The Claws Will Come Out at CMS in 2013

Health plans and other stakeholders in Medicare Advantage and Part D can be assured of one thing by President Obama’s reelection: that the claws will come out at the Centers for Medicare and Medicaid Services (CMS) in his second term.

Having worked a number of years at the agency I can tell you there is a natural tendency among career regulators to be emboldened in a President’s second term.  With legacy in mind they know that a Democratic White House won’t push back much on a more aggressive posture with the private sector.  And frankly many of those regulators have scores to settle with some of the companies in their portfolio that go back even pre-Obama.  Now’s their chance.

But CMS on the warpath in the next four years is driven by many more factors this time around, like the fact that the agency would like to be in business with many fewer than the almost 2,000 plan options available in Medicare Advantage.  The career staff feels there’s an embarrassment of riches in MA/Part D, to the point that it confuses beneficiaries.  Therefore, a priority in the second term will be to simplify the program by systematically hunting down and eliminating inferior species.

Second, CMS made it very clear that it would begin targeting Medicare Advantage and Part D plans with lower than 3-Star ratings for three or more years in 2013. Low-Stars plans also get the “Scarlet Letter” of a low-quality indicator on, and this past AEP marked the first time CMS actually sent letters to enrollees of sub-3 Star plans encouraging them to take a look at higher-ranked plans in their market.  If you’ve been below 3 Stars the last several years you now have a target on your back.

Third, budget pressures and cuts to CMS’s administrative funding in the last couple years meant that CMS shifted more of its traditional oversight functions to the plans themselves.  This year, through routine site visits and remote data monitoring, CMS will find that many of those functions have been neglected and the agency will make some examples.  This is particularly true of the renewed focus by CMS on delegation oversight — how a plan monitors its vendors like its pharmacy benefit manager and affiliated provider groups.  They’ll also pay much more attention to “compliance effectiveness” — whether the plan’s internal compliance program is actually a living, breathing function that roots out issues before they become problems for beneficiaries.

Fourth, there were a number of new audit protocols for 2013 announced by CMS in last year’s call letter, such as expanded use of private contractors overseeing program integrity in Medicare Advantage and Part D, renewed emphasis on remote monitoring of sales and enrollment “red flags”, and intense focus on Complaint Tracking Module cases where beneficiaries are howling about poor performance.

Finally, 2013 will be the year that the long-dreaded Risk Adjustment Data Validation (RADV) audits will begin in earnest.  CMS, its program integrity vendors, and the law enforcement branch of HHS, the Office of Inspector General (OIG), will undertake dozens of audits of health plans’ diagnostic data submitted for risk adjustment in the coming two years.  Yesterday OIG said the $124 billion MA program is the focus of very few investigations from fraud-hunters—a conclusion that comes on the heels of several RADV audits alleging hundreds of millions of dollars of questionable payments in the program.  Last year HHS officials published the results of years-long investigations into four MA plans, and concluded that the plans had received nearly $600 million more than they should have in 2007 by inflating diagnostic data.  All four companies denied the allegations, but OIG is continuing with probes of several other of the 175 plans participating in MA.

This is also about setting the tone with health plans before the launch of the Affordable Care Act’s health insurance exchanges this fall.  CMS knows most of the plans that participate in Medicare Advantage and Part D will also jump into the exchange, and bloodying some noses in 2013 lets them all know who’s calling the shots as we sail into what promises to be a chaotic launch of health reform.  Remember the messy launch of the Medicare drug benefit in 2006? The launch of the exchanges and the complexity of the subsidies will make Part D pale in comparison…and CMS wants its private sector partners to be walking on eggshells.

Smart executive teams will commit themselves to a doctrine of “lean and clean” and a culture of compliance in the President’s second term.



For more infomration on how Gorman Health Group can help with Part D requirements, visit our website.

For information on how Gorman Health Group can help support your goals with Medicare Advantage, visit our website.

To find out how Gorman Health Group can help you develop a Star Ratings action plan, visit our website.

John Gorman
John Gorman

Under John's leadership, Gorman Health Group has become the leading professional services and solutions firm for government-sponsored health care, providing thought leadership and expert strategic, operational, and technology-based solutions. Read more

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