MedPAC Releases Medicare Advantage Recommendations, BMA Reacts

March 22, 2022 - MedPAC’s March 2022 recommendations to Congress for Medicare Advantage payment policies have roused reactions from payers, specifically Better Medicare Alliance.

At the beginning of the report on Medicare Advantage payment policies, MedPAC pointed out four recommendations that the commission had made to Congress that had not yet been implemented and the potential impact these policies would have.

Congress has not accounted for Medicare Advantage coding intensity, which could lower payments by two percent. Lawmakers have not made changes to encounter data accuracy and completeness. Lastly, they have not replaced the quality bonus program or established more appropriate benchmarks, both of which could produce two percent decreases in payments.

The report also provided insight into the state of Medicare Advantage.

Medicare Advantage’s fast-paced enrollment growth did not stagnate in 2021. Instead, 2021 enrollment was more than double in 2010, rising from 11.3 million enrollees to 26.9 million enrollees in ten years. Enrollment grew by ten percent from 2020 to 2021, and Medicare Advantage enrollment represents 46 percent of the overall Medicare population.

READ MORE: MedPAC Seeks Changes to Medicare Advantage, Star Ratings Metrics

Access to Medicare Advantage plans is still high. Nearly all Medicare beneficiaries (99 percent) have access to at least a single Medicare Advantage plan, as has been the case since 2018. In both rural and urban areas, UnitedHealth Group, Humana, and CVS Health Corporation hold the top three spots for the share of Medicare Advantage enrollment.

In 2022, nearly all beneficiaries (98 percent) also have access to zero-premium plans with drug coverage, and 94 percent have access to a type of special needs plan, with dual eligible special needs plans being the most widespread type.

The report found that plan bidding levels in 2022 were among the lowest recorded levels at an average of 85 percent of fee-for-service Medicare spending before the coding estimate.

“When a plan bids below the benchmark, its payment rate is its bid plus a share of the difference between its bid and the benchmark,” the report explained.

But uncorrected coding intensity can bump rebates. As a result, rebates for 2022 were a record-high $164 per beneficiary.

READ MORE: BMA Asks CMS to Enhance, Solidify Medicare Advantage Benefits

Better Medicare Alliance found that the report largely ignored data about Medicare Advantage’s value through reduced spending and improved quality.

The payer organization responded to five claims in the report.

The report acknowledged that Medicare Advantage plans diminish costs year-over-year but argued that the savings only serve Medicare Advantage plans and enrollees. Taxpayers and Medicare beneficiaries who fund the plans do not experience savings collectively.

MedPAC noted that Medicare Advantage payments and benchmarks exceed fee-for-service Medicare spending. In 2022, Medicare Advantage payments are 104 percent of fee-for-service Medicare spending. This includes 3.6 percentage points of uncorrected coding intensity, without which Medicare Advantage payments match fee-for-service expenditures.

However, Better Medicare Alliance cited a Milliman report in response to both of these claims. The report noted that Medicare Advantage enrollees cost the federal government less than comparable fee-for-service Medicare beneficiaries and that the program has savings value for the government.

READ MORE: BMA: Medicare Advantage Offers Lower Costs, Better Benefits Than FFS

The payer organization also emphasized the considerable savings for Medicare Advantage enrollees.

MedPAC found Medicare Advantage quality reporting to be deplorable.

“The current state of quality reporting in MA is such that the Commission can no longer provide an accurate description of the quality of care in MA,” the report stated.

MedPAC reminded Congress of its June 2020 recommendation to entirely replace the quality bonus program with a new value incentive program.

However, Better Medicare Alliance found that the evaluation was too harsh. The organization pointed to separate studies that have attested to Medicare Advantage plans’ high quality in areas such as screenings and reducing unnecessary hospitalizations. 

Moreover, the Medicare Advantage star ratings system assesses quality over a range of key areas, and plans have scored high in recent years. The average Medicare Advantage-prescription drug plan in 2022 scored 4.37 stars through the star rating system for high performance in areas such as customer service, access to care, and care coordination.

The third MedPAC claim to which Better Medicare Alliance replied involved supplemental benefits. While 15 percent of Medicare Advantage payments go toward supplemental benefits, MedPAC found a lack of evidence around consumer use of these benefits or their value.

Better Medicare Alliance argued that separate research had investigated the share of plans that offer particular benefits. Additionally, the payer organization cited research that indicated that over half of Medicare Advantage members had used vision and dental coverage.

Finally, Better Medicare Alliance tackled MedPAC’s claim that coding intensity boosts Medicare Advantage payments, reducing cost-effectiveness.

Better Medicare Alliance defended coding intensity by pointing to the high share of Medicare Advantage beneficiaries with chronic diseases.

“It is appropriate and unsurprising that Medicare Advantage coding and risk score trends would reflect the truth of this increasingly diverse, at-risk, and medically complex patient population,” the organization argued.