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
PQRS See Physician Quality Reporting System
Preferred Provider Organization The term Preferred Provider Organization (PPO) can be used to describe several different things: A plan of benefits that has a dual option: a higher preferred level when PPO providers are used, and a lower standard level when non-participating providers are used; or a provider organization that contracts with purchasers to be the preferred provider under their dual option plan; or an administrative organization that contracts with providers, and brokers these contracts with PPO purchasers.
Primary Care Case Management A program where the State contracts directly with primary care providers who agree to be responsible for the provision and/or coordination of medical services to Medicaid recipients under their care. Currently, most PCCM programs pay the primary care physician a monthly case management fee in addition to reimbursing services on a fee-for-service basis.
Primary Care Physician The physician responsible for the direct general care of each member in an MCO, and the overall coordination of any specialty care required for their patients. Also referred to as the “gatekeeper”.
Prior Authorization In the Prospective Review process for Utilization Management, specified services require an advance approval before they are deemed to be a covered benefit.
Private Fee-For-Service Plan A Private Fee-For-Service (PFFS) plan is a Medicare Advantage (MA) health plan, offered by a State licensed risk bearing entity, which has a yearly contract with the Centers for Medicare & Medicaid Services (CMS) to provide beneficiaries with all their Medicare benefits, plus any additional benefits the company decides to provide. The PFFS plan: Pays providers on a fee-for-service basis without placing the providers at financial risk; Varies provider payment rates only based on the specialty or location of the provider or to increase utilization of certain preventive or screening services; Does not restrict members' choices among providers that are lawfully authorized to furnish services and accept the plan's terms and conditions of payment; and Does not permit the use of prior authorization or notification.
Program of All-Inclusive Care for the Elderly The Program of All-Inclusive Care for the Elderly (PACE) is a capitated benefit authorized by the Balanced Budget Act of 1997 (BBA) that features a comprehensive service delivery system and integrated Medicare and Medicaid financing. The program is modeled on the system of acute and long term care services developed by On Lok Senior Health Services in San Francisco, California. The PACE model was developed to address the needs of long-term care clients, providers, and payers.
Prospective Payment Assessment Commission In 1983, the Congress created the Prospective Payment Assessment Commission to advise the secretary of the Department of Health and Human Services on Medicare's diagnosis related group-based prospective payment system. Its members are appointed by the director of the Office of Technology Assessment. The Commission's main responsibilities include recommending an appropriate annual percentage change in DRG payments; recommending needed changes in the DRG classification system and individual DRG weights; collecting and evaluating data on medical practices, patterns, and technology; and reporting on its activities.
Prospective Payment System Medicare's acute care payment method for inpatient care. Prospective payment rates are set at a level intended to cover operating costs for treating a typical inpatient in a given diagnosis-related group. Payments for each hospital are adjusted for differences in area wages, teaching activity, care to the poor, and other factors. Hospitals may also receive additional payments to cover extra costs associated with atypical patients (outliers) in each DRG. Capital costs were phased into the system.
Provider Network An MCO’s list of participating providers is often referred to as its network or panel of providers.
Provider Sponsored Organization A PHO arrangement typically involving capitated risk and sometimes direct contracting with purchasers.
PSO See Provider Sponsored Organization.
RAC Medicare Recovery Audit Contractors
RADV See Risk Adjustment Data Validation
RBRVS See Resource-based relative value scale.

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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
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Data.Medicare.Gov
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Industry Resources
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Kaiser Family Foundation
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http://www.kff.org/medicare/choice.cfm


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Medicare: Part D / Prescription Drugs
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