Learning Objective 4 - Government Programs

Question 1

physician reimbursement uses a fee schedule based on:

Answer 1

RBRVS - resource-based relative value scale

Question 2

Impact of the CMS-HCC model being additive

Answer 2

will incrementally increase payment for multiple conditions that are not closely related.

Question 3

MLR for MA plans under the ACA

Answer 3

85%

Question 4

Individuals eligible for Medicare Coverage

Answer 4

1. Aged - at least age 65 and eligible for Social Security or Railroad Retirement benefits
2. Disabled - entitled to Social Security or Railroad Retirement disability benefits for at least 2 years
3. ESRD - insured workers with ESRD, including spouses and children with ESRD
4. Some other aged and disabled individuals who pay mandatory premiums

Question 5

Types of Medicare coverage

Answer 5

1. Part A - hospital insurance (HI) - eligible persons receive coverage automatically with no premium charge
2. Part B - supplementary medical insurance (SMI)
   a. Requires a monthly premium ($99.90 in 2012, higher for high incomes)
   b. Beneficiaries can decline coverage, but a premium penalty (10% per year) applies if coverage is elected at a later date
3. Part C - Medicare Advantage
   a. Alternative to Parts A & B. Offered by private plans, which receive a capitation from Medicare, which varies by county and enrollee risk.
   b. Typically offer lower cost sharing plus coverage from some services not covered under Medicare.
4. Part D - covers most Rx. Provided through private insurers.
5. Medicare Supplement - private insurance to cover OOP costs and some other benefits not covered by Medicare.

Question 6

Services covered by Medicare Part A

Answer 6

1. Inpatient Hospital - semi-private room and ancillary services and supplies
2. SNF - semi-private room, meals, skilled nursing and rehabilitative services after a related 3 day inpatient hospital stay
3. Home health agency - services following discharge from a hospital or SNF
4. Hospice care - provided to terminally ill patients with life expectancies less than 6 months

Question 7

Medicare Part A cost sharing and coverage limits

Answer 7

Based on a benefit period, which starts at admission and ends 60 days after discharge from hospital or SNF. The $ amounts are indexed; amounts shown are for 2015.

1. Inpatient Hospital
   Cost-sharing: $1,260 deductible per benefit period
   $350/ day for days 61-90 of ben period
   $630/ day for days 91-150 each lifetime reserve day
   Coverage Limits: 60 lifetime reserve days; No coverage beyond lifetime reserve
2. SNF
   Cost Sharing: $157.50/ day for days 21-100 of each benefit period
   No coverage after 100 days each benefit period
3. Home Health Agency
   Cost Sharing: None
   Coverage Limits: 100 visits per illness
4. Hospice Care
   No cost sharing or coverage limits
5. Blood
   Cost Sharing: cost of 1st 3 pints of blood
   No coverage limit

Question 8

Services covered by Medicare Part B

Answer 8

1. Outpatient hospital ( including ER)
2. Medical care by qualified health practitioners (including diagnostic tests, supplies, and DME)
3. An initial preventive care visit within 12 months of enrolling in Part B and yearly wellness visits thereafter
4. Ambulance
5. Clinical laboratory and radiology
6. Physical and occupational therapy
7. Speech pathology
8. Outpatient rehabilitation
9. Radiation therapy
10. Transplants
11. Dialysis
12. Home health care beyond that covered by Part A
13. Drugs & biologicals that cannot be self-administered
14. Certain preventive services (such as an annual flu shot or cancer screenings)

Question 9

Medicare Part B cost sharing

Answer 9

1. Calendar year deductible ($147 in 2015)
2. Coinsurance after the deductible (usually 20% of the Medicare-approved amount, but does not apply to clinical lab and certain preventive care services)

Question 10

Drug types excluded from standard Part D coverage

Answer 10

1. Drugs covered by Part A or B
2. Anorexia and weight loss drugs
3. Fertility drugs
4. Cosmetic drugs (including hair loss)
5. Drugs used to relieve cough and cold symptoms
6. Vitamins and minerals (except for prenatal vitamins and fluoride)
7. OTC drugs

Question 11

Funding sources for the Medicare Program

Answer 11

1. Medicare is funded on a pay-as-you-go basis
2. SMI
   a. Part B is financed through contributions from the general fund of the Treasury (75%) and beneficiary premiums (25%)
   b. Part D is financed through a separate account in the SMI trust fund, from general revenues (74.5%) and premiums (25.5%)
3. HI (Part A)
   a. Payroll tax rate is 1.45% of all earnings (not caped), with a matching employer tax
   b. The ACA added an additional 0.9% payroll tax and a 3.8% tax on investment income for high-income taxpayers.

Question 12

Approaches for improving Medicare solvency

Answer 12

1. Increase taxes
2. Reduce or eliminate some covered services
3. Increase Medicare cost sharing through higher deductibles and copays
4. Raise the eligibility age for benefits to age 66 or 67
5. Adjust reimbursement to providers of care
6. Encourage new initiatives and expand existing initiatives that lower trend.

Question 13

Medicare provider reimbursement

Answer 13

1. Hospitals - reimbursed on a prospective payment system based on the diagnosis-related grouping (DRG) methodology. Paid a set amount for each admission (which encourages hospitals to provide services efficiently) based on the patient’s condition and the services provided.
2. Physicians - uses a complex fee schedule to assign relative values to services. Reimbursement equals the sum of area-adjusted unti values, multiplied by a nationwide conversion factor. Unit values for the procedures are based on:
   a. Work Value - measuring the time and skill required
   b. Practice expense - reflecting the cost of rent, staff, supplies, equipment, and overhead
   c. Malpractice value - measuring the associated professional liability costs
3. Outpatient services - reimbursed on an outpatient prospective payment system known as ambulatory payment classification (APC)

Question 14

Categories of Medicaid-eligible individuals

Answer 14

1. Categorically eligible groups
   a. These groups include children, parents or other caretakers with dependent children, pregnant women, individuals with disabilities and seniors
   b. Individuals in these categories must also meet income and asset requirements (the minimum criteria is set by the federal government). For example, states cover all pregnant women and children under age 6 with incomes below 138% of the FPL
2. Medically-needy individuals - states often extend coverage to these individuals, who qualify when their medical expenses reduce income below defined limits
3. The State Children’s Health Insurance Program (CHIP) allows states to expand coverage to uninsured children from low-income families not eligible for Medicaid, typically with an upper limit of 200% of FPL
4. The ACA expanded eligibility to everyone under age 65 with income up to 138% of FPL (in states that choose to expand)

Question 15

Workers in the US who are not covered by Social Security

Answer 15

1. Federal employees hired before 1984
2. About 1/4 of state and local workers (who are covered by plans comparable to Social Security)
3. A very small # of people who object to receiving governmental benefits on religious grounds
4. Certain agricultural and domestic workers
5. Railroad employees who are covered by a program similar to Social Security

Question 16

Requirements for insured statuses under Social Security

Answer 16

One credit is earned for each $1,200 of wages (year 2014 amount; indexed), up to a max of 4 per year. All 4 credits can be earned at any time during the year. (Many earn all 4 in January)

1. Disability-insured status - requires between 6-40 credits. Some credits must have been earned recently, as follows:
   a. For those required to have 20 or more credits, 20 credits must be from the last 40 quarters
   b. for those required to have more than 6 and less than 20 credits, at least half must have been earned after age 21
   c. For those required to have 6 credits, all must be from the last 12 quarters
2. Fully-insured status - requires credits equal to the worker’s age minus 22, with a minimum of 6 an a max of 40
3. Currently -insured status - requires 6 credits in the 13 calendar quarters ending with the quarter of death

Question 17

Eligibility and benefit amounts for Social Security disability and survivor benefits

Answer 17

1. Disabled-worker benefits
   a. Eligibility - must be disability insured and fully-insured and be unable to engage in any “substantial gainful activity” because of a physical or mental impairment that has lasted or is expected to last for 12 months or to result in death.
   b. Benefit amounts - calculated using essentially the same procedures used for retired-worker benefit amounts, using an assumed age of 62 and no early-retirement reduction factor.
2. Survivor Benefits
   a. Eligibility - family members may receive survivor benefits if the worker was either fully insured or currently insured at the time of death
   b. Benefit amounts - the worker’s primary insurance amount (PIA) is computed using the standard procedures assuming an age of 62. Survivors receive a % of the PIA:
   I. 75% for eligible children
   ii. grading linearly from 71.5% at age 60 to 100% at normal retirement age for eligible widows or widowers
   iii. 82.5% for an eligible surviving parent, or 75% each for 2 parents. ( a family max applies, typically 175%)

Question 18

Equivalence requirements for Part D employer group wavier plans (EGWPs)

Answer 18

1. Benefits must be at least as rich as standard Part D benefits
2. The deductible must be no greater than the standard Part D deductible
3. Benefits in the same coverage gap must be at least as rich as standard Part D benefits
4. Catastrophic coverage must be at least as rich as standard Part D catastrophic coverage

Question 19

Types of Part D plans

Answer 19

1. Prescription Drug Plans (PDPs) - private stand-alone plans that offer drug-only coverage.
2. Medicare Advantage prescription drug plans (MA-PDs) - plans that offer both prescription drug and health coverage

Question 20

Late enrollment penalty for Part D plans

Answer 20

1. Applies to those who do not sign up for Part D when they are 1st eligible
2. is 1% of the base beneficiary premium for every month the person waited to enroll
3. Is paid every month for the beneficiary’s lifetime
4. Does not apply if the individual had creditable coverage through another source (such as an employer or retirement plan). Coverage is creditable if it is at least as good as Medicare Part D

Question 21

Options provided by CMS to incentivize employers to participate in Part D

Answer 21

1. Retiree Drug Subsidy (RDS)
   a. To qualify for the subsidy, the plan must provide an actuarial attestation that it provides coverage at least as rich as the original Par D benefit design (gross test) and with a subsidy at least as great as the Part D subsidy (net test). The net value is calculated by subtracting retiree premiums from the gross value.
   b. government reimburses the sponsor for 28% of prescription drug spending otherwise covered by Part D for drug costs between the cost threshold ($310 in 2011) and cost limit ($6,300 in 2011)
   c. Drug rebates are subtracted from the amount eligible for the subsidy
   d. Easiest option, but now less attractive after the ACA eliminated the subsidy as of 2013
2. Employer group waiver plan (EGWP) - was conceived to be superior to the RDS. Two options:
   a. Direct contract EGWP - contract directly with CMS to become a PDP
   b. “800” series EGWP - outsource to a 3rd party PDP or MA-PDP, who performs the administrative and financial functions of the plan
3. Coordinate benefits in a wraparound plan
   a. Employer plan fills in benefit voids that are not covered by Part D (e.g., paying the deductible or a % of the coverage gap or total OOP costs)
   b. A concern with this option is that pharmacies may not be prepared to manage patients with 2 benefits (Part D wrap around plans)

Question 22

Advantages of using EGWP instead of RDS

Answer 22

1. Cost Savings - savings are about 15-20% in RDS compared to 19-35% under EGWP
2. Minimal disruption to the membership - current plan design can usually be maintained
3. Ta obligations are treated equally between EGWP & RDS
4. Direct monthly subsidy is received from CMS
5. Governmental Accounting Standards Board Statements 43/45 liability is reduced
6. Part D benefit provides catastrophic coverage
7. Additional advantages of using an “800” series EGWP
   a. administrative functions are handled by the 3rd party sponsor
   b. Risk avoidance - risk is shifted to the 3rd party sponsor
   c. The employer has no direct contact with CMS
   d. The 3rd party will handle compliance and regulatory issues.

Question 23

Beneficiary cost sharing for the standard Part D benefit design

Answer 23

$0 - $320: deductible
$320.01 - $2,960: 25% coinsurance
$2960.01 - $4,700 (TrOOP): Coverage gap (“donut hole”), 65% generic, 45% brand coinsurance*
After TrOOP: about 5% coinsurance**

• due to the ACA, these %s are gradually decreasing until they both reach 25% in 2020
• *Greater of 5% or a copay of $.2.65 for generics and preferred multiple source drugs or $6.60 for other drugs

1. TrOOP = True OOP costs
2. the deductible, initial coverage limit ($2,960), TrOOP, and catastrophic copays are indexed annually. Amounts shown here are for 2015
3. Low-income beneficiaries have a different benefit design. For example, dual eligible pay no premium, have no deductible, and pay only a small copay for drugs.

Question 24

Impact of regulations on the MA program

Answer 24

Programs where Medicare contracts with private plans to provide benefits to seniors and the disabled.

1. The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 authorized the Medicare program to pay HMOs on a capitated basis. These HMOs were able to lower costs and use the savings to offer more comprehensive benefits than FFS Medicare, so these plans grew steadily.
2. The Balanced Budge Act (BBA) of 1997 significantly reduced health plan payments. About half of the beneficiaries in Medicare health plans exited over the next few years.
3. The Medicare Modernization Act (MMA) of 2003 reignited enrollment:
   a. Creating the Medicare Part D drug benefit
   b. Creating regional MA PPOs
   c. Creating special needs plans (SNPs)
   d. Dramatically increasing payment for MA plans
   e. Introducing competitive bidding and risk-adjusted payments.
4. The ACA made dramatic changes to MA:
   a. MA plans suffered cuts of $136 billion over 10 years.
   b. A new payment methodology was introduced, reducing county benchmark rates to between 95% and 115% of FFS Medicare rates.
   c. Bonus payments were introduced for plans that achieve at least four start under a new star rating system. High-quality plans will receive a bonus of 5% of the new benchmark payment rate, with certain counties being eligible for double bonuses. Rebates were also tied to quality ratings
   d. A minimum medical loss ratio standard of 85% was also imposed.

Question 25

Types of MA Plans

Answer 25

1. Coordinate Care Plans
   a. These plans use a network of providers, which CMS must approve to ensure beneficiaries have sufficient access to covered services
   b. Other than in an emergency, beneficiaries must use the network in order for the care to be covered
2. Private FFS plans
   a. Enrollees can self-refer to any Medicare provider willing to accept the plan’s coverage rules
   b. Providers are paid on a FFS basis at Medicare fee schedule rates and do not accept financial risk
3. Medical savings account plans
   a. These plans combine a high-deductible MA plan and a medical savings account
   b. The account is similar to commercial HSAs. But only Medicare may make a deposit into the account.

Question 26

Types of MA coordinate care plans

Answer 26

1. HMOs - similar to commercial HMOs and represent most MA enrollments. Can offer a POS option to cover services out of network
2. PPOs - like commercial PPOs, they do not use gatekeepers, have larger networks than HMOs, a nd provide some coverage for non-contracted providers. Types include:
   a. Local PPOs - can choose which counties to operate in
   b. Regional PPOs - must serve all counties within their region. They are given more flexibility in meeting access standards.
3. Special Needs Plans (SNPs) - enrollment is limited to individuals with special needs. Most are offered by HMOs. Types include:
   a. Dual-eligible SNPs (D-SNPs) - for those eligible for both Medicare and Medicaid. they coordinate the benefits and requirements of those 2 programs
   b. Institutional SNPs (I-SNPs) - for beneficiaries institutionalized for 90 days (such as in a SNF or psych facility)
   c. Chronic care SNPs (C-SNPs) - for hose with a severe or disabling chronic condition (defined by CMS). Must include certain benefits beyond Medicare Pat A and Part B services
4. Religious and Fraternal Benefit Society Programs
5. Senior housing facility plans.

Question 27

Payment calculation for MA plans

Answer 27

1. MA plans submit bids to CMS each year, representing their projected costs to cover Part A and B services, net of cost sharing, pls administrative costs and profit
2. The bid amount is normalized to a risk score of 1.0 and then compared to the benchmark. When a plan covers more than one county, the bid and benchmark are calculated as weighted averages of the county-specific amounts.
3. If the bid exceeds the benchmark, the plan must charge beneficiaries a monthly premium to cover the difference.
4. If the bid is less than the benchmark, the plans receives a % of the resulting savings as a rebate and must use this to provide additional benefits or pay beneficiaries’ Part B or Part D premiums. The rebate is 70% for plans with a rating of 4.5 or 5 stars, 65% for plans with a rating of 3.5 or 4 stars, and 50% for plans with a rating below 3.5 stars
5. CMS may require changes to the bid if:
   a. Beneficiary costs are increasing at an unacceptable rate
   b. The proposed profit margin is considered too high
   c. The benefit design is considered discriminatory, which could discourage enrollment of sicker beneficiaries
   d. The cot sharing design is not at least as generous as FFS Medicare.

Question 28

Payment calculation for Medicare Part D plans

Answer 28

1. Part D plans submit plans to CMS each year, representing their projected costs to provide the standard Part D benefit package, net of cost sharing, plus administrative costs and profit.
2. CMS then calculates the following:
   a. National average monthly bid = the enrollment-weighted average of all Part D bids received
   b. Base beneficiary premium = national average monthly bid * 25.5% / ( 1 - projected reinsurance payments to Pat D plans / projected total claim payments to Part D plans)
   c. Direct subsidy = national average monthly bid - base beneficiary premium
3. CMS makes the following payments to plans:
   a. Risk- adjusted direct subsidy
   b. Low-income premium and cost-sharing subsidies for beneficiaries who qualify for financial assistance
   c. Reinsurance to cover 80% of members’ costs in excess of the catastrophic threshold
   d. Risk corrido payment
   i. The payment is 50% of actual costs that exceed projected costs by between 5% and 10%, plus 80% of the amount exceeding 10% of the projected costs
   ii. Conversely, the plan must pay CMS using those same %s when actual costs are at least 5% less than projected costs
4. The plan must chare beneficiaries a premium equal to the difference between the plan’s bid and the direct subsidy.

Question 29

Basic requirements for a health plan to be eligible for a Medicare contract

Answer 29

1. Be licensed as a risk-bearing entity to offer health insurance in the states in which it operates
2. Demonstrate financial solvency and a positive net worth
3. Offer premiums that do not exceed the AV of Medicare cost sharing
4. Offer benefits and premiums that are uniform thorough the service area
5. Use Medicare-certified providers and demonstrate network, adequacy, meeting CMS access standards6. Meet minimum enrollment requirements: at least 5K members or, in rural areas at least 1,500 members
6. Demonstrate an ability to administer the contract (e.g., meet quality requirements, have a compliance plan, and address fraud and abuse.)

Question 30

Election periods during which Medicare beneficiaries can enroll or disenroll in MA plans

Answer 30

In general, a Medicare beneficiary who has both Part A and Part B and permanently resides in the MA plan’s services area may enroll in the plan if the enrollment request is received during an election period.

1. Annual election period - from Oct 15 through Dec 7, all eligible beneficiaries can join or switch plans for the coming year.
2. MA disenrollment period - between Jan 1 and Feb 15 of each year, members can disenroll from an MA plan and return the FFS Medicare. They can join a Pat D plan to add drug coverage.
3. Special election periods - those center around certain events, such as when an individual moves, loses other coverage, gets Medicaid, or loses Medicaid or low-income subsidies.
4. Initial coverage election periods - these allow individuals to enroll in an MA plan or a Part D plan beginning 3 months before they first become eligible for these plans.
5. Open enrollment for institutionalized individuals - is continuous but only applies to individuals who move into, reside in, or moved out of institutions such as SNF and LTC hospitals. Individuals have the right to enroll in plans that allow it, but MA plans are not required to be open for this period.

Question 31

Situations resulting in involuntary disenrollment of MA plan members

Answer 31

An MA plan must involuntarily disenroll beneficiaries who:

1. leave the service are permanently
2. are incarcerated
3. Lose entitlement to either Part A or Part B

An MA plan involuntarily disenroll beneficiaries who:

1. Commit fraud in enrolling in a plan or allowing others to use their enrollment cards to obtain care.
2. Fail to pay premiums in a timely manner
3. Use disruptive or abusive behavior

Question 32

Marketing and sales rules for MA plans

Answer 32

1. Prohibited marketing activities include:
   a. Door-to-door solicitation
   b. Discriminatory marketing
   c. Misleading marketing or misrepresentation
   d. Giving monetary incentives as an inducement to enroll
   e. Completing any portion of the enrollment application for prospective enrollee
2. Prior approval is required for all marketing and enrollment materials
3. Prospective enrollees must be given descriptive material sufficient for them to make an informed choice
4. Enrollees must be notified at least 30 days in advance of changes in membership rules and must be given a notice of changes in benefits and cost sharing by September 30 of the year before the change.
5. Plans can conduct “marketing or sales events” to promote the plan and “educational events” that do not include sales activities
6. Plans must train and test all agents and brokers annually on Medicare results and on details specific o the plans they are selling. CMS has established rule on compensation.
7. Plans must have a website web page dedicated to each product, and must operate a variety of call centers to answer enrollees’ questions.

Question 33

MA requirements related to access to care

Answer 33

1. Maintaining an adequate provider network, including minimum provider-to-enrollee ratios
2. Using the “prudent layperson” definition of what constitutes an emergency
3. Limiting copayments for emergency services to amounts specified by CMS
4. Covering OOA dialysis during an enrollee’s temporary absence from the service area
5. Specifying that the examining physician’s decision prevails regarding when a patient may be considered stabilized for discharge or transfer
6. Requiring plans to permit females to chose direct access to an IN women’s health specialist for women’s routine and preventive health services

Question 34

Steps of the MA member appeals process

Answer 34

Appeals pertain to adverse decisions regarding coverage or cost

1. The determination by the organization within 14 days
2. Reconsideration by the organization within 30 days. And if that decision is adverse to the enrollee, a reviews of that decision by an independent review entity under contract to CMS
   a. These 1st 2 steps may require an expedited decision (with 72 hours) if needed due to the enrollee’s condition
3. Review by an administrative law judge (ALJ) for claims valued at $130 or more if the independent review entity’s decision is adverse to the enrollee
4. Judicial review in federal court for claims valued at $1,300 or more.

Question 35

Explanation of star ratings for MA plans

Answer 35

1. MA plans must report the following data to CMS, which it used to create star ratings from 1 to 5 (5 stars signifies an excellent-performing plan):
   a. HEDIS
   b. Consumer Assessment of Healthcare Provider and Systems (CAHPS)
   c. Health Outcomes Survey
   d. Plan information on contract performance measures
2. Plan ratings are reported at four levels (as of 2011):
   a. Overall rating for MA-PD contracts - average of Part C and Part D star ratings
   b. Summary level - the overall score on the 5 Part C domains and d4 Part D domains
   c. Domain - groups of similar measures assigned a start rating based on an average of the individual measures.
   d. Individual quality and performance measures (36 for part C and 17 for Part D)
3. Organizations that fail to achieve at least a 3-star summary rating on Part C or Part D for 3 straight years is considered out of compliance with their Medicare contracts. CMS intends to terminate these contracts.

Question 36

Required elements of MA and Part D compliance programs

Answer 36

1. Written policies and procedures
2. Having a compliance officer (who reports to the CEO or other senior management) and a compliance committee (which provides periodic reports to the health plan’s governing body)
   3 Training and education
3. Effective lines of communication
4. Enforcement of standards through well-publicized disciplinary guidelines
5. Monitoring and auditing
6. Corrective action procedures

Question 37

Enforcement actions CMS may apply to noncompliant MA plans

Answer 37

1. Administrative and intermediate sanctions - these are lesser actions that can be applied instead of termination or nonrenewal
   a. Reject applications
   b. For serious noncompliance: suspension of enrollment, suspension of marketing activities, and suspension of payment for new Medicare beneficiaries during the sanction period
2. Termination or nonrenewal - can be based on any one of 13 regulatory reasons for termination. These include failure to carry out the terms of the contract and failure to comply with prompt payment rules.
3. Civil monetary penalties - for example, $25,000 for each CMS finding where beneficiaries were adversely affected or could have been adversely affected.
4. Exclusion from all federal programs - this generally follows conviction of a felony, misdemeanor, license revocation, or similar offense.

Question 38

Long-range financing challenges for the Medicare program

Answer 38

1. Income to the Hospital Insurance (HI) trust fund is not adequate to fund the HI portion of Medicare benefits. The HI trust fund i projected to be depleted in 2030, at which time payroll tax revenues are projected to cover only 85% of program costs.
2. Increases in Supplementary Medical Insurance (SMI) costs increase pressure on beneficiary household budgets and the federal budget. The SMI trust fund is expected to remain solvent because its financing is tied to projected future costs. But this will require increases in beneficiary premiums and general revenue contributions.
3. Increases in total Medicare spending threaten the program’s sustainability. Total Medicare expenditures were 3.5% of GDP in 2013. Under the baseline scenario, they are expected to grow to 6.8% of GDP in 2085.

Question 39

ACA provisions to address Medicare’s financial condition

Answer 39

1. Reduction to provider payment updates - to reflect productivity improvements
2. Medicare Advantage plan payments will be reduced gradually relative to FFS costs
3. Health care payment and delivery system improvements - for example, initiatives on bundles payments and accountable-care organizations
4. Increases in Medicare revenues - increasing the payroll tax, Part B premiums, and Part D premiums for those with higher income
5. Creation of the Independent Payment Advisory Board - to recommend changes to provider payments if Medicare spending exceeds a target per capita growth rate.

Question 40

Types of managed care delivery systems used in Medicaid programs

Answer 40

1. Comprehensive risk-based managed care - states contract with managed care plan to cover all or most Medicaid-covered services. Plans are paid a capitation rate and take on the financial risk.
2. Primary care case management - enrollees have a designated primary care provider who is paid monthly case management fee to assume responsibility for managing and coordinating their basic medical care. Individual providers continue to be pad on a FFS basis.
3. Limited-benefit plans - most states contract with these plans to manage specific benefits (such as MH or DM) or to provide services for a particular subpopulation.

Question 41

Types of waivers used by states for their Medicaid programs

Answer 41

States obtain waivers of certain federal requirements allow to allow them to experiment with different approaches for program operation, delivering services, and payment.

1. Medicaid program waiver - these offer states additional flexibility to test new approaches for delivering services.
2. Freedom of choice Section 1915(b) waivers - these permit states to implement service delivery models that restrict choice of providers. This allows states to use managed care plans.
3. Home and community-based services Section 1915(c) waivers - these authorize states to provide HCBS as an alternative to institutional care in nursing homes and other facilities.
4. Section 1115 research and demonstration projects - certain provisions of the Medicaid and CHIP statute may be waived to allow “any experimental, pilot, or demonstration project likely to assist i promoting the objectives” of Medicaid and CHIP

For Section 1115 and 1915(c) waivers, estimated federal spending cannot be greater than it would have been without the waiver (“budget or cost neutrality”). The state must identify savings that will offset the cost of any program expansion.

Question 42

Federally-mandated services that Medicaid programs must cover

Answer 42

1. Physician’s services
2. Hospital services (IP & OP)
3. Lab & x-ray services
4. Early and periodic screening, diagnostic, and treatment (EPSDT) services for individuals under 21
5. Federally-qualified health center and rural health clinic services
6. Family planning services and supplies
7. Pediatric and family nurse practitioner services
8. Nurses midwife services
9. Nursing facility services for individuals 21 and older
10. Home health care for persons eligible for nursing facility services
11. Transportation services

Question 43

Optional services that are commonly offered by Medicaid programs

Answer 43

1. Prescription drugs
2. Clinic services
3. Care furnished by other licensed practitioners
4. Dental services
5. Prosthetic devices, eyeglasses, and DME
6. Rehabilitation and other therapies
7. Case management
8. Nursing facility services for individuals under age 21
9. Intermediate care facility services for individuals with intellectual disabilities
10. Home and community-based services
11. Inpatient psychiatric services for individuals under age 21
12. Respiratory care services for ventilator-dependent individuals
13. Personal care services
14. Hospice services

Question 44

Definition of long-term services and supports

Answer 44

1. Services and supports that provide assistance with activities of daily living and also with instrumental ADLs, such as preparing meals and managing medication
2. Includes, but not limited to:
   a. Nursing facility care
   b. Adult daycare programs
   c. Homme health aide service
   d. Personal care services
   e. Transportation
   f. Assistance provided by a family caregiver
   g. Care planning and care coordination services to help beneficiaries navigate the health system
3. Often provided by unpaid caregivers (relatives & friends). But as care needs grow paid professionals may be needed, and are primarily paid for by Medicaid (51%), other public sources (21%), the patient (OOP, 19%), and private insurance (8%)

Question 45

Steps for implementing risk adjustment into a Medicaid managed care program

Answer 45

1. Decide which risk adjustment system will be used - there are various commercially-available models. Should choose a system based on the data used and the ability to customize it.
2. Decide what types of data should be used in the risk adjustment model - includes demographic information and claims and pharmacy data
3. Decide which Medicaid eligibility groups will be risk-adjusted and which subpopulation may be excluded
4. Decide whether the risk adjustment system should be prospective (use experience period data to estimate future morbidity) or concurrent (use data from the current period to estimate morbidity for that period)
5. Decide whether to base the risk adjustment factors on the individuals enrolled during the rating period or during the experience period.
6. Decide whether to customize the risk weights inherent in the risk adjustment model - may be needed due to differences in the state program as compared to the population used to develop the model.
7. Decide on criteria for including individuals in the risk adjustment calculations - many states require at least 6 months of eligibility exposure.
8. Develop criteria for claims records to be included in the risk adjustment model.
9. Determine the phase-ins schedule and whether or not risk corridors will be used.

Question 46

purpose of ASOP #49

Answer 46

guidance to actuaries when performing professional services related to Medicaid (and CHIP) managed care capitation rates.

Question 47

ASOP #45

Answer 47

guidance on risk adjustment

Question 48

Adjustments to base period data when calculating Medicaid managed care capitation rates

Answer 48

Adjustments may be needed to reflect changes that occurred during the base period (retroactive), between the base period and rating period (interim), or in the rating period (prospective).

1. Missing data adjustment - examples of missing data may include claims or encounter data that was not reported through the same system as the base data
2. Incomplete data adjustment - to account for claim reserves, reinsurance, and claim settlements
3. Population adjustment - to reflect expected changes in the population between the base period and the rating period
4. Funding or service carve-out adjustments - to adjust for payments or services that will not be covered by the capitation rate.
5. Retroactive eligibility adjustments - to exclude costs incurred during a period of retroactive eligibility that is not the responsibility of the MCO
6. Program, benefit, or policy adjustments - to reflect differences in benefit or service delivery requirements between the base period and the rating period.
7. Data smoothing adjustments - to address anomalies or distortions in the base data, such as large claims or limited enrollment
8. Claim cost trends- to reflect changes in demographics benefit levels, and state-mandated reimbursement schedules that are not captured elsewhere
9. Managed care adjustments - to reflect changes in the level of managed care between the base period and the rating period.

Question 49

Criteria for Medicaid managed care capitation rates to be considered actuarially sound

Answer 49

1. They were developed in accordance with generally accepted actuarial principles and practices
2. They are appropriate for the populations to be covered and the services to be furnished.
3. They have been certified as meeting the requirements of 42 CRF 438.6(c) by actuaries who meet the Qualification Standards established by the American Academy of Actuaries.