Managed Care Rule Could Make Medicare Harder to Navigate

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By Mindy Yochelson

Medicare’s proposed Medicare Advantage regulation might be an early holiday gift for managed care plans but could be a lump of coal in beneficiaries’ stockings.

The Medicare managed care proposal for 2019 ( RIN:0938-AT08) would allow plans to offer different benefits and cost sharing to beneficiaries who meet specific criteria. The goal of the provisions is to get away from uniformity requirements and allow for more targeted benefits for certain enrollees. Another provision would ease the requirement that plans offered by the same company in a particular county differ.

Medicare Advantage groups praised the proposal, expected to be published in the Nov. 28 Federal Register. But a Center for Medicare Advocacy representative told Bloomberg Law Nov. 21 that some of the loosening of restrictions could make things more complex for enrollees. Beneficiaries already have to consider a number of factors about whether to enroll in a plan and which one, David A. Lipschutz, senior policy attorney for the beneficiary advocacy group, said. Expanding the number of variables could make the choices more confusing, he said.

Proposed Flexibility Praised

America’s Health Insurance Plans and the Alliance of Community Health Plans were among the industry groups that embraced the Centers for Medicare & Medicaid Services’ proposals.

“These recommendations reflect a strong commitment to improving the patient experience, increasing flexibility and choice, and reducing regulation and red tape,” Marilyn Tavenner, AHIP’s president and chief executive officer, said in a Nov. 21 statement.

Ceci Connolly, ACHP’s CEO, said the proposal “appears to provide additional flexibility for Medicare Advantage and prescription drug plans to manage their benefits.”

Ipsita Smolinski, managing director for Capitol Street, a health-care policy research group, called the provisions “largely positive for plans, as they provide regulatory flexibility.”

Meaningful Differences

Specifically, the CMS is proposing to eliminate limitations on MA plan offerings by the same organization in the same county.

“Current regulations place artificial limits—called ‘meaningful difference’ requirements—on the variety of plans an MA organization can offer,” the agency said. MA sponsors must show that a plan’s benefits are substantially different from those of other plans in the service area. This is at least in part intended to avoid confusion for beneficiaries as they consider various choices and to encourage a plan sponsor to focus on quality, rather than quantity.

However, the CMS said it’s concerned that the requirement has resulted in organizations reducing the value of certain offerings in order to make their benefits comply with restrictions. “The current meaningful difference methodology may force MA organizations to design benefit packages to meet CMS standards rather than beneficiary needs,” the proposed rule said.

However, John Gorman, executive chairman of Gorman Health Group, a Washington-based consulting company, said a downside of ending meaningful difference is that it could “reintroduce hundreds of similar plan designs back into the market and confuse beneficiaries.”

Less Uniform Requirements

The CMS also said it wants MA organizations to be able to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different deductibles for beneficiaries who meet specific medical criteria.The emphasis in the past has been for MA plans to offer all enrollees access to the same benefits at the same cost sharing, in part to avoid discrimination.

“For contract year 2019, we are considering issuing guidance clarifying the flexibility MA plans have to offer targeted supplemental benefits for their most medically vulnerable enrollees,” the proposed regulation said. For example, MA plans should be able to offer only diabetic enrollees more frequent foot exams, the agency said.

However, Lipschutz said, “we’ve advocated for more standardization, not less.” Without that, it’s hard for Medicare to track whether plans are abiding by guidelines and how beneficiaries fare in different plans, he said.

Also, the more plan variables there are, the more beneficiaries will struggle to figure out the system, he said.

Value-Based Insurance Design

The concept of allowing varied benefits in MA is similar to that in the Value-Based Insurance Design Model, or VBID, a demonstration being tested in seven states in 2017 and another three in 2018. The CMS announced Nov. 22 that it will add 15 more states in 2019.

The proposed rule said the CMS expects the VBID demonstration to provide insights to the agency on a varied benefit design for the entire MA program.

Providing Medicare Advantage plans the flexibility to set cost-sharing levels based on health status in the MA program “will allow seniors to choose plans that are tailor-made to their specific clinical and financial needs,” A. Mark Fendrick, director of the University of Michigan Center for Value-Based Insurance Design, told Bloomberg Law.

However, Lipschutz wondered why the CMS is proposing to expand varied benefit design in the proposed rule before the VBID demo is analyzed. “Even if one agreed with the premise of loosening plan restrictions, it would make sense to see how the demo is going first,” he said.

Comments on the proposed rule are due Jan. 16. The CMS’s upcoming 2019 draft call letter to plans, expected to be released in February, will address additional details of the policies.

To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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