CMA Alert – April 25, 2019

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  1. Medicare Trustees Issue 2019 Report: Medicare is Not Going Broke
  2. Article Raises Concerns about Medicare Advantage and Calls Attention to Limited Medigap Access
  3. CMS Proposed Rule to Redefine Group Therapy in Skilled Nursing Facilities: Concern for Resident Care
  4. CMS Expands List of DMEPOS Subject to Prior Authorization as a Condition of Payment

Only a few seats left for the 

6th Annual National Voices of Medicare Summit &
Sen. Jay Rockefeller Lecture

Rep. John Lewis will deliver this year’s Sen. Jay Rockefeller Lecture

Also joining us: Sen. Jay Rockefeller; Rep. Joe Courtney; Rep. Rosa DeLauro; Judy Feder of Georgetown University; Tricia Neuman, Senior VP, Kaiser Family Foundation; Henry Claypool, Technology Policy Consultant at AAPD and Former Director of the HHS Office on Disability; Cathy Hurwit, Former Chief of Staff for Rep. Jan Schakowsky; film writer Anna Reid-JhiradBen Belton, AARP Global Partner Engagement Director; and a Susie Young, a direct-care worker courtesy of SEIU._______________

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May 9, 2019
8:30 AM – 3:30 PM

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Kaiser Family Foundation
1330 G. Street, NW
Washington, DC

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Medicare Trustees Issue 2019 Report: Medicare is Not Going Broke

Earlier this week, the Medicare Trustees issued their 2019 annual report, which offers projections concerning the fiscal health of the Medicare and Social Security programs.  The Medicare Trustees estimate that the Part A Hospital Trust Fund will be depleted by 2026, unchanged from last year’s projection.

As noted in the Report, income to the Part A Trust Fund “is projected to be lower than last year’s estimates due to lower payroll taxes and lower income from the taxation of Social Security benefits” (p. 6).  Unfortunately, this is due, in part, to the ill-advised GOP tax bill passed in 2017, which reduced both revenue streams. 

Unlike Part A, Parts B and D of Medicare do not face a shortfall.  According to the Report, the combined trust fund for Part B and D “is expected to be adequately financed over the next 10 years and beyond because income from premiums and general revenue for Parts B and D are reset each year to cover expected costs and ensure a reserve for Part B contingencies” (p. 7).

The good news is that the projected insolvency date for Part A is about eight years later than it would have been without the Affordable Care Act.  The bad news, as noted above, is that date reflects recent, ill-advised laws and policies – including the 2017 tax cut, which is reducing revenue, increased enrollment in and inflated payments to private Medicare Advantage plans, and increased spending, particularly for prescription drugs.

The Trustees’ projection should not be used as an excuse to cut Medicare benefits for older and disabled people. . As demonstrated by the positive impact the Affordable Care Act had on increasing the life-span of the Trust Fund, the problem is fixable without reducing benefits. Instead, the Administration and Congress should negotiate drug prices for the whole Medicare program, stop Medicare Advantage overpayments, and end efforts to repeal and sabotage the Affordable Care Act

An Important Note on Trust Fund Solvency:

Even if the Part A Trust Fund were to be depleted as projected, the program would still be able to pay out approximately 89% of its Medicare benefits (and, if current projections hold, roughly 78% by 2050). While not ideal, this is far from “bankruptcy.”  Further, the date of projected insolvency is an estimate, and could easily change again – as it has many times before.

The Trust Fund largely reflects the health of the economy. At various times since 1970, the trustees have projected Trust Fund insolvency in as few as four years or as many as 28 years.  While the Part A Trust Fund is mostly funded by payroll taxes, as noted above, Medicare Part B is funded by a certain percent of general revenues and premiums, and therefore cannot “go broke.”

In fact, Medicare as a whole is not “going broke.”  It could be strengthened with better oversight of private Medicare Advantage plans, smarter prescription drug payment limitations, support for Affordable Care Act provisions, rolling back the over-zealous tax cuts, and other cost-effective planning and policies.

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Article Raises Concerns about Medicare Advantage and Calls Attention to Limited Medigap Access

A recent Bloomberg News article highlighted an important issue for Medicare beneficiaries: limited access to Medigap plans. The Center for Medicare Advocacy has long advocated for improved access to Medigap plans for all Medicare beneficiaries.

Medigap plans are private plans that provide supplemental health insurance for beneficiaries in Traditional Medicare to assist with out-of-pocket medical expenses, like co-insurance.

The article, Sticker Shock as Sicker Patients Dump Medicare Advantage Plans (April 24, 2019), discussed that sicker beneficiaries are more likely to want to disenroll from Medicare Advantage, but often face concerning realities when disenrolling from private Medicare Advantage plans to enroll in traditional Medicare.  Key among them: most people will not have access to supplemental plans (Medigap) that assist with out-of-pocket costs, leading to potentially huge health care costs. The article outlined this issue:

“Patients leaving Medicare Advantage for better access to preferred doctors and higher cost medications are learning they may have missed their window to purchase supplemental Medigap insurance that covers out-of-pocket expenses in traditional fee-for-service Medicare. . . .because federal law and 46 states allow Medigap insurers to deny coverage, charge more depending on health status, or impose a six-month waiting period to cover pre-existing conditions if Medicare enrollees buy the coverage outside their six-month enrollment period window. Similar restrictions apply if a beneficiary’s ‘guaranteed issue’ rights—which require Medigap insurers to provide coverage—aren’t in effect.”

Again, this limitation on Medigap plan access is particularly concerning given the well documented fact that sicker enrollees tend to disenroll from MA plans at a higher rate, likely because Traditional Medicare may serve their health care needs better than their MA plan. One reason may be that an MA plan, like all private health insurance, has a set network of providers, as opposed to traditional Medicare, which provides access to all providers who accept Medicare (according to a Kaiser Family Foundation report in October 2015, more than 9 out of 10 primary care physicians accept Medicare).

This trend of sicker enrollees disenrolling from MA at higher rates, coupled with the fact that CMS has been increasingly steering beneficiaries toward enrolling in MA over traditional Medicare, can result in a rude awakening for beneficiaries when they try to disenroll from their MA plan and enroll in traditional Medicare and are stuck with higher out-of-pocket costs without access to a Medigap plan.

This limitation on Medigap access is a central piece of the decision-making process when beneficiaries make Medicare enrollment decisions. It is crucial that beneficiaries understand this reality when weighing whether to enroll in MA or traditional Medicare.

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CMS Proposed Rule to Redefine Group Therapy in Skilled Nursing Facilities: Concern for Resident Care

On April 25, 2019, the Centers for Medicare & Medicaid Services (CMS) published a notice of proposed rulemaking (NPRM) on fiscal year 2020 payment and policy changes for Medicare-certified skilled nursing facilities. Most notably, the proposed rule projects an $887 million increase in aggregate payments to SNFs and revises the definition of group therapy to allow a single therapist to work with six residents at oe time instead of four residents, as is currently allowed. Comments on the proposed rule are due June 18, 2019.

The Center for Medicare Advocacy is troubled by CMS’s decision to redefine group therapy in this manner. The proposed revision, when examined in light of other related policies, suggests that facilities will have an even greater financial incentive to forgo individual therapy in favor of less costly, often less effective, group therapy sessions. The Center will be submitting comments detailing our concerns before the deadline. We urge others to do so as well, and let us know if we can help.

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CMS Expands List of DMEPOS Subject to Prior Authorization as a Condition of Payment

CMS has announced updates to its list of items of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) that will require prior authorization as a condition of payment. These new items will join 33 types of power wheelchairs that currently require prior authorization, bringing the list of DMEPOS that will require prior authorization to 45 items. For the first time, the list expands beyond power wheelchairs and includes 5 items of “Support Surfaces” (some mattresses, mattress overlays, and a powered air flotation bed.)[1]

Effective July 21, 2019, seven new Group 3 power wheelchair categories will each require prior authorization (Healthcare Common Procedure Coding System (HCPCS) Codes K0857, K0858, K0859, K0860, K0862, K0863 and K0864).

Effective July 21, 2019 (Phase 1) in California, Indiana, New Jersey and North Carolina (one state in each of the four DME Medicare Administrative Contractors (MACs) geographic areas), prior authorization will be required for five items in the “Support Services” category, including pressure reducing mattresses, mattress overlays, and powered air flotation beds (HCPCS Codes E0193, E0277, E0371, E0372, and E0373). Effective October 19, 2019 (Phase 2), the prior authorization requirement will expand to all states.

In addition to the expansion of the prior authorization list, the Master List of DMEPOS items that could potentially be subject to future prior authorization as a condition of payment has been updated, effective May 22, 2019. Newly added to the list are: oxygen concentrator (HCPCS E1390), home ventilator (HCPCS E0466), external ambulatory infusion pump – insulin (HCPCS E0784), and lumbar-sacral orthosis (HCPCS L0650).[2]

The Center for Medicare Advocacy published an Alert after the last DMEPOS prior authorization requirement list was expanded in September 2018. The Center examined possible benefits and problems with the prior authorization process and recommended ways to minimize/avoid denials of prior authorization requests. That Alert can be found at: https://www.medicareadvocacy.org/medicare-prior-authorization-requirement-for-power-wheelchairs-expanding-nationwide-effective-september-1-2018/

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