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HMA Insights – including our new podcast – puts the vast depth of HMA’s expertise at your fingertips, helping you stay informed about the latest healthcare trends and topics. Below, you can easily search based on your topic of interest to find useful information from our podcast, blogs, webinars, case studies, reports and more.
This week, our In Focus section covers Congress’s and the Administration’s parallel efforts to finalize fiscal year (FY) 2024 spending bills and begin the budget process for FY 2025.
Congress approved a bipartisan package for some of the FY 2024 spending bills, and on March 9, 2024, President Biden signed the Consolidated Appropriations Act of 2024 into law (PL 118-42). Programs funded through this measure include the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and other federal nutrition supports, rental assistance for safe and affordable housing, and veterans medical care and benefits.
Several mandatory funding extensions of public health programs and health-related policies also found their way into the 2024 consolidated appropriations package, including extending the Community Health Center Fund, delaying reductions in the disproportionate share hospital allotments, defining Certified Community Behavioral Health Centers (CCBHCs) as a Medicaid service, extending incentive payments for certain Medicare providers, and mitigating the impact of cuts to the Medicare physician fee schedule.
These policies, however, addressed a narrower set of issues than the expansive and bipartisan legislation that has been moving through both chambers of Congress. For example, House and Senate members have worked on respective bipartisan policies affecting price transparency, pharmacy benefit managers, and Medicare site-neutral policies, among others.
Meanwhile, President Biden released the FY 2025 Budget proposal March 11, 2024, kicking off the annual budget process. Like the administration’s FY 2024 budget proposal, the FY 2025 plan emphasizes deficit reduction and continues to make equity and Medicare solvency cornerstones of the budget. Health-related priorities include expanding access to affordable healthcare services, lowering drug costs, improving maternal health, addressing the mental health and substance use disorder crises, and enhancing biodefense and preparedness activities.
Check out the FY 2025 budget analysis from Leavitt Partners, a Health Management Associates, Inc. (HMA), company, and a deeper dive into the Consolidated Appropriations Act of 2024.
What We’re Watching
Congress is continuing negotiations on the outstanding spending bills, including the one that funds the Departments of Health and Human Services, Labor, and Education through September 2024. Lawmakers are working to reach an agreement before the next funding deadline of March 22.
The administration’s FY 2025 budget proposals are generally being characterized as a blueprint for President Biden’s re-election campaign and, if successful, a policy agenda for his second term. Though Congress has already begun holding hearings on the budget request, members on both sides of the aisle will likely focus on issues that resonate in an election year.
Regardless of the outcome of the November elections, Congress has an opportunity to address unfinished business during the lame duck session later this year.
HMA and Leavitt Partners collaborate to monitor legislative and regulatory developments in healthcare and adjacent spaces and to assess the impact of policy changes on the healthcare industry.
This week, our In Focus section analyzes preliminary 2023 Medicaid spending data collected in the annual CMS-64 Medicaid expenditure report. After submitting a Freedom of Information Act request to the Centers for Medicare & Medicaid Services (CMS), HMA received a draft version of the CMS-64 report that is based on preliminary estimates of Medicaid spending by state for federal fiscal year (FFY) 2023. Based on the preliminary estimates, Medicaid expenditures on medical services across all 50 states and six territories in FFY 2023 totaled nearly $852.9 billion, with 59.6 percent of that amount now flowing through Medicaid managed care programs. In addition, total Medicaid spending on administrative services was $33.8 billion, bringing total program expenditures to $886.7 billion.
Total Medicaid Managed Care Spending
Total Medicaid managed care spending (including the federal and state share) in FFY 2023 across all 50 states and six territories was $508.1 billion, up from $468.3 billion in FFY 2022. This figure includes spending on comprehensive risk-based managed care programs as well as prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs refer to prepaid health plans that provide only certain services, such as dental or behavioral health care. Fee-based programs such as primary care case management (PCCM) models are not included in this total. Following are some key observations.
Total Medicaid managed care spending grew 8.5 percent in FFY 2023.
Managed care spending growth has decreased in since the end of the COVID-19 pandemic, after peaking in FFY 2021.
In terms of dollars, the increase in Medicaid managed care spending from FFY 2022 to FFY 2023 was $39.8 billion, compared with $47.8 billion from FFY 2021 to FFY 2022.
Medicaid managed care spending has increased at a compounded annual growth rate (CAGR) of 14.2 percent since FFY 2007, compared with a 6.5 percent growth in total Medicaid spending.
Compared with FFY 2022, Medicaid managed care spending as a percent of total Medicaid spending in FFY 2023 increased by 0.5 percentage points to 59.6 percent.
Table 1. Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures, FFY 2007−2023 ($M)
As the table below indicates, 68.9 percent of FFY 2023 spending came from federal sources, which is 11.5 percentage points higher than the pre-Medicaid expansion share in FFY 2013 and 1.3 percentage points higher than FFY 2020.
Table 2. Federal versus State Share of Medicaid Expenditures, FFY 2013−2023 ($M)
State-Specific Growth Trends
A total of 44 states and territories report managed care organization (MCO) spending in the CMS-64 report. Average MCO spending during FFY 2023 increased 8.5 percent. On a percentage basis, Missouri experienced the highest year-over-year growth in Medicaid managed care spending at 51.7 percent, followed by Washington at 31.4 percent and Georgia at 29.3 percent.
The chart below provides additional detail on Medicaid managed care spending growth in states with risk-based managed care programs in FFY 2023.
Figure 1. Medicaid Managed Care Spending Growth on a Percentage Basis by State, FFY 2022-2023
Source: CMS-64; *Note: Not all states are included in the table.
Looking at year-over-year spending growth in terms of dollars, New York experienced the largest increase in Medicaid managed care spending at $5.9 billion. Other states with significant year-over-year spending increases included Washington ($4.1 billion), Illinois ($2.8 billion), and California ($2.4 billion). The chart below illustrates the year-over-year change in spending across the states.
Figure 2. Medicaid Managed Care Spending Growth on a Dollar Basis by State, FFY 2022−2023 ($M)
Source: CMS-64; *Note: Not all states are included in the table.
The percentage of Medicaid expenditures directed through risk-based Medicaid MCOs increased by more than one percentage point in 15 states from FFY 2022 to FFY 2023. The managed care spending penetration rate rose 6.7 percentage points in Missouri, 6.5 percentage points in Georgia, 6.3 percentage points in Louisiana, and 5.7 percentage points in Puerto Rico. In all, 22 states saw a decrease in managed care penetration from FFY 2022 to FFY 2023.
Table 3. Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures in States with a One percent or Greater Increase from FFY 2022 to FFY 2023 ($M)
Source: CMS-64 Note: Washington was excluded from the data table.
The table below ranks the states and territories by the percentage of total Medicaid spending through Medicaid MCOs. Iowa reported the highest percentage at 100 percent, followed by Puerto Rico at 97.5 percent and Kansas at 94.5 percent.
In many states, certain payment mechanisms may never be directed through managed care, such as supplemental funding sources for institutional providers and spending on retroactively eligible beneficiaries. As a result, the maximum achievable penetration rate in each state will vary and may be below the amount achieved in other states. The Medicaid managed care spending penetration rate is greatly influenced by the degree to which states have implemented managed long-term services and supports (MLTSS) programs.
Table 4. Medicaid MCO Expenditures as a Percent of Total Medicaid Expenditures, FFY 2016-2023
Source: CMS-64 Note: Washington was excluded from the data table.
If you’re interested in becoming an HMAIS subscriber and for access to the CMS-64 data, contact our expert below.
On February 15, 2024, HMA Principals Teresa Garate, PhD and Anika Alvanzo, MD, MS presented at the 2024 Opioid & Fentanyl Abuse Management Forum sponsored by the World Conference Forum. Their presentation focused on enhancing outreach strategies for reaching and engaging people suffering from opioid use disorder in their communities. Participants were able to learn about public health approaches, harm reduction and low-barrier treatment, as well as an understanding of the considerations needed when building community driven strategies that are person-centered.
Dr. Garate also served as chairperson for the two-day event, providing opening remarks on the first day, engaged panelists in provocative conversations, and closed out the gathering with a summary of the presentations. With a deep understanding that addiction is a disease of the brain, the presentations focused on biopsychosocial approaches and highlighted the use of multiple and diverse interventions. The compilation of the event’s presentations resulted in robust discussions on research, model programs, model strategies, and the critical role of policy, funding, innovation, and data sharing. The overarching message was that as a collective group of advocates, we must continue to use every resource we have at our disposal to push the envelope and challenge the status quo so that we can stop the increase in overdoses and overdose deaths.
At HMA, consultants on our opioid team have unique expertise and more than 30 years of experience tackling every part of the substance use disorder system. They have led the development of comprehensive prevention, evidence-based treatment, and recovery solutions at the state, county and community level. We have experience working with states and community organizations to develop impactful, sustainable responses to opioid crisis issues. Our team is ready to help clients create actionable and sustainable programs to address the opioid epidemic and addiction treatment.
Contact us to learn more about how we can help your organization develop programs to help combat the opioid crisis.
This week, our In Focus section reviews the statewide North Carolina request for proposals (RFP) for the new Children and Families Specialty Plan (CFSP), which the North Carolina Department of Health and Human Services (DHHS) released on February 7, 2024. The plan will provide physical health, behavioral health, intellectual and developmental disability, long-term care, and pharmacy services to children, youth, and families that the child welfare system serves. Implementation is scheduled for December 1.
Background
North Carolina implemented Medicaid managed care on July 1, 2021, after working on a plan to transition individuals from fee-for-service to managed care since 2015. CFSP is one of the four types of integrated Medicaid managed care plans the state will contract with to serve Medicaid beneficiaries. The other three are Standard Plans, the Behavioral Health and Intellectual/Developmental Disability (BH IDD) Tailored Plans, and the Eastern Band of Cherokee Indians Tribal Option.
Standard Plans are operated by one of two types of Medicaid managed care organizations (MCOs): statewide commercial plans (CPs) or regional provider-led entities (PLEs). The state awarded contracts to four CPs, the maximum allowed under the procurement, and one PLE. AmeriHealth Caritas North Carolina, Blue Cross and Blue Shield of North Carolina, UnitedHealthcare of North Carolina, and WellCare of North Carolina serve beneficiaries across six Medicaid managed care regions. A regional contract with provider-led Carolina Complete Health, a partnership between the North Carolina Medical Society and Centene, covers Regions 3, 4, and 5. The total value of the contracts is approximately $6.4 billion. The plans serve more than 2 million members as of year-end 2023.
The state plans to implement BH IDD Tailored Plans July 1. Tailored plans will be provided through the awarded local management entity-managed care organizations (LME-MCOs): Alliance Health, Partners Health Management, Trillium Health Resources, and Vaya Health. Implementation has been delayed multiple times since 2022. As a result, the state issued a directive last year to dissolve the Sandhills Center and consolidate Eastpointe and Trillium Health Resources to hasten the delayed rollout. The tailored plans are expected to cover approximately 160,000 beneficiaries.
Details about the CFSP
The following populations will be enrolled automatically in CFSP:
Beneficiaries who are in foster care
Beneficiaries who are receiving adoption assistance
Beneficiaries enrolled in the former foster youth eligibility group
The minor children of enrolled parents
The following populations will be eligible for enrollment in CFSP during contract year two:
Parents, caretaker relatives, guardians and custodians with children in foster care
Minor siblings of beneficiaries in foster care
Adults identified on an open Child Protective Services (CPS) In-Home Family Services Agreement case and any minor children living in the same household
Adults identified in an open Eastern Band of Cherokee Indians Department of Public Health and Human Services Family Safety program case and any children living in the same household
Any other beneficiary that has been involved with the child welfare system who could benefit from enrollment
RFP
The state will award the contract to a single statewide managed care plan. Applicant MCOs will need to develop strategies for engaging with historically marginalized populations, addressing health disparities, and incorporating health equity. Technical proposals will be evaluated based on the following criteria:
Medicaid Managed Care Qualifications and Experience
Medicaid Managed Care Program Administration
Administration and management
Program operations
Claims and encounter management
Financial requirements
Compliance
Technical specifications
Historically underutilized businesses
Diversity, equity, and inclusion
Integrated and Coordinated Delivery of Services
Members and recipients
Benefits and services
Providers
Stakeholder engagement
Comprehensive Care Management
Care management
Quality and value
Timeline
The CFSP data book and capitation rate methodology will be released March 1, with an overview for presentation at a pre-proposal conference on March 7. Proposals are due May 1 and awards are expected to be announced August 15. Contracts are scheduled to run December 1, 2024, through June 30, 2028, with one additional option year. The RFP indicates that the Department will work with awardee to establish an appropriate launch date.
Federal policy frameworks establishing alternative payment models in Medicare and Medicaid have been the kick-starter of value-based care (VBC) innovation in healthcare delivery. However, employers provide health insurance to most Americans, and very few employers – with the exception of jumbo, self-insured employers – have leaned heavily into VBC. Small- and medium-sized firms rely on brokers to find an affordable health insurance plan, and often lack the resources required to negotiate more. Though the tide has been changing, our fragmented payment system has yielded only a subset voluntarily taking substantial risk for patient outcomes.
It has been said that to truly transform our American healthcare system to pay for value – improved outcomes for lower cost – it would require better alignment across public and commercial payers to support care providers in shifting their business models to take risk.
Quality and cost information are critical to implement VBC payment and delivery systems. Federal initiatives in Medicare and Medicaid have opened the door for providers, payers, and innovators to use health information to improve outcomes, with patients more engaged and more in control; the “Universal Foundation” announced by the Centers for Medicare and Medicaid Services (CMS) in 2023 seeks to align quality measures across the more than 20 CMS quality initiatives; and policies included in the 21st Century Cures Act and CMS Interoperability and Patient Access rule are creating more transparency on price and quality.
By enabling an infrastructure to measure, digitize, and share cost and quality information, federal and state governments have set the stage for greater collaboration among all purchasers – including employers – and the healthcare delivery system to redesign care that addresses health related social needs and behavioral health, ensuring that healthcare is provided equitably and sustainably. As the care delivery system is better able to deliver high value care, more employers will demand this for their workforce to provide a better benefit to their workers.
These issues, and more, will be a part of the expert-led conversation on VBC at HMA’s 2024 Spring Workshop March 5-6, in Chicago. This workshop offers a unique opportunity for payers, government officials, community organizations, vendors, and providers to have an unvarnished conversation about the challenges, lessons, and opportunities in implementing VBC. The meeting is designed to share insights, change-oriented strategies and actions that advance VBC from top industry experts, health plan executives, state and federal leaders, and policy experts.
Our working sessions will feature solutions-focused conversations among peers:
Care delivery measures that drive outcomes, equity, population health
Payment & risk management models for payment, pricing, attribution
Data that is interoperable, consumer focused, deploying technology that is aligned to deliver on strategic objectives
Policy & Strategy Frameworks at federal, state, and local levels that incentivize VBC
The closing panel will look at ways to take action through policy and collaboration to move our industry toward more sustainable approaches to healthcare payment and delivery.
To learn more and register for this unique event, please visit HMA’s 2024 Spring Workshop page. Act fast – online registration ends Wednesday, February 28!
HMA’s Spring Workshop on Value-Based Care, March 5-6 in Chicago, is just a few weeks away. Listen to why our speakers are so excited to engage with attendees on value-based care.
Elizabeth Mitchell, CEO, Purchaser Business Group on Health will deliver the keynote speech on “The Purchaser’s Dilemma: Why Employers Should Demand Value (and Why They Don’t).”
Our March 5 dinner headliner Katie Kaney, CEO of LovEvolve will discuss her “Whole Person Index” and how we can collaborate in new ways to transform the healthcare system to deliver better health at a lower cost for all.
This week, our In Focus section reviews the Centers for Medicare & Medicaid Services (CMS) Interoperability and Prior Authorization Final Rule, published on January 17, 2024. This is CMS’s latest effort to flesh out regulations mandating payer interoperability and fully electronic prior authorization (PA) policies. The 2024 final rule also represents a new phase in the agency’s work to advance interoperability as it moves beyond policymaking focused on building interoperable systems to policies centered on the applications and usage of shared data.
The new requirements affect a large segment of the nation’s public health insurance programs, including Medicare Advantage (MA) organizations, state Medicaid fee-for-service (FFS) programs, state Children’s Health Insurance Program (CHIP) FFS programs, Medicaid managed care plans, CHIP managed care organizations, and qualified health plan (QHP) issuers on the federally facilitated exchanges (FFEs). These payers must implement and adhere to Health Level 7® (HL7®) Fast Healthcare Interoperability Resources® (FHIR®) application programming interfaces (APIs). These APIs were developed by the DaVinci project and the CARIN Alliance which are both HL7 FHIR accelerator programs. Leavitt Partners, an HMA company, leads the work of the CARIN Alliance.
The final rule demonstrates a commitment to information sharing across the industry landscape and confidence in the FHIR standard to support health data exchange across all required APIs. Ultimately, FHIR APIs are creating a more patient-centered data ecosystem that can provide a tangible return on investment.
Following are details about the requirements, opportunities, and next steps for stakeholders.
Prior Authorization API and Process
Payers must build and maintain PA APIs by January 1, 2027, allowing providers to ask payers whether PA is required for a patient’s procedure, what documents must be submitted to attain authorization, and to receive the final decision and reason for denied requests electronically within a specified timeframe (seven days for standard procedures and three days for expedited decisions).
The rule finalizes requirements for the PA process, regardless of whether the payer receives the PA request through the Prior Authorization API. Specifically, CMS is requiring that:
Affected payers send notices to providers when they make a prior authorization decision, including a specific reason for denial when they deny a PA request
Payers, other than QHP issuers on the FFEs, respond to prior authorization requests within specific timeframes
Affected payers publicly report certain metrics about their PA processes
These prior authorization process requirements become effective January 1, 2026. The last 12 months of PA information also must be shared with patient, providers, and other payers when the member switches a plan through the respective APIs.
To promote adoption of electronic prior authorization processes, CMS is adding an Electronic Prior Authorization measure for Medicare clinicians who participate in the Merit-based Incentive Payment System (MIPS) and hospitals and critical access hospitals in the Medicare Promoting Interoperability Program as an attestation measure.
Payer to Payer FHIR API
To support continuity of care and value-based programs, payers must be able to send, receive, and incorporate enrolled member data from previous and concurrent payers if members are dually enrolled.
To comply with the new electronic data sharing, the final rule requires payers to build and use FHIR API by January 1, 2027. Payer-to-payer (P2P) data sharing will include the last five years of claims/encounters, clinical data, and the active and pending PA requests. The data collected through the P2P APIs will need to be available to the other APIs (i.e., provider, patient, and prior authorization). The rule requires payers to request data from previous payers within a week after the patient opts in to sharing data. For dually enrolled members, data sharing will incur at least quarterly.
Patients must opt in and agree to the P2P data sharing. To this end, health plans must adjust their enrollment administrative process to allow members to easily share previous and concurrent payer information and consent to data sharing. CMS allows Medicaid or CHIP agencies to contract with entities, such as Health Information Exchanges (HIEs), for the digital access and transfer of a patient’s medical records, which supports the Payer-to-Payer API.
Provider Access FHIR API
Payers also must build and maintain a Provider Access API to share patient data with in-network providers with whom the patient has a treatment relationship, enabling continuity and coordination of care, by January 1, 2027. Affected payers must maintain an attribution process to associate patients with the appropriate in-network providers responsible for the patient care. The data from the payer via the Provider Access API must be added to a provider’s electronic health record, practice management solution, or any other technology solution that a provider uses for treatment purposes.
The Provider Access API includes the same data covered in the Payer to Payer Access API (claims/encounters, clinical data, and prior authorizations). The payer has one business day to deliver the required information. Payers must offer a mechanism for members to opt out from making their data available to the attributed providers.
Patient Access FHIR API
The final rule further enhances patient access to data to improve their treatment and shopping experience. In addition to claims and clinical data, as of January 1, 2027, payers must make PA data available through the Patient Access API to inform patients on their plan’s PA process and the status of requests.
In addition, affected payers must report annual metrics about Patient Access API usage and data requests to CMS beginning January 1, 2026.
Key Considerations and Early Results
The rule presents a significant opportunity to improve patient experiences and outcomes and to address some of the administrative burden on clinicians. Though CMS made some adjustments to timeframes in the proposed rule, immediate attention is needed to evaluate technological solutions available to payers, assess gaps between current and future required state, and develop policies to comply with new requirements and measures reporting.
Commercial payers may also leverage the improved electronic data sharing but are not required to do so. CMS-funded payers must respond to any inquiries from commercial payers and must require commercial payers to provide the same information as affected payers. Commercial payers, state governments, and other stakeholders have an opportunity to collaborate around the electronic data exchange.
This rule may have positive downstream application to other areas beyond PA, including quality measurements, risk adjustment, and population health. Early adopters who have implemented the prior authorization APIs have, on average, recorded a 150% – 300% return on investment (ROI). The implementation of API-based prior authorization represents a demonstrable increase in efficiency and significantly reduced provider burden. Given the measurable ROI, state-based regional collaboratives being led by Leavitt Partners are forming between payers and providers to implement the core tenants of the CMS rule well in advance of the 2027 deadline.
Similar initiatives are taking place in the technology space, like the Digital Quality Implementers Community, which was recently convened by Leavitt Partners and National Committee for Quality Assurance (NCQA) to build industry readiness for transitioning to FHIR-based digital measurement that hinges on improved electronic data sharing
What to Watch
The HMA team will continue to analyze the CMS’s Interoperability and Patient Access rule in the context of other federal and state policy changes affecting MA organizations, Medicaid FFS programs, state CHIP FFS programs, Medicaid and CHIP managed care programs, and QHPs.
The work and opportunities afforded with the Interoperability and Patient Access final rule will be featured prominently at The HMA Spring Workshop: Getting Real About Transforming Healthcare Quality and Value, March 5-6. In addition to rich discussions, HMA and HMA companies, including Leavitt Partners and Wakely Consulting LLC, are available to support planning and implementation and related system redesign initiatives. If you have questions about these topics, contact our experts below.
This week, our In Focus section reviews the Centers for Medicare & Medicaid Services (CMS) Calendar Year (CY) 2025 Advance Notice for the Medicare Advantage (Part C) and Part D Prescription Drug Programs published on January 31, 2024. Alongside the advance notice, CMS published draft CY 2025 Part D Redesign Program Instructions. This guidance includes CY 2025 payment updates as well as additional proposed technical and methodological changes to Medicare Advantage (MA) and Part D. CMS previously released a proposed rule in November 2023 that included proposed policy changes to MA and Part D for CY 2025.
The proposed payment policies signal CMS is working to ensure the stability of MA and Part D programs, while also addressing concerns about the appropriateness of payments to plans. Furthermore, CMS remains highly focused on the impact methodological changes could have on payment to plans that enroll beneficiaries who are dually eligible for Medicare and Medicaid services. Proposals to align quality measures across programs and strengthen the measures used to assess the quality of beneficiary experiences and services provide directional information on CMS’s plans for the forthcoming annual payment rules for 2025.
Following are highlights from the 2025 Advance Notice and Part D Redesign Program Instructions. The deadline for submitting comments is Friday, March 1, 2024. CMS will announce the MA capitation rates and final payment policies for 2025 no later than April 1, 2024.
Payment Impact on MA: CMS is projecting that federal payments to MA plans will increase on average 3.7 percent from 2024 to 2025. The increase reflects multiple factors, including growth rates in underlying costs, change in Star ratings, continued implementation of the new risk adjustment model and fee for service (FFS) normalization, and risk score trends. Actual impacts of the proposed payment policies will vary from plan to plan.
Risk Adjustment: CMS is proposing to continue its three-year phase in of the updated Part C risk adjustment model, first published in the CY 2024 Rate Announcement. In CY 2025, risk scores will be calculated by blending 67 percent of the risk score using the 2024 CMS hierarchical condition categories (HCC) risk adjustment model and 33 percent using the 2020 CMS-HCC risk adjustment model. In addition, the MA risk score trend is being calculated separately under each model, then blended by the respective percentage to determine a CY 2025 risk score trend of 3.86 percent.
CMS is proposing a new methodology for calculating the FFS normalization factor to accurately address the effects of the COVID-19 pandemic without excluding any years of FFS risk scores.
CMS also proposes to apply the statutory minimum MA coding pattern difference adjustment factor of 5.90 percent for CY 2025.
Frailty Adjustment for FIDE SNPs and PACE Organizations. For CY 2025, CMS is proposing to blend the frailty score calculated for fully integrated dual eligible (FIDE) special needs plans (SNPs) consistent with the phase-in of the 2024 CMS-HCC model. The FIDE SNP frailty score is the sum of:
33 percent of the score calculated with the 2020 CMS-HCC model frailty factors
67 percent of the score calculated with the 2024 CMS-HCC model frailty factors
CMS also intends to use only the full Medicaid frailty factors to calculate frailty scores for FIDE SNP enrollees in order to align with the requirement that FIDE SNPs must have exclusively aligned enrollment, meaning that enrollment in FIDE SNPs will be limited to full-benefit dually eligible individuals, beginning in CY 2025. CMS will use the frailty factors associated with the 2017 CMS-HCC model to calculate frailty scores for Program of All-Inclusive Care for the Elderly (PACE) organizations in CY 2025.
Star Ratings: CMS reiterates its plan to further implement the “universal foundation” of quality measures. CMS first announced this subset of metrics in 2023, with the goal of aligning a core set of metrics across the agency’s programs while continuing to allow for program specific measures. CMS reminds plans that beginning with the 2024 measurement year (2026 Star Ratings), the weight of patients’ experience, complaints, and access measures will be reduced from a weight of four to a weight of two.
CMS proposes several updates and refinements to the Star Ratings program, including:
Retiring the Care for Older Adults – Pain Assessment (Part C) measure, starting as early as the 2025 measurement year
Making changes to the Plan Makes Timely Decisions About Appeals and Reviewing Appeals Decisions (Part C) measures for cases submitted electronically to the independent review entity
Adding Social Need Screening and Intervention (Part C) to the display page for the 2025 Star Ratings and giving notice that National Committee on Quality Assurance (NCQA) is evaluating the potential addition of a utilities insecurity screening and intervention rate for this measure in the future
Adding Depression Screening and Follow-Up for Adolescents and Adults (Part C) and Adult Immunization Status (Part C) to the display page for the 2026 Star Ratings
Updating the Members Choosing to Leave the Plan (Part C and D) measure for the 2026 Star Ratings
Possibly adding the Initiation and Engagement of Substance Use Disorder Treatment (Part C) and Initial Opioid Prescribing for Long Duration (IOP-LD) (Part D) measures
Revisions to the Care Coordination (Part C) measure, and other changes through future rulemaking
Part D Impact
The advance notice reviews the significant changes to the Part D benefit occurring in 2025 as required in the Inflation Reduction Act (IRA). The IRA’s Part D changes effective in CY 2025 include:
Eliminating the coverage gap phase. A newly defined standard Part D benefit will consist of three phases: annual deductible, initial coverage, and catastrophic coverage. There is no initial coverage limit, and the initial coverage phase will extend to the maximum annual out-of-pocket threshold, after which the catastrophic phase begins.
Setting the out-of-pocket threshold at $2,000.
Sunsetting the Coverage Gap Discount Program and implementing of the Manufacturer Discount Program (Discount Program).
Making changes to the liability of enrollees, plans, manufacturers, and CMS.
Updating the definition of incurred costs to include, among other categories of costs, supplemental coverage and other health insurance, which was previously excluded. Manufacturer discounts provided under the Discount Program also will be excluded.
Premium stabilization will continue to be in effect.
CMS is recalibrating the RxHCC risk adjustment model to account for IRA changes and is proposing to calculate separate normalization factors for risk scores used to pay MA-PD plans versus PDPs.
Key Considerations
The impact of the MA risk score trend on payment will vary across individual MA plans. Plans will want to analyze these effects to inform their comments to CMS.
In the advance notice, CMS emphasized the strong growth in the dual SNP market for 2024. This market continues to present growth opportunities. CMS has sought to ensure that changes to payment accuracy better reflect more recent cost and utilization patterns and the risk profile of the sickest and most complex enrollees. Plans will want to consider payment incentives in the context of major policy, reimbursement, and operational changes required to improve integrated care for dually eligible individuals. MA organizations considering becoming FIDE SNPs and wishing to obtain frailty payments in 2025 will need to understand the specific requirements to be eligible for such payments.
The HMA Medicare team will continue to analyze these proposed changes. We have the depth and breadth of expertise to assist with tailored analysis, to model policy impacts across the multiple rules, and to support the drafting of comment letters on this notice.
If you have questions about the contents of CMS’s MA Advance Notice and payment policies and how these would affect MA plans, including SNPs, providers, and Medicare beneficiaries, contact our experts below.
This In Focus section reviews the request for applications (RFA) that the Commonwealth of Pennsylvania Department of Human Services (DHS) released January 30, for the Community HealthChoices (CHC) Program. CHC is the mandatory managed long-term services and supports (MLTSS) program, which serves five CHC zones that cover all 67 counties in the commonwealth.
Notably, this procurement, as compared to the original CHC procurement in 2018, has increased emphasis on innovative approaches to address health equity and the Social Determinates of Health (SDOH). The health equity focus goes beyond traditional health-related social needs such as access to housing, transportation, food, and employment, and addresses some SDOHs that have a particular impact on the CHC population, such as environmental conditions and addressing hazardous or unsafe living conditions.
Behavioral health remains carved-out to separate behavioral health managed care organizations (BH-MCOs). Instead, CHC applicants will need to articulate how they will coordinate with the BH-MCOs to ensure access to appropriate BH services, which continues to be an area of significant interest for state Medicaid officials.
Background
The CHC Program serves individuals who are dually eligible for Medicare and Medicaid and people with physical disabilities who receive home and community-based waiver services or nursing facility care.
Participants may receive LTSS in the community or in a nursing facility.
CHC is the sole program option for fully dual eligible beneficiaries and most nursing facility clinically eligible (NFCE) individuals who reside in the five zones. The regional CHC zones are as follows:
Medicaid managed care organizations (MCOs) may submit applications for one or more zones. Applications are due March 15, 2024. The department anticipates awarding agreements to three to five CHC-MCOs in each of the five CHC zones. Selected applicants must provide CHC services in all counties in the zone(s) for which they are selected to participate and improve the accessibility, continuity, and quality of services for participants in the CHC program. The contract will run for five years and will have three one-year renewal options.
DHS indicates that the awarded CHC-MCOs must have an aligned dual-eligible special needs plan (D-SNP) and a current Medicare Improvement for Patients and Providers Act (MIPPA) agreement with the department. The aligned D-SNP must be operational and the MIPPA agreement must be in place by the anticipated implementation date (January 1, 2025).
DHS indicates selected MCOs must be as flexible and adaptable as possible and demonstrate the ability to coordinate services for multiple populations and across multiple programs, including programs with a focus that is broader than the delivery of healthcare services and LTSS.
Other RFA highlights include the following:
Does not require a cost submittal.
Includes small diverse business (SDB) or veteran business enterprise (VBE) goals of 11 percent and 3 percent respectively. Applicants must include separate SDB and VBE submittals for each zone in its application.
Includes a contractor partnership program (CPP) which requires entities that are awarded a contract or agreement with DHS to establish a hiring target to support Temporary Assistance for Needy Families (TANF) beneficiaries in obtaining employment with the contractor, grantee, or their subcontractors.
Notably, DHS has provided itself flexibility within the RFA to implement a pay-for-performance incentive to MCOs. Under this policy, DHS could make incentives available to MCOs that help participants successfully complete the financial eligibility redetermination process with their local County Assistance Offices (CAOs). The department may implement additional pay-for-performance incentives in later years.
Timeline
Evaluation
For an applicant to be considered responsible for this RFA and eligible for selection of best and final offers (BAFOs) and negotiations:
The total score for the technical submittal of the application must be greater than or equal to 75 percent of the available raw technical points
The applicant’s financial information must demonstrate that the organization possesses the financial capacity to fulfill the good faith performance of the agreement
The evaluation committee will evaluate technical submittals for each zone separately. For each zone, DHS must select for negotiations the applicants with the highest overall score. The weight for the technical criterion is 100 percent of the total available points. Technical evaluation will be based on soundness of approach, applicant qualifications, personnel qualifications, and understanding the project.
The final technical scores will be determined by giving the maximum number of technical points available to the application with the highest raw technical score. The remaining applications will be rated by applying the formula located at RFP Scoring Formula.
Financial information will not be scored as part of the technical submittal. It will be reviewed only to determine an applicant’s financial responsibility.
SDB and VBE participation submittals will not be scored, however, if an applicant fails to satisfy the SDB or VBE requirements described, and DHS will reject the application.
DHS will not score the CPP submittal. Once an applicant has been selected for negotiations, DHS will review the CPP submittal.
Current Market
The CHC incumbents are AmeriHealth Caritas, Centene, and University of Pittsburgh Medical Center (UPMC), serving 411,034 CHC members as of October 2023.
Want to know more about how the next phase of Community Health Choices will impact your organization?
HMA’s Pennsylvania-based teams can assist organizations seeking to understand the implications of this important procurement, key program changes and what the outcome may mean for providers, community base organizations, and other stakeholders. Please contact Dianne Bisacky with questions or if you are seeking more detailed analysis of this procurement or the Community Health Choices program generally.
Nine States to Participate in Children’s Behavioral Health Policy Lab
LANSING, MICH. – Health Management Associates (HMA), in partnership with the Annie E. Casey Foundation, Casey Family Programs, National Association of State Mental Health Program Directors (NASMHPD), the Child Welfare League of America (CWLA), the American Public Human Services Association (APHSA), National Association of Medicaid Directors (NAMD) and the Centene Foundation, will convene a Children’s Behavioral Health (CBH) State Policy Lab, Feb. 7-9 in Baltimore. HMA today announced that Georgia, Kansas, Kentucky, Maryland, Missouri, Pennsylvania, Texas, Utah, and Wisconsin will participate in the policy lab. MITRE, which previously hosted a related federal convening, will also take part in this state convening.
This pioneering effort, made possible by the partner organizations, aims to convene state interagency teams – including child welfare, juvenile justice, behavioral health, Medicaid, and K-12 public education – to collectively strategize, learn from innovators in the sector and promote cross-system alignment to drive outcomes for children, youth, and families.
COVID-19 has exacerbated long-standing system collaboration challenges across state child welfare, behavioral health, and Medicaid that lead to unsatisfactory outcomes for the most vulnerable children in our communities. Most worrisome is the worsening of behavioral and physical health challenges and trauma because of uncoordinated or fragmented care. This lack of coordinated strategy and policy leads to higher costs of treatment and also increasingly exposes states and local jurisdictions to threats or filings of class action lawsuits, and related settlements or those arising from Department of Justice investigations. Fortunately, federal and state efforts and investments to address the youth systems of care – including schools, community, delivery systems, and community-based child placing agencies – are in motion.
In November, a call for applications was released to U.S. states and territories for potential participation in the State Policy Lab. Applicants were required to identify demonstrated need, existing state agency governance structures focused on children and youth, technical assistance needs, and outcomes for attending the policy lab. The applications required demonstrated participation from Medicaid, child welfare and behavioral health agencies; a commitment to creating sustainable interagency solutions for children, youth, and their families and had to certify formal support from the Governor/Cabinet level.
An external independent panel reviewed applications for state agency participation using a standardized rubric that covered four domains:
Gaps and opportunities analysis
Intent of collaborative partnerships
Approach to engagement of youth and adults with lived experience
Imminent risks to public agency operations as a result of poor outcomes for children, youth, and their families
This convening is aimed at assisting child welfare, juvenile justice, behavioral health, Medicaid, and K-12 public education where possible to build upon existing efforts to improve outcomes for children, youth, and families, strategically layering on missing components and promoting alignment between them and with other agency priorities. Examples of what could be co-designed with state partners:
Build a shared strategic vision for a comprehensive continuum of care that ensures access to the “right service, at the right time based on individual and family need.” This vision can strengthen prevention initiatives and ensure the full array of evidence-based community-based interventions including use of crisis response and stabilization models.
Develop policies and strategies for improving the engagement of children, youth, and families with lived experiences to the “right part of the system for the right level of care,” agnostic of the door through which they enter any coordinated child serving system, while ensuring that all aspects of this system are anchored in equity.
Following the event, learnings and findings will be disseminated to help states and counties adopt innovative solutions to improve outcomes for children, youth, and their families.
This week, our In Focus section highlights a new report released on January 25, 2024, Analyzing the Expanded Landscape of Value-Based Entities: Implications and Opportunities of Enablers for the CMS Innovation Center and the Broader Value Movement. The analysis explores the growing ecosystem of new entities designed to assume accountability for the total cost and quality of care in order to understand the growth of this market and consider the role these entities play in advancing accountable care in Medicare, Medicaid, and the broader healthcare sector. The report combines the value-based payment (VBP) policy and market expertise of Health Management Associates (HMA) and Leavitt Partners, an HMA company, with support from Arnold Ventures.
At the start of the movement, value-based arrangements primarily involved traditional providers and payers engaging in relatively straight-forward and limited contractual arrangements. In recent years, the value-based care market has expanded to include a variety of risk-bearing healthcare delivery organizations and provider enablement entities, with capabilities and business models aligned with the functions and aims of accountable care. Despite their prevalence, little formal research has been conducted to determine the role, growth, and impact of these entities to date, and publicly available information is limited.
The report introduces a framework for classifying these entities and estimates the size of this market for the first time. Using insights from 60 interviews with entity leaders, providers, and policymakers, and extensive secondary research into approximately 120 organizations, the report details the common offerings, partnership models, and growth strategies of these entities. The research investigated primary care-focused entities as well as risk-bearing delivery organizations and VBP enablers focused on select specialty areas that align with total cost of care models (i.e., kidney care, oncology, cardiology, behavioral health, and palliative care). Authors examined providers’ experiences selecting and collaborating with enablement partners and the role of these entities within Medicare accountable care models, as well as the broader value movement, to inform a set of guiding principles that help providers and policymakers evaluate the attributes of ideal partners.
Market Landscape
For the past decade, the Centers for Medicare & Medicaid Services (CMS), through its Innovation Center (CMMI), has been leading the movement toward value. Going forward, the agency is focused on scaling accountable care adoption to achieve its 2030 goal, but also seeks to ensure that transformation is equitable and sustainable. These entities are helping providers to engage in accountable care, but our guiding principles and policy recommendations aim to support CMS in ensuring that their growth aligns with provider and patient priorities.
In assessing the value-based care market, the report divided the organizations into three main categories by their core business model: VBP enablers (which are not involved in the direct provision of care, but in assisting others to adopt VBP models); risk-bearing delivery organizations (entities designed to deliver value-based care and assume payment risk for the cost of care); and organizations that are a hybrid of the two (companies that own assets that enable other organizations and those that deliver care).
From risk-bearing delivery organizations with business models that hinge on effective population health management and longitudinal patient relationships, to VBP enablers that provide the population health functions needed to succeed in accountable care while sharing responsibility for those outcomes, these entities are creating more opportunities for clinicians to deliver the type of coordinated, proactive, whole-person care that is unsupported in a fee-for-service system.
A Growing Market
Fueling the growth of value enablers are signals from federal and state policymakers that value-based payment (VBP) is here to stay. The certainty of this approach is already leading to increased focus on underserved populations and safety net providers as CMS places greater focus on expanding VBP contracts in Medicaid and other public insurance programs.
As the market matures and pressure to participate in accountable care mounts, organizations will have several paths forward to implementation of alternative payment models. The growth and availability of enablement entities that are designed with the explicit purpose of helping providers overcome barriers to participation – and whose own financial success hinges on the success of their provider partners – could represent a promising gateway toward achieving accountable care.
The research found several similarities across most entities in this space, demonstrating a highly competitive market, with organizations focused on similar priorities in target providers, geographies, and key populations. Entities often use hybrid, high-touch clinical models to support physicians with patient navigators and other clinical extenders and support staff. They heavily rely on health information technology, and often develop homegrown, proprietary tech assets to better address provider pain points. Finally, most entities depend on outside capital and investment to fuel growth, and investor interest in the space seems to be robust and growing, along with the evolution of value-based care models.
Guiding Principles and Policy Recommendations
The report concludes by proposing a set of guiding principles to describe the optimal attributes of value-based enablement entities aligned with CMS, provider, and patient goals. Authors point to steps CMS can take to best engage with this expanded ecosystem in support of its efforts to scale accountable care while ensuring appropriate guardrails are in place to protect patients and providers.
As CMS works to accelerate adoption of accountable care to achieve its 2030 goal and beyond, the agency must find ways to bring in new providers who have yet to engage meaningfully in these models, while retaining current participants and advancing model designs for the next phase of VBP and delivery reform. The report makes policy recommendations to 1) drive new and sustained provider participation and 2) ensure high-quality partnerships for CMS and providers.
With its acquisition of Leavitt Partners and Wakely Consulting, along with its strong and growing Medicare policy practice, HMA is developing a diverse and robust set of solutions for entities engaging in value-based care and payment. On March 5 and 6, HMA will be devoting its spring event to the topic. The report authors will be featured prominently and will lead a session on the report’s implications. More information about the Spring Workshop, Getting Real about Transforming Healthcare Quality and Value, can be found here.
For details about this research, please contact the report authors below.
In the constantly changing healthcare environment, data analytics and technology are key tools to assist in controlling the burden of increased costs and identifying gaps in quality. As digital health tools and technology advance to include wearable devices, mobile health apps, telemedicine platforms, and other innovations, this enables the integration of digital solutions and real-time patient data. Artificial intelligence, still largely untapped, may have a significant impact as well.
Ideally better data will result in higher quality, better health outcomes, and an increase in provided value. To achieve this, effective health information technology platforms need to be interoperable and truly facilitate the exchange of patient information among providers and care coordinators. Data analytics tools and technology also must be consumer focused and focus on collecting and sharing data that is analyzable. These tools are a vital component of establishing new payment structures, allowing plans and providers to share some of the risk and the cost savings from producing better health outcomes. Identifying a core set of metrics that are patient-focused, measurable, and actionable along with optimizing data analytics tools can provide more efficient pathways to providing healthcare. Any company working in healthcare must elevate data and technology as a fundamental part of corporate strategy across all objectives.
You can explore best practices and emerging opportunities for data and technology at HMA’s 2024 Spring workshop on value-based care (VBC) March 5-6, in Chicago. Breakout discussions offer a unique forum for payers, government officials, community organizations, vendors, and providers to have an unvarnished conversation about the challenges, lessons, and opportunities in implementing value-based care. You will engage with HMA experts and peers in an intimate setting and come away with new ideas and new allies.
The Data and Technology cohort will include two small group discussions facilitated by HMA leaders Ryan Howells, Stuart Venzke, and David Lee, as well as former US Chief Technology Officer Aneesh Chopra. The sessions are designed to arrive at specific recommendations as to how stakeholders can advance their own data and technology capabilities and jointly address systemic barriers to better meet the needs of those taking risk for outcomes:
Making Data More Patient Centric: Opportunities in Trusted Exchange Framework and Common Agreement (TEFCA) implementation in producing and supporting FHIR APIs to create a more patient-centered data ecosystem that achieves a tangible return on investment.
Making Data Central to Strategy: Developing a strategic organizational technology roadmap that will support both current and future data and technology priorities
Other cohort discussions will delve into approaches to develop and manage risk-based contracting across sectors, establish effective partnerships with safety net providers and community-based organizations, and navigating changes in local market and policy conditions that are shaping value-based care adoption and innovation.
This week, our In Focus section highlights the Innovation in Behavioral Health (IBH) model, which the Centers for Medicare & Medicaid Services (CMS) announced January 18, 2023. It is the third state-based alternative payment model that the CMS Center for Medicare and Medicaid Innovation (Innovation Center) has released in recent months. HMA wrote about the Transforming Maternal Health (TMaH) Model here and States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model here.
IBH Model Overview
This model is designed to improve the quality of care and health outcomes for people with moderate to severe behavioral health conditions through person-centered care that integrates physical health, behavioral health, and health-related social needs (HRSN). Its objective is to improve care through healthcare integration, care management, health equity, and health information technology.
CMS will select up to eight state Medicaid agencies for participation in this eight-year model that will begin in fall 2024. Participating states must partner with the agencies that are responsible for mental health and/or substance use disorder treatment to ensure coordination and alignment of policies. Model participants will develop and implement the IBH model in partnership with at least one Medicaid managed care organization or another intermediary as applicable.
Community-based behavioral health organizations and providers in selected states can choose to engage as practice participants in the model. Community-based providers can include safety net providers, community mental health centers, public or private practices, and opioid treatment programs. Practice participants will be responsible for coordinating with other members of the care team to comprehensively address behavioral and physical health needs and HRSN, such as housing, food, and transportation for patients. Practice participants will conduct HRSN screenings, refer patients to specialists and community-based resources, and more. They will be compensated based on the quality of care provided and improved patient outcomes.
Opportunities and Considerations
The model will include three pre-implementation years during which states and practice participants will receive Medicaid and Medicare funding for development and capacity building. Medicare will provide practice participants with a per-beneficiary-per-month payment in pre-implementation years to support health IT, electronic health records (EHR), practice transformation, new workflows, and staffing investment necessary to implement the model. Starting in year four, the Medicaid alternative payment model must be implemented, and Medicare will begin making performance-based payments.
Notably, the announcement materials do not indicate the maximum funding amount selected state Medicaid agencies are eligible to receive in IBH. The cooperative agreement funding for selected states will support implementation preparations, such as statewide health IT infrastructure, supporting practice participants, stakeholder convening, and developing the Medicaid alternative payment model.
What’s Next
The Innovation Center expects to release a Notice of Funding Opportunity (NOFO) in spring 2024. More details on the requirements, including payment methodologies and funding, are expected to be included in the NOFO.
The HMA Behavioral Health and federal policy teams will continue to monitor developments in IBH and analyze the opportunities for states and providers in this model. HMA experts are also assessing the relative opportunities of the IBH model alongside other Innovation Center opportunities and initiatives already underway in states.
