Opinion

Fixing Risk Adjustment In Medicare Advantage to Serve Vulnerable Seniors

As it has signaled in its recent Advance Notice and Call Letter, the Centers for Medicare & Medicaid Services (CMS) is on the cusp of making a critical change to fix an inequity in the Medicare Advantage risk adjustment system that harms consumers with low incomes.

This is of particular interest to the Safety Net Health Plans that hold membership in the Association for Community Affiliated Plans (ACAP), most of which are dedicated to serving “full-benefit dual eligibles,” or people who are eligible for Medicare and all Medicaid services. Health plans serve full-benefit dual eligibles through either a Medicare Advantage Dual-Eligible Special Needs Plan (D-SNP) or a Medicare-Medicaid Plan (MMP) in a Financial Alignment Demonstration—known more commonly as a “duals demonstration.”

ACAP plans collectively enroll more than four in 10 people in duals demonstrations nationwide; all such members are full-benefit dual eligibles.

As a group, full-benefit dual eligibles have the lowest incomes and the highest level of health need among Medicare beneficiaries. These individuals may also be frail, have multiple chronic conditions, cognitive impairments, physical disabilities, developmental disabilities, and behavioral health issues.

However, owing to a flaw in the Medicare Advantage risk adjustment system, health plans that serve these individuals are routinely underpaid because the risk adjustment system currently in use underpredicts their health costs. This routine underpayment threatens the sustainability of health plan programs—many of which exist solely to improve these individuals’ access to and quality of care.

To its credit, CMS has taken this issue very seriously. The agency researched and last fall explicitly identified this flaw in the risk-adjustment system. The agency recently proposed an approach that improves the accuracy of payments not only for full-benefit duals, but also for Medicare beneficiaries who live with disabilities.

It is imperative that CMS make these changes final for all Medicare Advantage plans and for the Medicare-Medicaid Plans in the duals demonstration; addressing this inequity is key to the sustainability of the Financial Alignment Demonstration as well as the D-SNPs that serve full-benefit dual eligibles.

Assuring sustainability through the proposed risk adjustment fixes will also support health plan innovations to better serve dual eligibles. Safety Net Health Plans have undertaken a concerted effort to connect their members to home- and community-based services, locate and connect members to subsidized housing, and providing intensive case management services to help people enrolled in the duals demonstration thrive in their community.

Here’s just one example:  an ACAP plan participating in the duals demonstration in California was serving a 71-year-old man who had been admitted to a skilled nursing facility for rehabilitation after surgery. He’d lived for 20 years in a Section 8 apartment, but his rehabilitation at the nursing facility took a year and he lost his apartment. He couldn’t leave the facility until he had a place to live.

So his health plan case manager worked with a local housing assistance organization to find a unit that would accept his Section 8 voucher. They found an apartment, helped him move in, and secured a waiver to help him obtain furniture and houseware free of charge.

So many of these innovations and connections move beyond what we traditionally think of as ‘health care’ and address the underlying social factors that can sway health outcomes significantly. Many such interventions involve up-front investments that pay off over the long term through lower levels of health need, fewer inpatient admissions and–most importantly–people who have better health outcomes.

Closing the systemic gap between safety net plans’ reimbursement rates and the health status of the populations they serve is an important step toward assuring that the Medicare Advantage program can continue to live up to its promise to serve all eligible beneficiaries, regardless of income or health status. Fixing the risk-adjustment methodology to adequately account for the higher costs of the sickest dual-eligible beneficiaries will remove the incentive for health plans to select against full-benefit duals–and it would bring CMS’s payment methods in line with recommendations from its own analysis.

Safety Net Health Plans are mission-driven, not-for-profit organizations. We take on the challenges posed by delivering care to full-benefit dual eligibles–and take them on with relish–because it’s in line with the mission of Safety Net Health Plans to improve the health of people throughout the community.

Many of the innovative programs Safety Net Health Plans and others have undertaken to serve the lowest-income Medicare beneficiaries hold tremendous promise – but flaws in the risk adjustment system have constituted a very challenging business environment.

Let’s preserve the changes proposed by CMS to make sure these innovations can flourish.