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Home care providers have complained about Medicare Advantage (MA) becoming a more mainstream payer source.
Still, many have begun to work with MA plans for the first time over the past few years. But now, there’s concern that the government’s crackdown on MA could restrict opportunities even further, particularly when it comes to supplemental benefits.
“There’s no question that the recently proposed risk-adjustment policy would reduce payments enough that plans would certainly reduce supplemental benefit offerings,” ATI Advisory founder and CEO Anne Tumlinson told HHCN in an email.
Specifically, the U.S. Centers for Medicare & Medicaid Services (CMS) is attempting to cut plans’ payment rate by 2.27%. CMS is also hoping to regain billions of dollars in overpayments from major insurers in the near-term future.
That, some believe, could mean that plans are “less generous” with the supplemental benefits they offer. Health Affairs covered the issue in an analysis published Wednesday.
“Concerns that … plans are overpaid have motivated calls to reduce MA benchmarks – the dollar amounts set by [CMS] against which MA plans bid to set premiums and fund extra benefits,” the Health Affairs analysis states. “However, cutting benchmarks may lead to higher MA enrollee premiums and decreased plan generosity.”
Home Health Care News explores this issue and the possible impact to home care providers in this week’s exclusive, members-only HHCN+ Update.
CMS’ approach to the most recent MA payment rule is similar to how the agency approached the CY2023 final rule for home health agencies. Home health providers are seeing a 4% decrease to aggregate payments this year, but with other factors included, a 0.7% “bump”.
From the MA plan perspective, CMS is cutting rates by 2.27% in 2024, though the agency argues payments will increase by about 1%.
What matters is whether plans see their final payment rule as cause for a financial belt tightening. That possible cut is also on top of promised increased oversight and potential clawbacks for overpayments. CMS will reportedly ask major health insurers to give back about $4.7 billion in overpayments to start.
The question: Will this revenue hit mean less room for home care providers within the supplemental benefits structure?
Newer supplemental benefits fall into two categories: Expanded Primarily Health-Related Benefits (EPHRB) and Special Supplemental Benefits for the Chronically Ill (SSBCI). The amount of plans offering these benefits has skyrocketed over the past few years.
Benefits such as in-home support services (IHSS), among others, are where home care providers have been able to step in.
“You have to put these [payment] reductions in the larger context that growth in plan payments over recent years has certainly fueled much of the rapid growth in the new non-medical supplemental benefit offerings, particularly for in-home support services,” Tumlinson said.
IHSS has been one of the most popular benefits. There has been a 364% increase in plans offering the benefit since 2020, from 283 plans then to 1,314 in 2023. There has also been a 320% increase in plans offering caregiver support services, another supplemental benefit.
The per member, per month average for plan spending on supplemental benefits increased from $36 in 2022 to $50 in 2023, according to the Medicare Payment Advisory Commission (MedPAC). Rebates paid by the government to MA plans, which the plans used to fund enhanced benefits, also grew 53% between 2019 and 2022, according to Health Affairs.
Supplemental benefits’ future
Given the steady payment environment that has benefited MA plans over the course of the past few years, supplemental benefits should not be on the immediate chopping block.
“I think there’s room to cut some before it has a significant impact on supplemental benefit offerings and out-of-pocket costs,” Tumlinson said. “Plans do not want to lose enrollment and they are competing not just against each other, but against the open networks of original Medicare fee-for-service, so they’ll probably accept some margin compression before they give up lives.”
Indeed, supplemental benefits are a key differentiator MA plans have to tout over Medicare fee for service. Personal home care, for instance, is not available under the traditional Medicare benefit.
Tumlinson foresees a benefit-offering slowdown, but with a caveat.
“What you would see is that plans already offering these benefits would keep offering them because they are so meaningful to the people using them,” she said. “But you would see a significant slow-down in the number of new plans coming to market offering them going forward.”
The data backs up Tumlinson’s assertion. The aforementioned Health Affairs study – which focused on supplemental benefits, but not home-based care ones specifically – concluded that CMS’ MA changes would “decrease plan generosity,” but only modestly.
The propensity to offer benefits would generally decline by less than 5 percentage points, according to Health Affairs, with the greatest impact being on the availability of dental, hearing and vision benefits.
Helper Bees COO Andy Friedell – who works in the middle of plans and home care providers – believes the same.
“The evidence implies the effect on benefits is modest,” Friedell said. “That’s in part because members really want, or now expect, many of these services. So, this requires the plans to be significantly more efficient with how they administer and track these benefits.”
The Helper Bees works with MA plans and providers to make the process of deploying in-home care more seamless.
“Not all supplemental benefit programs are created equal,” Friedell said. “And when it comes to in-home programs, ‘If you build it, they will come,’ isn’t always true. Fulfillment consistency and reliability are very real challenges for many families.”
Ultimately, supplemental benefits and in-home offerings represent competitive advantages for MA plans, against each other and against Medicare fee for service.
For the home care providers that have invested time and resources into getting into MA beneficiaries’ homes, panic is not yet warranted. In the end, health care is moving further into the home, whether CMS is handing out rate increases to MA plans or not.