accountable for the coordination, cost, and quality of patient care. According to the Biden administration, DCEs will facilitate “the next evolution of risk-sharing arrangements to produce value and high-quality health care.” While just beginning DCEs along with ACOs and MA plans will make Medicare managed care the overwhelming provider for Medicare services.
The data supports the benefits of Medicare managed care, according to a Milliman report, the federal government pays less and receives more for its dollar under MA than FFS Medicare. The Milliman study found that that each dollar spent by the federal government on MA provides beneficiaries with additional benefits and lower cost sharing than beneficiaries enrolled in traditional Medicare receive.
The Milliman report also confirmed that that the coordinated care model that serves as the basis of the MA program works to prevent the administration of unnecessary services and thus allows MA plans to provide the same services as traditional Medicare at lower costs. This coordinated care structure within MA allows federal dollars to be more cost effective as MA plans provide Medicare-covered benefits for less than what the same benefits cost under FFS Medicare. This coordination of care is yet another area where clinical pathways can play a leadership role.
This coordination of care needs to include addressing social determinants of health as an ATI Advisory analysis found that MA beneficiaries proportionally possess higher rates of social risk factors than beneficiaries in FFS Medicare. This includes increased likelihood of being food insecure, of speaking English as a second language or not speaking English at all, of having lower education levels, and renting a home rather than owning, all of which are more likely to have a negative impact on health and as such have an opportunity to be addressed within clinical pathways.
Quality Measures
While assuring the efficient and effective use of resources is a foundation of clinical pathways, they can also play a role in other areas such as appropriate coding to establishing and delivery of quality measures. Medicare managed care’s quality measures continue to evolve, always in need of direction. The current MA Stars Program contains over 40 categories that measures quality and provides a star-based rating system to plans based on their performance. Clinical pathways can be used to guide quality measures that are more specific and appropriate for improving outcomes.
HCC Risk Adjustment
Reimbursement for Medicare managed care is based on the expected medical needs of each member. Risk adjustment is essential in managed care models because it estimates a beneficiary’s future health care costs and aligns compensation with acuity and severity of disease. This system is used for Medicare managed care to appropriately adjust quality metrics, expenditure benchmarks, and cost metrics, thus allowing for a more precise measurement of performance. As a result clinical pathways would be of increasing use to Medicare managed care organizations by calling out specific diagnostic codes and their rated risk adjustment so Medicare managed care providers can cover this in their process of caring for these individuals.
CMS has also recently noted their focus on stronger protections against inappropriate coding and risk score growth. The codes need to be correct, as the Department of Justice has filed cases against such large MA providers such as Kaiser, United, and Anthem for submitting false risk adjustment claims. The Justice Department has even opened an inquiry into Oak Street’s practices. Clinical pathways can assist these managed care organizations by calling out appropriate ICD-10 diagnostic codes as well as how to appropriately capture the correct diagnostic codes.
Additional ACO Changes
CMS also has also called out that through the CMS Innovation Center, CMS will be working with ACOs and other partners who share the new CMS vision and values for improving patient care, which are guided by three key principles.
- any model that CMS tests within Traditional Medicare must ensure that beneficiaries retain all rights that are afforded to them, including freedom of choice of all Medicare-enrolled providers and suppliers.
- CMS must have confidence that any model it tests works to promote greater equity in the delivery of high-quality services.
- CMS expects models to extend their reach into underserved communities to improve access to services and quality outcomes.
Models that do not meet these core principles will be redesigned or will not move forward. Of most interest here is #1 as one of the bases for managing care is restricting choice to a defined network of providers and suppliers. This could result in the ability of Medicare beneficiaries to argue for access to a provider or treatment that is outside those preferred by the group managing their care. This will require practice guidelines to clearly articulate the bases for preferring one path over another so that these selections would encourage Medicare beneficiary adherence.
Journeys will also be better received as a result of this new CMS directive in addressing underserved communities especially identifying gaps in social determinants of health (SDOH).
CMS has called out that ACOs can include greater access to enhanced benefits, such as telehealth visits, home care after leaving the hospital, and help with co-pays – these additional paths can be included in comprehensive clinical pathways.
In the end clinical pathways need to appreciate the dominance that Medicare private managed care providers will play. And the role that clinical pathways can plan in guiding not only utilization of resources but areas such as care coordination, addressing social determinants of health, identifying appropriate quality measures and capturing the correct diagnostic codes. By addressing these areas clinical pathways will be truly embraced and used by not only the growing number of Medicare managed care organizations by Commercial and Medicaid payers that follow the lead of these leaders.
References
2. https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html
3. https://www1.nyc.gov/office-of-the-mayor/news/062-22/mayor-adams-on-city-s-medicare-advantage-plan
Author Information
Author: Richard G. Stefanacci, DO, MGH, MBA, AGSF, CMD
Affiliation: EVERSANA™, Berkeley Heights, NJ
Disclosures: Dr Stefanacci has served as a Sanofi Scientific Education Program speaker as well as chief medical director for the managed markets agency of EVERSANA™.
