Medicare Learning Center

The Medicare Learning Center and MedicareHMO newsletter, brought to you by MCOL, have been developed to provide a resource for health care professionals for business information on Medicare health plans and related programs including Medicare Advantage and Part D Presecription Drug Plans.

The Medicare Learning Center offers the following resources:

  • Sign up to receive the complimentary MedicareHMO e-Newsletter
  • Browse our dictionary, with a searchable Glossary of common and obscure Medicare terminology
  • Reference our Fact Sheet, filled with key data and information
  • Review Lists compiled of relevant Medicare data and more, from healthsprocket
  • Check out  links to important web External Resources from around the web curated for professionals
  • Consult our library of Videos on selected Medicare business topics

 

The above graphic is used with permission from KBM Group: Health Services, all rights reserved.

Medicare Learning Center MedicareHMO Newsletter

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Term Definition
Medicare Durable Medical Equipment Regional Carrier A Medicare contractor responsible for administering Durable Medical Equipment (DME) benefits for a region.
Medicare Economic Index An index often used in the calculation of the increases in the prevailing charge levels that help to determine allowed charges for physician services. In 1992 and later, this index is considered in connection with the update factor for the physician fee schedule.
Medicare Health Support A Medicare disease management initiative administered by CMS. Section 721 of the Medicare Modernization Act of 2003 (MMA) authorized development and testing of a voluntary chronic care improvement program, now called Medicare Health Support, to improve the quality of care and life for people living with multiple chronic illnesses.
Medicare Medical Savings Account Plan A Medicare health plan option made up of two parts. One part is a Medicare MSA Health Insurance Policy with a high deductible. The other part is a special savings account where Medicare deposits funds that payments can be made from before the deductible is met.
Medicare Modernization Act See Medicare Prescription Drug, Improvement and Modernization Act of 2003
Medicare Part A Fiscal Intermediary A Medicare contractor that administers the Medicare Part A (institutional) benefits for a given region.
Medicare Payment Advisory Commission A commission established by Congress in the Balanced Budget Act of 1997 to replace the Prospective Payment Assessment Commission and the Physician Payment Review Commission. MedPAC is directed to provide the Congress with advice and recommendations on policies affecting the Medicare program.
Medicare Plus Choice See Medicare + Choice
Medicare PPO A demonstration project whereby contracting plans offer PPO benefits to enrolled Medicare beneficiaries, and Medicare pays the plans under modified risk arrangements
Medicare Premium Collection Center The contractor that handles all Medicare direct billing payments for direct billed beneficiaries. MPCC is located in Pittsburgh, Pennsylvania.
Medicare Premium Support The concept of premium support builds on the notion of beneficiaries picking private plans to deliver their Medicare benefits, but with an additional feature of limiting the government subsidy and not permitting it to vary with plan features. Beneficiaries would receive a government contribution toward the premium charged by a private plan of their choice. If the premium exceeded the contribution, beneficiaries would pay the difference.
Medicare Prescription Drug Plan A plan contracted with Medicare to provide Part D benefits to enrolled beneficiaries receiving their medical Medicare benefits through tradtional Medicare, and any supplemental coverage, as opposed to integrated Part D coverage such as provided through Medicare Advantage plans.
Medicare Prescription Drug, Improvement and Modernization Act of 2003 Medicare reform law that created voluntary Part D prescription drug benefits for Medicare Beneficiaries, retitled the Medicare+Choice program as "Medicare Advantage", increased Medicare Advantage payments to participating plans and created Health Savings Accounts (HSAs).
Medicare Remittance Advice Remark Codes A national administrative code set for providing either claim-level or service-level Medicare-related messages that cannot be expressed with a Claim Adjustment Reason Code. This code set is used in the X12 835 Claim Payment & Remittance Advice transaction, and is maintained by the HCFA.
Medicare Risk HMO An HMO contracting with under the Medicare Advantage program

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Programs

Medicare Advantage (MA) is also known as Medicare Part C, and is an alternative for beneficiaries to Original fee-for-service Medicare. These MA beneficiaries must be enrolled in both Medicare Part A and Part B, and continue to pay Part B premium. Under the MA program, Medicare contracts with and pays private plans to provide benefits and cover services for applicable beneficiaries during annual open enrollments or upon becoming eligible. Open enrollment period currently runs from November 15 – December 31st. Medicare contracts with private plans under this MA or other prepaid categories:

  • Local HMOs
  • Local  PPOs
  • Private Fee-for-Service plans (PFFS) authorized in 1997, were not required to establish networks, will generally be required to do so but beginning in 2011
  • Special Needs Plans (SNPs), restricted to beneficiaries who are dually eligible for Medicare and Medicaid; live in long-term care institutions (or would otherwise require an institutional level of care); or (3) have certain chronic conditions.
  • Regional PPOs, established to provide rural beneficiaries greater access to MA, and cover entire statewide or multi-state regions.
  • Other types of private plans outside the regular MA program (e.g., cost plans, HCPP, PACE, medical savings accounts, demonstrations and pilots)

The Medicare Prescription Drug Program, also known as Medicare Part D, is available to beneficiaries enrolled in Medicare Part A or Part B, who choose to enroll in a Medicare prescription drug plan, either a stand-alone Part D plan or a Medicare Advantage plan with prescription drug coverage.  

Enrollment

Inforgraphic on Medicare Advantage Plan Enrollment

As of April 2015, there were 16,398,126 million enrollees in Medicare Advantage plans and another 953,465 in related prepaid programs for a total 17,351,591 prepaid enrollees, including 85.8% in Local HMOs and Local PPOs; 1.5% in PFFS plans; 7.1% in Regional PPOs and 5.6% in Other Programs including Cost, PACE, MSAs, and pilots. 88.1% of these MA beneficiaries had a MA prescription drug plan; 11.8% were Special Needs Plans enrollees; and 19.0% were Employer Plan enrollees. 1  Approximately 30% of Medicare Beneficiaries receive benefits through Medicare Advantage plans. 8

The top five states for Medicare Advantage enrollment as of April 2015, which account for 42% of total MA enrollment, are as follows: California – 2,275,768; Florida – 1,589,563; Texas – 1,125,946; New York – 1,231,700; and Pennsylvania – 1,012,306. There are sixteen states and territories with over a one-third penetration rate (compared to the national overall rate of 31.9%): Arizona       - 38.8%; California - 40.8%; Colorado - 37.3%; Florida - 40.3%; Hawaii - 46.2%; Minnesota - 54.0%; Nevada - 33.6%; New York - 37.1%; Ohio - 41.4%; Oregon - 44.4%; Pennsylvania - 40.3%; Puerto Rico - 74.9%; Rhode Island - 35.3%; Tennessee - 34.4%; Utah - 34.1%; Wisconsin - 37.9%; and Idaho - 32.9%. 2

As of April 2015, there were 23,967,558 enrollees in Medicare Prescription Drug Plan enrollees, including 19.6% that are Employer Plan enrollees. 1 The top five states for PDP enrollment, which account for 26.7% of total PDP enrollment, are as follows: California - 2,055,343; Florida - 1,407,630; Texas - 1,564,789; New York - 1,386,331; and Pennsylvania - 1,037,553. There are twenty states and territories with over a 50% penetration rate (compared to the national overall rate of 44.1%): Virgin Islands - 88.5% North Dakota - 66.6%; Vermont - 66.3%; Delaware - 65.5%; Iowa - 63.3%; South Dakota - 61.0%; Nebraska - 60.1%; Wyoming - 59.6%; New Jersey - 59.4%; Michigan - 58.4%; Kansas        57.8%; Mississippi - 57.4%; New Hampshire - 56.8%; Kentucky - 53.6%; Indiana - 52.6%; Maryland - 51.8%; Oklahoma - 51.2%; Illinois - 51.0%; Arkansas - 50.8%; and Connecticut - 50.8%. 3

Previously, there were 6.9 million MA enrollees in 1999, 5.6 million in 2005 and 13.1 million in 2012, with overall penetration rates of 18% in 1999, 13% in 2005 and 27% in 2012. 4

Participating Plans

As of April 2015, CMS had 529 Medicare Advantage plan contracts in place; 209 other prepaid plan contracts including 114 PACE agreements; and 76 Prescription Drug Program contracts. 1 Contracts can cover more than one plan for an organization. There are 1,945 MA plans available in 2015, compared to 2,014 in 2014, 2,074 in 2013, 1,974 in 2012, 2,011 in 2011 and 2,314 in 2010. For 2015, 65.6% of these plans were local HMOs, 23.9% were local PPOs, 3.5% were PFFS plans, 2.2% were Regional PPOs and 4.8% were Cost and other plans. 6

Of the 16,256,265 April 2015 enrollees in local HMO, PPO, PFFS and other prepaid plans excluding regional PPOs represented by 312 parent organizations, the top five parent organizations had 52.9% of total enrollment and are as follows: 5

  • UnitedHealth Group – 2,864,845
  • Humana – 2,683,054
  • Kaiser Foundation Health Plan – 1,301,209
  • Aetna –1,253,442
  • Cigna – 496,507

Of the 1,236,386 April 2015 Regional PPO enrollees represented by four contracting parent organizations, UnitedHealth Group, Inc. held the largest number of enrollees, with 47.3%.  5 As of April 2015, the top five Medicare Prescription Drug Plan contracts by enrollment represent 75.9% of total enrollment and are as follows: 5

  • UnitedHealth Group, Inc. – 5,119,963
  • CVS Caremark Corporation – 4,459,328
  • Humana Inc. – 4,296,565
  • Express Scripts Holding Company – 2,724,654
  • Cigna – 1,474,322

Kaiser Family Foundation found that for 2015 90 percent of beneficiaries will have access to an HMO and 80 percent will have access to a local PPO. Among beneficiaries in rural areas, 66 percent will have access to an HMO and 69 percent will have access to a local PPO. 6

PDP Benefits

Kaiser Family Foundation found that for 2015, 44% of MA-PDs will offer some prescription drug coverage in the Part D coverage gap; while 63% have a $0 coverage deductible, 13% have a deductible under $200 and 24% have a deductible exceeding $200.   6

Premiums

Kaiser Family Foundation found that in 2015, the average unweighted monthly premium for Medicare Advantage Prescription Drug plans (MA-PDs) will be $53 – a $3 increase over 2014. Monthly premiums for HMOS will average $38, up $3 from 2014.  6

Kaiser Family Foundation also found that 78% of all beneficiaries will have access to a zero-premium MA-PD in 2015, and that “since 2011, about half of all Medicare Advantage enrollees have been enrolled in a zero-premium MA-PD” 6

Regions

CMS has designed 26 MA Regions and 34 PDP Regions, which are used for risk-assignment, reporting and other various purposes. Of the 34 PDP regions, 25 consist of single states. Six regions consist of two states. Three regions encompass more than two states. Of the 26 MA regions, 11 consist of single states. Fourteen of the states that are their own regions for PDP purposes have been combined into seven two-state regions for MA purposes. Two of the PDP two-state regions have been combined into a four-state region. The remaining PDP two-state regions and other multi-state regions remain unchanged for MA purposes.7

Star Ratings

CMS now rates Medicare Advantage plans on a scale of one to five stars, according to the following scale:

  • 5 Stars - Excellent performance
  • 4 Stars - Above average performance
  • 3 Stars - Average performance
  • 2 Stars - Below average performance
  • 1 Star - Poor performance

The Star Ratings now impact an MA plan’s payments from CMS. Kaiser Family Foundation analysis for 2015 found 2% of MA contracts received 5 stars, 13% received 4.5 starts; 18% received 4 stars; 27% received 3.5 stars. 12% received 3 starts; 4% received 2 starts and 24% received no rating. 6

Payments to Plans

For 2016 Medicare Advantage Monthly Capitation Rates for Plans by County range from Northwest Arctic in Alaska ($1,309.32 5% Bonus / $ $1,243.85 0% Bonus) to Newton in Arkansas ($683.33 5% Bonus / $ 654.86 0% Bonus) [Excluding 102 counties located in the territories of PR, GU and VI with lower rates] 9

Kaiser Family Foundation describes MA payments as follows: “ Since 2006, Medicare has paid plans under a bidding process....The ACA of 2010 revised the methodology for paying plans and reduced the benchmarks...Reductions in benchmarks will be phased-in over 2 to 6 years between 2012 and 2016.  By 2017, when the new benchmarks are fully phased-in, the benchmarks will range from 95% of traditional Medicare costs in the top quartile of counties with relatively high per capita Medicare costs (e.g., Miami-Dade), to 115% of traditional Medicare costs in the bottom quartile of counties with relatively low Medicare costs (e.g., Boise).The ACA specified that plans with higher quality ratings would receive bonus payments added to their benchmarks, beginning in 2012.  The ACA also reduced rebates for all plans, but allowed plans with higher quality ratings to keep a larger share of the rebate than plans with lower quality ratings.  A CMS demonstration was implemented in 2012 that superseded bonuses specified by the ACA, raised the size of the bonus payments, and increased the number of plans that would receive bonus payments, providing an additional $8 billion in bonuses between 2012 and 2014.” 8

Utilization

The following utilization rates apply to Medicare HMOs under the Medicare Advantage program as published in the Sanofi-Aventis 2014-2015 Public Payer Digest: 9

  • Hospital Inpatient Days Per 1,000 Per Member: 1,727.1
  • Average Inpatient Length of Stay:  6.3
  • Physician Encounters Per Member Per Year:  10.4
  • Emergency Department Visits Per Member Per Year: 0.45
  • Prescriptions Per Member Per Year  29.4

Notes

1 Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report - Monthly Summary Report (Data as of April 2015), CMS

2 MA State/County Penetration Report- April 2015 CMS

3 PDP State/County Penetration Report- April 2015, CMS

4 Medicare Advantage Fact Sheet, Kaiser Family Foundation, November 2012, http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/

5 Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Organizations - Monthly Report by Contract - April 2015, CMS

6 Medicare Advantage 2015 Data Spotlight, Kaiser Family Foundation, http://kff.org/medicare/issue-brief/medicare-advantage-2015-data-spotlight-overview-of-plan-changes/

7 What are the CMS Medicare Part D prescription drug plan regions? Q1Medicare.com http://www.q1medicare.com/q1group/FAQ.php?category_id=1&faq_id=360

8 Medicare Advantage Fact Sheet, Kaiser Family Foundation, May 2014  http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet

9 Medicare Advantage Monthly Capitation Rates for 2016 for All Plans Except PACE Plans, CMS

10 Public Payer Digest, 2014–2015, Managed Care Digest Series, Sanofi-Aventis https://www.managedcaredigest.com/pdf/PublicPayer.pdf


EvolveSPM
CMS MA-PD Enrollment Data, includes MA-PD enrollments by month, by county
http://evolvespm.com/pages/CMS_Medicare_market_report.htm

AARP
Insurance & Medicare Resources
http://www.aarp.org/health/medicare-insurance/


CMS
Medicare Main Page
http://www.cms.gov/home/medicare.asp


CMS
Research, Statistics, Data & Systems
https://www.cms.gov/home/rsds.asp


CMSGov Twitter
Official Twitter account for CMS
http://twitter.com/cmsgov


The Commonwealth Fund
Medicare Portal
http://www.commonwealthfund.org/Topics/Medicare.aspx


Data.Medicare.Gov
Medicare.Gov interactive data access
http://data.medicare.gov/


FamiliesUSA
Medicare Portal
http://familiesusa.org/issues/medicare/


Gorman Health Group
Industry Resources
http://www.gormanhealthgroup.com/industry-resources


Kaiser Family Foundation
Medicare: Medicare Advantage / Private Plans
http://www.kff.org/medicare/choice.cfm


Kaiser Family Foundation
Medicare: Part D / Prescription Drugs
http://www.kff.org/medicare/rxdrugs.cfm


The Medicare Blog
CMS Medicare Blog for Consumers
http://blog.medicare.gov/


Medicare.gov
Database Downloads
http://www.medicare.gov/download/downloaddb.asp


Social Security Adminsitration - Actuarial Publications
Status of the Social Security and Medicare Programs
http://www.ssa.gov/oact/trsum/index.html