New Trump Order Seeks Rate Equality Between Advantage Plans, Fee-for-Service Medicare

President Donald Trump signed a new executive order Thursday designed to bolster and expand Medicare Advantage (MA), the private Medicare insurance program for seniors that currently covers roughly 22 million individuals.

While the executive order is relatively wide-ranging in scope, one major detail should immediately win the attention of home health providers.

In the order, President Trump calls on the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) to close the gap between MA and fee-for-service (FSS) Medicare within 180 days. Specifically, the order directs federal health care policymakers to use MA-negotiated rates in setting rates for FSS Medicare. 

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“This very popular Medicare program has been around for a long time,” Trump said Thursday during a speech at The Villages retirement community in Florida, referring to Medicare Advantage. “Millions of seniors are enjoying better, healthier and more prosperous retirement.”

Historically, the home health industry has had a very tumultuous relationship with MA plans, which often provide significantly lower rates than FSS Medicare and tightly ration the delivery of services.

A presidential mandate making MA the benchmark for traditional Medicare would likely send providers reeling, especially as they also adapt to the new Patient-Driven Groupings Model (PDGM) after its Jan. 1 implementation date. 

Some health care experts, however, believe the relationship between MA plans and the home health industry is starting to change for the better.

“As MA plans grow and become more sophisticated, they’re realizing that — for their continued growth and future — they can’t bank on enrolling younger, healthier Medicare beneficiaries who don’t require any sort of home health or post-acute care services,” Fred Bentley, managing director of Washington, D.C.-based health care consulting firm Avalere Health, previously told Home Health Care News. “They are going to have to figure out how to manage sicker, more challenging patient populations, and home health is a critical part of that.”

CMS has taken several moves to expand the MA program in recent years, giving plans more leeway to offer innovative supplemental benefits that address social determinants of health.

As a result of those moves and an uptick in enrollment, there will be about 1,200 more MA plans operating in 2020 than in 2018, according to federal health care statistics.

In 2019, about one-third of all Medicare beneficiaries were enrolled in the MA program.

The Congressional Budget Office (CBO) projects figure will rise to about about 47% of all beneficiaries by 2029.

Apart from using MA-negotiated rates in setting FSS Medicare rates, the new executive order also broadly asks policymakers to make sure “FFS Medicare is not advantaged or promoted over MA with respect to its administration.”

Although unclear, that language could leave wiggle room for CMS to more aggressively pursue a hospice carve-in under MA, which it currently plans to do through the Value-Based Insurance Design (VBID) model.

Additionally, the order also encourages the use of telehealth services and seeks to eliminate “burdensome” regulations that “limit professionals from practicing at the top of their profession.”

“We look forward to swiftly implementing these bold and comprehensive policies, which build on the steps we have already taken, to increase choices, encourage medical innovation, empower patients, and eliminate waste, fraud and abuse to protect seniors and taxpayers,” CMS Administrator Seema Verma said in a statement.

On a political level, the Trump administration is positioning Thursday’s executive order as a counter to the various Medicare-for-All proposals coming from Democrats.

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