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Chairman Brady, Ranking Member McDermott, and distinguished members of the Subcommittee on Health, I am
Thank you for the opportunity to testify on the future of
Medicare Rights answers 15,000 questions on our national helpline each year from older adults, people with disabilities, and those that help them--family caregivers, social workers, attorneys, and other service providers. Through our educational initiatives, including peer-to-peer learning networks, we touch the lives of another 140,000 people with
We counsel thousands of people with MA about topics ranging from enrolling in a plan to appealing a denied claim. This experience informs our support for changes made to MA plans by the ACA as well as other policies advanced by the
The ACA advances a value-driven agenda for transforming our health care system, and
Many predicted that ACA changes to MA payment methods would lead to widespread disruption of the MA market. However, there is little evidence that this has occurred. In fact, it is important to note that MA enrollment is at an all-time high, with nearly 16 million beneficiaries now enrolled in an MA plan, representing a steadily growing percentage of beneficiaries. n3 In addition, premium costs, benefit levels, and the availability of MA plans remain relatively stable across the country. n4
MA remains a viable choice for
Delivery system and payment reforms are now being implemented in the private sector, in
As such, the ACA included a set of policies designed to make the MA marketplace more efficient, and to enhance the quality of MA plans. Transforming our health system from one that rewards high-volume care to one that rewards high-value care is a goal shared by all. Alongside physicians, hospitals, and other health care providers, MA plans have been, and should be, playing an important role in this transformation. The MA provisions included in the ACA are ultimately intended to secure better quality care at the right price.
Among the most notable ACA changes to the MA market were adjustments to plan payments. In 2010 and 2011, maximum MA plan payments were frozen. Beginning in 2012, gradual reductions in plan payments were phased in according to county-specific, per beneficiary spending rates in Original Medicare. n6 These adjustments are intended to scale back payments to MA plans to better approximate payments and costs in Original Medicare.
In 2009, before passage of the ACA,
Now, thanks to the ACA, reimbursement changes to plans are being phased in over nearly a decade to minimize disruptions in the MA market and to give plans time to adopt needed efficiencies. To date, payment adjustments are fully implemented in more than half of all counties, with another quarter of counties being fully phased-in by the end of 2015. Notably, MA enrollment increased in all counties since 2010. n9
Furthermore, ACA savings secured largely from MA payment adjustments are producing positive returns for the
This news is particularly notable given that MA overpayments historically drove up premiums for all
Importantly, the ACA put the
According to the 2013 Medicare Trustees Report, the Medicare HI trust fund is solvent through 2026, extended by 10 years since passage of the ACA. This represents one of the longer periods of projected solvency throughout the program's history. n13 According to the
In addition to reining in overpayments, the ACA has made many other critical improvements for people with
In 2013, an estimated 37.2 million people with
The ACA also limited the ability of MA plans to charge higher cost-sharing than Original Medicare for certain services, particularly those used disproportionately by sicker beneficiaries. n18 Specifically, as of 2011, MA plans are prohibited from charging higher cost-sharing for renal dialysis, chemotherapy, and skilled nursing facility stays. In addition, starting this year, plans must adhere to a Medical Loss Ratio (MLR). The MLR improves value for the beneficiaries and taxpayers by requiring that plans spend 85% of beneficiary premiums and federal payments on patient care, which in turn limits spending on marketing, CEO salaries, profits, and other administrative costs. n19
Finally, the ACA established critical initiatives designed to improve MA plan quality. Specifically, the ACA ties payment bonuses to star ratings for MA plans. These ratings are determined through a wide array of performance measures and range from 1 to 5 stars, with plans receiving 1 star for poor performance, 3 stars for average performance, and 5 stars for excellent performance. Starting in 2012, MA plans with 4 or 5 stars began receiving bonus payments.
At the same time, CMS launched a demonstration program providing more modest bonuses to 3 and 3.5 star MA plans, and increased bonuses across the board in an effort to more rapidly enhance plan performance. n20 This demonstration will end in 2015. n21 In addition, the star rating system allows CMS to track poor-performing plans, and to encourage beneficiaries remaining in an MA plan ranked 3 stars or less for three consecutive years to switch to a better performing plan. CMS also has the option to terminate these poor-performing plans altogether. n22
Data suggest that these pay-for-performance initiatives are improving MA plan quality. Consider that in 2014, 38% of MA plans scored 4 stars or higher, and 14 MA and MA-PD plans scored 5 stars--all increases from ratings in 2013. According to CMS, more than half (52%) of MA beneficiaries are now enrolled in a plan with 4 stars or higher, up from 37% in 2013. n23 These improved scores reflect advancement across several measures, including adult BMI assessment, colorectal cancer screening, beta-blocker treatment after a heart attack, and the detection of potentially harmful drug interactions. n24
While the ACA serves as a platform for several notable improvements to MA, CMS has implemented key regulatory changes that further strengthen MA plans. Specifically, in 2011, CMS required that MA plans set an out-of-pocket maximum on beneficiary cost-sharing no higher than
Additionally, CMS undertook efforts to consolidate duplicative and low-enrolling plans. n26 Reducing the number of nearly identical offerings addresses some of the problems that beneficiaries face when choosing a plan. In general, we find that older adults and people with disabilities find selecting among multiple MA plans a dizzying experience. We encourage people with MA to revisit their plan's coverage each year, as annual changes to plan benefits, cost-sharing, provider networks, utilization management tools, and other coverage rules are commonplace.
Despite regular plan changes, research suggests that inertia is widespread and most people with
A recent Health Affairs study attributes some degree of beneficiary inertia with having too many plans from which to choose. The authors write, "Our study suggests that the
On this topic, a
In sum, recent changes to MA advanced by the ACA and CMS have strengthened MA plans for current and future enrollees. In addition to improving the overall financial outlook for the
After the Affordable Care Act, the Medicare Advantage Market Remains Stable
Reductions to MA plan reimbursement mandated by the ACA raised concerns that the MA market--and people with MA--would suffer. Opponents claimed that MA enrollees would see increased premiums and cost-sharing, tightened provider networks, and fewer plan choices. Some predicted that enrollment in MA plans would decline after implementation of the ACA. n31 Yet, the opposite has proven true.
Today, MA enrollment is higher than ever before--with nearly 16 million enrollees, 6.3 million more than projected by CBO in 2010. n32 CBO now projects that MA enrollment will continue to rise, with 25 million enrollees expected in 2024. n33 In short, ACA payment adjustments to MA have not, and are not, expected to weaken enrollment, and predictions that the MA market will falter have not held up.
Nor has the ACA reduced the availability of ample plan options.
In 2014, the average
Not only do beneficiaries retain a sufficient number of plan choices, plan availability remains relatively stable from year to year. Specifically, analyses suggest little change in the availability of plans from 2011 to 2014. n35 From 2013 to 2014, for example, the national MA landscape experienced a net change of only 60 products, with a total of 2,014 MA plans available this year. n36
Enrollment is on the rise, plan availability is strong, and other fluctuations in plan offerings--namely in premiums, covered benefits, and cost-sharing--are relatively unchanged after passage of the ACA. Most notably, MA premiums actually declined, from an average
Through this analysis, conducted by Medicare Rights with funding from the
Our qualitative interviews confirmed that reimbursement reductions to MA plans have mostly been shouldered by plans, rather than being passed on to consumers--though some voiced concern as to whether this practice can continue. That said, plan administrators expressed reluctance at increasing premiums or changing benefits, which may adversely impact their star ratings. Those interviewed suggested that plans were more likely to adopt other efficiencies to accommodate changes in reimbursement--like information sharing among network doctors, soliciting feedback on services and treatments, and investing in technologies that facilitate communication among health care providers. n39
Critically, while MA plans continue to adapt to changing reimbursement rates, additional analyses reveal that they continue to profit. A companion report released by UHF on the NY State MA marketplace reveals that the average underwriting income among MA plans declined only slightly after the ACA, totaling
And there is no evidence that changes to MA reimbursement have or will disproportionately harm low-income
While MA plans may be a good option for some dually eligible beneficiaries, we equally find that dually eligible beneficiaries avoid enrolling in MA due to more restrictive plan networks and increased use of utilization management controls. Dually eligible beneficiaries are low-income by definition, and they also tend to be sicker than the general
Given this, it is important to note that nothing in the ACA restricts the core
Further, it is worth noting that a part of the MA program seems poised for growth. Many MA plans, as well as new plans that have not been part of the MA program, are engaged in developing new products intended solely for dually eligible beneficiaries through a demonstration program initiated by the ACA to improve care coordination and health care quality for this population, known as the Financial Alignment Initiative. n44For example, 23 private health care plans are participating in the
In sum, the news on the MA landscape post-ACA remains overwhelmingly positive: enrollment is on the rise, premiums are down, and plan availability and benefits remain stable. However, it is critical to examine MA plan offerings and performance on an ongoing basis. As implementation of the ACA moves forward, we will continue to advocate for vigilant monitoring of the MA plan landscape and individual offerings to help ensure that plans are optimally serving beneficiaries under the new payment system.
Recommendations to Improve Medicare Advantage
While many argued that ACA changes to MA reimbursement would unduly restrict beneficiary choice, this has not proven true. To the contrary, independent, empirical research soundly supports our experience in counseling
Given this, steps must be taken to further improve the MA market for people with
Support consumer counseling services: Adequate funding for SHIPs nationwide is absolutely vital to ensuring that people with
As a technical assistance provider to NY State's Health Insurance Information Counseling and Assistance Program (HIICAP) network--NY State's SHIP--we understand the value of this federal resource administered by the states for older adults and people with disabilities. Additional resources are needed to enhance the capacity of SHIPs and to increase outreach to ensure that people with
In addition to the above, federal policymakers should ensure that MA marketing materials, notices, and websites are additionally simplified and standardized with plain-language information. As a requirement, these plan resources should include a prominent referral to unbiased counseling resources for beneficiaries, including SHIPs and 1-800-
Further, plans should be prohibited from asserting or implying that standard benefits, like an out-of-pocket cap or free preventive services, are unique to a given MA plan. Similarly, MA plans should not be permitted to suggest that income-based benefits, like the MSPs or the Low-Income Subsidy of
Lessen the impact of mid-year changes to MA provider networks: Changes to provider networks are one tool available to MA plans to control costs. When these changes occur in the middle of the plan year, it can be particularly disruptive to beneficiaries, risking the continuity of needed care. Our helpline counselors work with many beneficiaries who face hardship as a result of mid-year MA network changes, including increased financial burdens, impeded access to physicians with whom they have longstanding relationships, and confusion. We observe that the sudden loss of a provider can be particularly damaging to someone undergoing active treatment for a condition or illness.
As such, we strongly support efforts by CMS to ease these burdens, namely by encouraging MA plans to provide sufficient notice prior to network changes, committing to investigating significant network changes, and granting a Special Enrollment Period (SEP) to beneficiaries where significant changes occur. To date, CMS relies on MA plans to define what constitutes a significant network change.
While we understand the need to permit some plan-level interpretation, beneficiaries need a consistent policy to ensure equal protection regardless of plan choice. As such, we continue to advocate that CMS engage in rulemaking to more clearly delineate the requirements of MA plans with respect to network issues. n48 In addition, CMS should be vigilant in its oversight of plan behavior, ensuring that notice is properly delivered, transition planning is provided as appropriate for people in active treatment, and unbiased counseling sources are prominently publicized.
Beyond rulemaking, we believe that more can and should be done to help ensure the continuity and stability of MA provider networks through the plan year. Toward this end, we urge
Enhance transparency through data and notification: A recent report by the
Toward this end, we support CMS'
Encourage meaningful variation among plans: As reflected in numerous studies as well as our experience serving helpline callers, many people struggle to make choices when presented with several MA plans and multiple, complex plan variables. To encourage efficient plan selection, distinctions among plans must be made more meaningful, furthering recent efforts by CMS, described earlier, to eliminate plans too alike to other plans offered by the same insurer. At the same time, members of
Some argue that the ACA's increased emphasis on quality and efficiency must be coupled with increased flexibility for MA plans, specifically to alter cost-sharing and benefits. These suggestions concern us not only because they would further complicate the marketplace for consumers but might also lead to discriminatory practices. Given our experience, having helped tens of thousands of beneficiaries through the years, this market needs to be more standardized and well-regulated with clear rules that protect benefits, beneficiaries, and taxpayers. Increased flexibility for MA plans could encourage development of discriminatory plan designs intended to deter sicker, more vulnerable beneficiaries and skew risk unfavorably among products.
Enhance star ratings: As discussed above, the MA and Part D star rating system shows promise as a vehicle for improving both plan quality and simplifying consumer choice. In the short term, efforts to improve the star rating system should ensure that beneficiaries are educated and engaged, as many people with
In the long term, the star rating system should be enhanced to provide consumer-specific information relevant to individual choices. As the program evolves, people with
In conclusion, the experience of our clients at Medicare Rights demonstrates that for some older adults and people with disabilities, MA plans are a good option, but for many others Original Medicare is a better choice. Thanks to recent advancements made possible by the ACA and additional efforts by CMS, the market for MA plans has significantly improved. These changes to MA plans must be preserved.
MA plans can play an important role in the value-driven agenda advanced by the ACA--and are already doing so. MA plan quality continues to increase, a trend attributable to quality improvement initiatives embedded in the ACA. While some may be inclined to link any annual plan changes to the ACA, like altered cost-sharing and changes to provider networks, it is important to recall that these practices have been the norm within the MA landscape since its inception. As always, people with MA have the option to switch their coverage during the annual
Despite all of these improvements, our experience and empirical research indicate that
Thank you for the opportunity to testify.
n1 MA plans cover Medicare Part A and Part B; MA-PD plans cover Medicare Part A, Part B and Part D
n2 O'Kane, M., "Testimony for the
n5 Blum, J., "Delivery System Reform: Progress Report from CMS" (Invited Testimony to the
n6 Gold, M. "Making Sense of the Change in How Medicare Advantage Plans are Paid," (
n7 MedPAC, Report to the
n8 Angles, J. "Health Reform Changes to Medicare Advantage Strengthen Medicare and Protect Beneficiaries," (Center on Budget and Policy Priorities:
n9 Neuman, T. and G. Jacobson, "
n10 CMS, "Press Release: CMS announces major savings for
n11 Angles, J. "Health Reform Changes to Medicare Advantage Strengthen Medicare and Protect Beneficiaries," (Center on Budget and Policy Priorities:
n12 Jacobson, G., Huang, J. and T. Neuman, "Income and Assets of Medicare Beneficiaries, 2013 - 2030," (
n14 CBO, "The 2014 Long-Term Budget Outlook," (
n16 CMS, "Press Release: 7.9 million people with
n18 Angles, J. "Health Reform Changes to Medicare Advantage Strengthen Medicare and Protect Beneficiaries," (Center on Budget and Policy Priorities:
n21 CMS, "Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and
n22 Cotton, P., "Medicare Advantage Pay for Performance Results," (NCQA presentation to 9th Annual
n23 CMS, "Fact Sheet - 2014 Star Ratings," (
n25 Gold, M., Jacobson, G.,
n27 Hoadley, J., Hargrave, E., Summer, L., Cubanski, J., and T. Neuman, "To Switch or Not to Switch: Are Medicare Beneficiaries Switch Drug Plans to Save Money?" (
n28 Jacobson, G., Swoope, C., Perry, M., and
n29 McWilliams, J.M., Afendulus, C.C.,
n31 Neuman, T. and G. Jacobson, "
n33 CBO, "CBO's
n34 Gold, M., Jacobson, G.,
n35 Schwarz, C. "
n36 Gold, M., Jacobson, G.,
n37 Neuman, T. and G. Jacobson, "
n38 Schwarz, C. "
n40 Newell, P. and A. Baumgarten, "
n42 MedPAC, "The Data Book: Health Care Spending and the Medicare Program," (
n43 Jacobsen, G., Neuman, T., and A.
n44 CMS, "Financial Alignment Initiative," (last updated
n45 See the following examples that include policy priorities of the
n47 Medicare Rights Center, "Memo: Plan Finder Observations During Fall Open Enrollment:
n48 CMS, "Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and
n51 CMS, "CMS First Public Use File (PUF) of Plan-Reported Data," (HPMS Memo from
n52 O'Brian, E. and
n54 Goggin-Callahan, D. "
Read this original document at: http://waysandmeans.house.gov/UploadedFiles/072414_Baker_Testimony_Final_HL.pdf
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