Objective 4 - Government Programs

Question 1

Individuals Eligible for Medicare Coverage

Answer 1

1. Aged - At least 65 and eligible for social security or Railroad Retirement benefits
2. Disabled - entitled to social security or Railroad Retirement disability benefits for at least two years
3. End-stage renal disease (ESRD) - insured workers with ESRD, including spouses and children with ESRD
4. Some other aged and disabled individuals who pay mandatory premiums

Skwire, Chapter 9, Page 132

Question 2

Types of Medicare Coverage and Funding

Answer 2

1. Part A - Hospital Insurance (HI)
   a) Eligible persons receive coverage automatically with no premium charge
   b) Funded through payroll tax rate of 1.45% of all earnings, with matching employer tax
2. Part B - Supplemental Medical Insurance (SMI)
   a) Requires a monthly premium ($99.90 in 2012, except 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)
   c) Financed through general revenues (75%) and beneficiary premiums (25%)
3. Part C - Medicare Advantage
   a) Alternative to Parts A and 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 for some services not covered under Medicare
4. Part D - Covers most prescription Drugs, provided through private ensurers. Funded through General Revenues (74.5%) and premiums (25.5%)
5. Medicare Supplement - private insurance to cover out-of-pocket costs and some other benefits not covered by Medicare

Skwire, Chapter 9, Page 133

Question 3

Services Covered by Medicare Part A

Answer 3

1. Inpatient Hospital - semi-private room and ancillary services and supplies
2. Skilled nursing facility (SNF) - Semi-private room, meals, skilled nursing, and rehabilitative services
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 six months

Skwire, Chapter 9, Page 133

Question 4

Medicare Part A cost sharing and coverage limits

Answer 4

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

1. Inpatient hospital (Cost Sharing)
   a) $1,260 deductible per benefit period
   b) $315 per day for days 61-90 each benefit period
   c) $630 per day for days 91-150 each lifetime reserve day
   Coverage Limits - 60 lifetime reserve days (No coverage beyond lifetime reserve)
2. SNF (Cost Sharing)
   a) $157.50 per day for days 21-100 of each benefit period
   Coverage Limits - No overage after 100 days each benefit period
3. Home Health Agency (Cost Sharing)
   a) None
   Coverage Limits - 100 visits per illness
4. Hospice Care - No Cost Sharing or Coverage Limits
5. Blood - Cost of first 3 pints of blood (Cost Sharing)

Skwire, Chapter 9, Page 133

Question 5

Services Covered by Medicare Part B

Answer 5

1. Outpatient Hospital (including ER)
2. Medical care by qualified health practitioners (including Diagnostic tests, supplies, durable med equipment)
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 and biologicals that cannot be self-administered
14. Certain preventive services (such as an annual flu shot and cancer screenings)

(THIS LIST NEEDS A MNEMONIC)

Skwire, Chapter 9, Page 134

Question 6

Medicare Part B Cost Sharing

Answer 6

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)

Skwire, Chapter 9, Page 134

Question 7

Drug Types excluded from Standard Part D Coverage

Answer 7

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. Over-the-counter drugs

Skwire, Chapter 9, Page 136

Question 8

Funding sources for the Medicare Program

Answer 8

1. Medicare is funded on a pay-as-you-go basis
2. SMI
   a) Part B 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 fun, from general revenues (74.5%) and premiums (25.5%)
3. HI (Part A)
   a) Payroll tax rate is 1.45% of all earnings (not capped), with a matching employer tax
   b) The ACA added an additional 0.9% payroll tax and 3.8% tax on investment income for high-income taxpayers

Skwire, Chapter 9, Page 136

Question 9

Approaches for Improving Medicare Solvency

Answer 9

1. Increase Taxes
2. Reduce or eliminate some covered services
3. Increase Medicare cost sharing through higher deductibles and copays
4. Raise 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

Skwire, Chapter 9, Page 137

Question 10

Medicare Provider Remibursement

Answer 10

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 conditions and the services provided.
2. Physicians - Used a complex fee schedule to assign relative values to services. Reimbursement equals the sum of area-adjusted unit 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 rend, 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

Skwire, Chapter 9, Page 137

Question 11

Categories of Medicaid-Eligible Individuals

Answer 11

1. Categorically Eligible Individuals
   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 must covered all pregnant women and children under age 6 with incomes below 138% of the federal poverty level
2. Medically-needy individuals - states often extend coverage to these individuals, who qualify when their medical expenses reduce income below defined limits
3. The ACA expanded eligibility to everyone under age 65 with income up to 138% of federal poverty level (in states that chose to expand)

Skwire, Chapter 9, Page 141

Question 12

Workers int he US who are not covered by Social Security

Answer 12

1. Federal employees hired before 1984
2. About 1/4 of state and local government workers (those who are covered by plans that are comparable to Social Security)
3. A very small number 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

Skwire, Chapter 9, Page 145

Question 13

Requirements for Insured statuses under Social Security

Answer 13

1. Disability-insured status - requires between 6 credits (at young ages) and 40 credits (at ages 62 or older). Some credits must have been earned recently, as follows:
   a) For those required to have 20 or more credits, 20 must have been from the last 40 quarters
   b) For those required to have between 6 and 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 and a maximum of 40
3. Currently-insured status - requires 6 credits in the 13 calendar quarters ending with the quarter of death

Question 14

Eligibility and Benefit Amounts for Social Security disability and survivor benefits

Answer 14

1. Disabled-worker benefits
   a) Eligibility - must be disability insured and fully insured and be unable to engage in any “substantial gainful activity”
   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 - worker’s primary insurance amount (PIA) is computed using the standard procedures and 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 two parents (a family maximum applies, which is typically 175%)

Skwire, Chapter 9, Page 146

Question 15

Equivalence Requirements for Part D employer group waiver plans (EGWPs)

Answer 15

1. [B]enefits must be at least as rich as standard Part D benefits
2. The [d]eductible must be no greater than the standard Part D deductible
3. Benefits in the coverage [g]ap must be at least as rich as standard part D benefits
4. [C]atastrophic coverage must be at least as rich as standard Part D catastrophic coverage

Mnemonic - Better Cover Donut Gap (BCDG)

Skwire, Chapter 29, Page 506

Question 16

Types of Part D Plans

Answer 16

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 drugs and health coverage

Rosenbloom, Chapter 21, Page 533

Question 17

Late enrollment penalty for Part D plans

Answer 17

1. Applies to those who do not sign up for Part D when they are first eligible
2. Is 1% of the base beneficiary premium for every month the person waited to enroll
3. Is paid every month for 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

Rosenbloom, Chapter 21, Page 535

Question 18

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

Answer 18

1. Retiree Drug Subsidy (RDA)
   a) (From Skwire, Chapter 29):To qualify for the subsidy, the plan must provide an actuarial attestation that it provides coverage at least as rich as Part D (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) The 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 not less attractive after the ACA eliminated the employer tax deduction for the subsidy as of 2013.
2. Employer Group Waiver Plan (EGWP) - was conceived to be superior to the RDS. Two options are:
   a) Direct contract EGWP - contract directly with CMS to become a PDP
   b) “800” series EGP - outsource to a third-party PDP or MA-PD, 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 percentage of the coverage gap or total out-of-pocket costs)
   b) A concern with this option is that pharmacies may not prepared to manage patients with two benefits (Part D and the wraparound plan)

Rosenbloom, Chapter 21, Page 537

Question 19

Advantages of using EGWP instead of RDS

Answer 19

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. Tax obligations are treated equally between EGWP and RDS
4. Direct monthly subsidy is received from CMS
5. Governmental Accounting Standards Board Statements 43/45 liability is reduced
6. Part D benefits provides catastrophic coverage
7. Additional advantages of using an “800” series EGWP
   a) Administrative functions are handled by the third-party sponsor
   b) Risk avoidance - risk is shifted to the third-party sponsor
   c) The employer has no direct contract with CMS
   d) The third-party will handle compliance and regulatory issues

Rosenbloom, Chapter 21, Page 539

Question 20

Beneficiary cost sharing for the standard Part D benefit design

Answer 20

Drug Cost Range

a) $0 - 320 (deductible) - Beneficiary pays 100%
b) $320.01 - $2,960 (Initial Coverage) - Beneficiary Pays 25%
c) Up to TrOOP of $4,700 (Donut Hole) - Beneficiary Pays 65% for generic, 45% for brand
d) After TrOOP (Catastrophic) - ~5%**

• Due to ACA, these percentages are gradually decreasing until they reach 25% for both brand and generic drugs 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 out-of-pocket costs
2. Deductible, initial coverage limit, TrOOP, and catastrophic copays are indexed annually. Amounts shown for 2015.
3. Low-income beneficiaries have a different benefit design. For example, dual eligibles pay no premium, have no deductible, and pay only a small copay for drugs.

(includes information form Skwire, Chapter 9

Rosenbloom, Chapter 21, Page 54

Question 21

Impact of Regulations on the Medicare Advantage (MA) program

Answer 21

MA is the current name of this program wherein 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 Budget 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. Medicare Modernization Act of 2003 (MMA) reignited enrollment by:
   a) Creating 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 stars 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 (separate list)
   d) A minimum medical loss ratio standard of 85% was also imposed

Kongstvedt, Chapter 24, Pages 500 and 511

Question 22

Types of MA Plans

Answer 22

1. Coordinated care plans (separate list for types of coordinated 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 the 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.

Kongstvedt, Chapter 24, Page 501

Question 23

Types of MA Coordinated Care Plans

Answer 23

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, and 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 two programs.
   b) Institutional SNPs (I-SNPs) - for beneficiaries institutionalized for 90 days (such as in a skilled nursing facility or psychiatric facility)
   c) Chronic care SNPs (C-SNPs) - For those with severe or disabling chronic condition (defined by CMS). Must include certain benefits beyond Medicare Part A and Part B services.
4. Religious and Fraternal Benefit Social plans
5. Senior housing facility plans

Kongstvedt, Chapter 24, Page 501

Question 24

Payment calculation for MA plans

Answer 24

1. MA plans submit bids to CMS each year, representing their projected costs to cover Part A and Part B services, net of cost sharing, plus 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 country-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 percentage 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 for sicker beneficiaries
   d) The cost sharing design is not at least as generous as FFS Medicare

Kongstvedt, Chapter 24, Pages 507 and 512

Question 25

Payment Calculation for Medicare Part D plans

Answer 25

1. Part D plans submit their bids 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 Part 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 corridor 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 projected costs
   ii) Conversely, the plan must pay CMS using those same percentages when actual costs are at least 5% less than projected costs
4. The plan must charge beneficiaries a premium equal to the difference between the plan’s bid and the direct subsidy

Kongstvedt, Chapter 24, Page 512

Question 26

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

Answer 26

1. Be (Licensed) as a risk-bearing entity to offer health insurance in the state in which it operates
2. Demonstrate financial (solvency) and a positive net worth
3. Offer premiums that do not exceed the (actuarial value) of Medicare cost sharing
4. Offer benefits and premiums that are (uniform) throughout the service area
5. Use Medicare-certified providers and demonstrate (network adequacy), meeting CMS access standards
6. Meet minimum (enrollment) requirements: at least 5,000 members or, in rural areas, at least 1,500 members
7. Demonstrate an ability to (administer) the contract (e.g., meet quality requirements, have a compliance plan, and address fraud and abuse)

Mnemonic - LSAUNEA (What to do with this?)

Kongstvedt, Chapter 24, Page 514

Question 27

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

Answer 27

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

1. Annual election period - Oct 15 - Dec 7, all eligible beneficiaries can join or switch plans for the coming year
2. MA disenrollment period - Jan 1 - Feb 15, members can disenroll from an MA plan and return to FFS Medicare. They can join a Part D plan to add drug coverage.
3. Special election periods - these 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 and institutionalized individuals - is continuous but only applies to individuals who move into, reside in, or moved out of institutions such as skilled nursing facilities 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.

Kongstvedt, Chapter 24, page 516

Question 28

Situations resulting in involuntary disenrollment of MA plan members

Answer 28

An MA plan must involuntarily disenroll beneficiaries who:

1. Leave the service area permanently
2. Are incarcerated
3. Lose entitlement to either Part A or Part B

An MA plan may 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 abuse behavior

Kongstvedt, Chapter 24, Page 516

Question 29

Marketing and Sales rules for MA plans

Answer 29

1. Prohibited Marketing activities include:
   a) Door-to-door solicitation
   b) Discriminatory marketing
   c) Misleading marketing or misrepresentation
   d) Giving monetary incentives as inducement to enroll
   e) Completing any portion of the enrollment application for a 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 rules and on details specific to plans they are selling. CMS has established rules on compensation.
7. Plans must have a website or web page dedicated to each product, and must operate a variety of call centers to answer enrollees’ questions

Kongstvedt, Chapter 24, Page 517

Question 30

MA requirements related to access to care

Answer 30

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 out-of-area (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 choose direct access to an in-network women’s health specialist for women’s routine and preventive health services

APL DEF

FED PAL

Kongstvedt, Chapter 24, Page 518

Question 31

Steps of the MA member Appeals Process

Answer 31

Appeals pertain to adverse decisions regarding coverage or cost

1. 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 review of the decision by an independent review entity under contract to CMS.
   a) these first two steps may require an expedited decision (within 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. Review of the ALJ’s decision by the Medicare appeals council
5. Judicial review in federal court for claims valued at $1,300 or more

Kongstvedt, Chapter 24, Page 518

Question 32

Explanation of Star Ratings for MA plans

Answer 32

1. MA plans must report the following data to CMS, which it uses to create star ratings from one to five (five stars signifies an excellent-performing plan):
   a) HEDIS
   b) Consumer Assessment of Healthcare Providers 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 scores on the five Part C domains and four Part D domains
   c) Domain - groups of similar measures assigned a star 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

Kongstvedt, Chapter 24, Page 521

Question 33

Required elements of MA and Part D compliance programs

Answer 33

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
4. Effective lines of communication
5. Enforcement of standards through well-publicized disciplinary guidelines
6. Monitoring and auditing
7. Corrective action procedures

Kongstvedt, Chapter 24, Page 523

Question 34

Enforcement Actions CMS may apply to non-compliant MA plans

Answer 34

1. Administrative and intermediate sanctions - these are lesser actions that can be applied instead of termination or non-renewal
   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 non-renewal - 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

Kongstvedt, Chapter 24, page 524

Question 35

Long-Range Financing Challenges for the Medicare Program

Answer 35

1. Income to the Hospital Insurance (HI) trust fund is not adequate to fund the HI portion of Medicare benefits. The HI trust fund is 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,t hey are expected to grow to 6.8% of GDP in 2085.

GHC-800-15, Page 4

Question 36

ACA provisions to address Medicare’s financial condition

Answer 36

1. Reductions 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 bundled 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 incomes
5. Creation of the Independent Payment Advisory Board - to recommend changes to provider payments if Medicare spending exceeds a target per capita growth rate

GHC-800-15, Page 7

Question 37

Types of Managed care delivery systems used in Medicaid Programs

Answer 37

1. Comprehensive risk-based managed care - states contract with managed care plans 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 a monthly case management fee to assume responsibility for managing and coordinating their basic Medical care. Individual providers continue to be paid on a FFS basis.
3. Limited-Benefit plans - mos states contract with these plans to manage specific benefits (Such as mental health or disease management) or to provide services for a particular subpopulation

Mnemonic - Comp/Contract/cap; Primary/Primary/FFS; Limited/Subbenefits/Subpopulation

GHC-811-16, Page 10

Question 38

Types of Waivers used by states for their Medicaid Programs

Answer 38

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

1. Medicaid program waivers - 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 in promoting the objections” 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

GHC-811-16, Page 12

Question 39

Federally-mandated services that Medicaid programs must cover

Answer 39

1. [P]hysicians’ services
2. [H]ospital services (inpatient and outpatient)
3. [L]aboratory and x-ray services
4. Early and periodic [s]creening, diagnostic, and treatment (EPSDT) services for individuals under age 21
5. [F]ederally-qualified health center and rural health clinic services
6. [F]amily planning services and supplies
7. [P]ediatric and family nurse practitioner services
8. Nurse [m]idwife services
9. [N]ursing facility services for individuals 21 and older
10. [H]ome health care for persons eligible for nursing facility services
11. [T]ransportation services

Mnemonic - M H N PPL H STFF (Medicaid Helps Needy PeoPLe Have STuFF)

GHC-812-16, Page 13

Question 40

Optional services that are commonly offered by Medicaid programs

Answer 40

1. Prescription drugs
2. Clinic services
3. Care furnished by other licensed practitioners
4. Dental services and dentures
5. Prosthetic devices, eyeglasses, and durable medical equipment
6. Rehabilitation and other therapies
7. Case management
8. Nursing facility services for individuals under age 21
9. Intermediate care facility services for individuals under age 21
10. Respiratory care services for ventilator-dependent individuals
11. Personal care services
12. Hospice services

GHC-812-16, Page 14

Question 41

Definition of Long-Term Services and Supports

Answer 41

1. Services and supports that provide assistance with activities of daily living (ADLs, see separate list of ADLs in Leida chapter 2) and also with instrumental ADLs, such as preparing meals and managing medication
2. Includes, but is not limited to:
   a) Nursing facility care
   b) Adult daycare programs
   c) Home health aide services
   d) Personal care services
   e) Transportation
   f) Assistance provided by a family caregiver
   g) Care planning and care coordination services to help beneficiaries navigae the health system
3. Often provided by unpaid caregivers (relatives and 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 (out-of-pocket, 19%), and private insurance (8%)

GHC-813-16, Page 1

Question 42

Steps for Implementing Risk Adjustment into a Medicaid managed care program

Answer 42

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 system - includes demographic information and claims and pharmacy data
3. Decide which Medicaid eligibility groups will be risk-adjusted and which subpopulations 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 six months of eligibility exposure
8. Develop criteria for claims records to be included in the risk adjustment model
9. Determine the phase-in schedule and whether or not risk corridors will be used

HW: Risk Adjustment in State Medicaid, Page 15

Question 43

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

Answer 43

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 nor 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 services 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

ASOP #49, Page 6

Question 44

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

Answer 44

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 CFR 438.6(c) by actuaries who meet the Qualification Standards established by the American Academy of Actuaries

ASOP #49, Page 11