Source: https://www.medicareadvocacy.org/march-2018-tipping-the-scales-toward-medicare-advantage-other-issues/
Timestamp: 2019-04-20 01:08:33+00:00

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On February 9, 2018, the Bipartisan Budget Act of 2018 was signed into law. While the Budget Act included a number of permanent provisions, including those discussed below, it only extended spending on the federal budget through another short-term continuing resolution (CR), which expires March 23rd. The remainder of the FY 2018 federal budget, along with the fate of several important programs, still need to be addressed. However, as of the issuance of this Alliance brief on March 12, 2018, there is limited public information about progress on negotiations over the federal budget and potential omnibus spending bill.
See, e.g., “Omnibus Action Next Week Possible, but Obstacles Still Exist” Roll Call, March 8, 2018: https://www.rollcall.com/news/politics/omnibus-action-next-week-possible-obstacles-still-exist.
Part C of the Medicare program, also known as Medicare Advantage (MA), is an option available to Medicare beneficiaries who wish to receive their benefits through private insurance companies, primarily HMOs. In 2017, more than 19 million Medicare beneficiaries (33%) were enrolled in MA plans. MA enrollment is projected to continue to grow, rising to an estimated 41% of beneficiaries by 2027. There are both pros and cons for beneficiaries who choose to enroll in MA plans (see, e.g., the Center’s enrollment tips here and here). For example, “pros” include the ease of “one stop shopping” through MA plans, as opposed to those in traditional Medicare who often must purchase separate Part D prescription drug and Medigap supplemental plans. “Cons” often include limited networks of providers available through MA plans, and, in our experience, increased difficulty in accessing services when the need for such services intensifies.
As discussed below, despite costing more than traditional Medicare, yielding mixed quality outcomes, and a lack of enough data about how the program works, a variety of factors ranging from policy changes to government outreach tip the scales in favor of enrollment in MA plans. This bias towards the MA program not only costs Medicare more, but disadvantages the majority of Medicare beneficiaries who choose to access their coverage through the traditional program.
The MA program has several built in advantages to enrollees over individuals with traditional Medicare, including: an out-of-pocket cap, absent from traditional Medicare; a requirement to accept almost all Medicare beneficiaries on an annual basis, as compared to federally-mandated enrollment rights regarding Medigap supplemental insurance plans, which does not require sale to individuals under 65, and only requires sales to people over 65 following certain triggering events; and the ability to waive the 3-day prior hospital stay requirement for coverage in a skilled nursing facility. These MA advantages have been amplified by recent changes in both law and regulation, including the changes discussed below.
Effective 2019, for the first 3 months of the calendar year there will be a continuous open enrollment and disenrollment period relating to MA plans (previously called the Medicare Advantage Open Enrollment Period, or MA-OEP). During this 3-month period an MA eligible beneficiary can make a one-time change to another MA plan, they can elect traditional Medicare, or they can elect coverage under Part D. This policy change, which has been backed by insurance agents/brokers and the health insurance industry, among others, favors MA enrollment over traditional Medicare by giving those in MA plans more flexibility to make changes to their coverage.
Beginning in 2021, people with End-Stage Renal Disease (ESRD) will be able to enroll in MA plans. Current law prohibits people with ESRD from enrolling in MA plans except in limited situations. Instead of promoting free choice regarding how people wish to obtain their health coverage, and endorsing equal opportunity for all Medicare beneficiaries, regardless of age or health status, Congress failed to extend Medigap rights to people with ESRD at the same time it removed prohibitions on enrollment in MA. Conversely, Congress is working to erode Medigap coverage more broadly. In 2015, Congress passed the Medicare and CHIP Reauthorization Act (MACRA) bill that will prohibit people eligible for Medicare on or after January 1, 2020 from purchasing a Medigap policy that covers the Part B deductible (sometimes referred to as policies that offer “first dollar coverage”).
Expansion of supplemental benefits in MA – beginning in 2020, supplemental benefits offered by MA plans will no longer be limited to being “primarily health related” but instead must only have a reasonable expectation of improving or maintaining the health or overall function of chronically ill enrollees.
Expansion of access to telehealth services available to enrollees of MA plans, including offering such services as a basic benefit.
In the current climate of “deregulation” a number of policy proposals have been offered that favor MA plan sponsor “flexibility” in a way that will make things more complex, not less, for Medicare beneficiaries. While the provisions of both the proposed Part C and D rule and the draft Call Letter are currently in draft form and not yet finalized, they are expected to appear in final versions of these documents in early April 2018.
Additional proposals to segment benefit flexibility, add greater flexibility to plan maximum out of-pocket limits (MOOP) and allow higher cost-sharing limits for services combine to exacerbate barriers Medicare beneficiaries face in making informed decisions about their health insurance coverage.
Health Related Supplemental Benefits – CMS intends to expand the scope of the primarily health related supplemental benefit standard by reinterpreting the statute “to permit MA plans to offer additional benefits as ‘supplemental benefits’ so long as they are healthcare benefits. Under [CMS’] new interpretation, in order for a service or item to be ‘primarily health related,’ it must diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization.” While the Budget Act of 2018 contains a similar proposal, to be implemented in 2020, CMS’ proposal would be rushed to implementation in 2019, apparently without time for drafting of thoughtful guidance, beneficiary education, solicitation of stakeholder feedback, and development of plan oversight protocols.
Medicare Advantage (MA) Uniformity Flexibility – This policy change, first proposed in the draft Part C & D rule (discussed above) is presented in the draft Call Letter as if it is final policy. If implemented, it could dramatically increase the range of benefits and cost-sharing between plans, and risks allowing some MA plans to devise discriminatory plan designs, intentionally or otherwise. We note that CMS began to test some of the concepts of loosening MA benefits in a Value-Based Insurance Design (VBID) demonstration through the Centers for Medicare and Medicaid Innovation (CMMI) beginning in January 2017. The demo is limited by condition, geography and plan and incorporates significant consumer protections. By loosening uniformity standards for all plans, CMS is putting the proverbial cart before the horse by scaling up an experiment before we have meaningful results, including whether such flexibility – even for a much smaller cohort with specific conditions – improves health outcomes. CMS’ policy change is premature in that there is not yet actionable, long-term feedback or lessons from the VBID demo as to whether altering benefits and cost-sharing in this manner is effective among the MA population – a crucial first step before significantly altering plan requirements. Loosening uniformity requirements in the manner CMS proposes could – by itself – create a chaotic environment for Medicare beneficiaries trying to make informed decisions about what options might be best for themselves. To do so without issuing strong guard rails in the form of consumer protections and more firm restrictions on plans is a stark departure from the more thoughtful and cautious approach recently taken by CMS in rolling out the VBID demo.
The Medicare Annual Coordinated Election Period (ACEP), from October 15th through December 7th, allows Medicare beneficiaries to make certain changes to their Medicare coverage, effective the following January 1st. As the Center discussed in an October 25, 2017 Weekly Alert, official Center for Medicare & Medicaid Services (CMS) Medicare Open Enrollment materials for 2018 tipped the scales to encourage beneficiaries to choose a private Medicare plan over original Medicare. For example, the Key Messages of the CMS Communications Plan for 2018 Open Enrollment did not even address original Medicare, the CMS Open Enrollment webpage made no mention of original Medicare as a choice during Open Enrollment, and while a CMS document entitled “Medicare Open Enrollment: Review, Compare, Enroll” does list original Medicare as a coverage option, the section on Open Enrollment in the document does not include original Medicare as an option.
On November 9, 2017, the Leadership Council of Aging Organizations (LCAO), a member coalition of the nation’s non-profit organizations serving older Americans, sent a letter about this issue to CMS and committees of jurisdiction in Congress.
The organizations listed in the letter wrote to express concerns that during the last Medicare open election period, CMS encouraged entities that assist Medicare beneficiaries with enrollment choices to disseminate information that was incomplete, biased towards Medicare Advantage (MA) and often failed to even mention traditional Medicare. The organizations urged CMS to take immediate corrective action to include and accurately portray the benefits and drawbacks of all coverage options in CMS materials.
The Medicare Advantage (MA) program, which provides Medicare enrollees with the option of obtaining their Medicare coverage through private plans, is reimbursed at rates higher than what traditional Medicare would spend on a given individual, often leading to extra benefits, along with other factors that favor MA enrollment over traditional Medicare. The Center urges policymakers to expand services and coverage equally for all Medicare beneficiaries, not just subsets – including those in traditional Medicare. For example, an out-of-pocket cap, or stop-loss, should be added to the program as exists in MA. Rights to purchase Medigap supplemental insurance policies should be expanded to both people under 65 and to include more ongoing access for all in order to provide truly meaningful choices for Medicare beneficiaries. And both payment and coverage should be equalized between MA and traditional Medicare so that the scales are not irreversibly tipped in favor of privatization.
On February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (full text available here) which, among other things, raises the debt ceiling through March, 2019, removes budget caps imposed by the Budget Control Act of 2011, and keeps the government funded through March 23, 2018. The Budget Act contains a “health extenders” package, which includes a number of wide-ranging provisions relating to various health programs. Below we highlight certain provisions, which we divide into “Good” and “Bad” – for more information, see the Center’s statement following passage of the bill, available here. For additional analysis of some of the health-related provisions of this bill, see, e.g., summaries by Justice in Aging and Medicare Rights Center.
Also see the Center’s Weekly Alert “Congress Repeals Medicare Outpatient Therapy Caps, Strengthening the Jimmo Settlement Agreement” (February 14, 2018).
Further Means Testing Medicare Premiums – Medicare beneficiaries with incomes of $85,000 (or $170,000 for a couple) already have to pay higher premiums for both Part B and Part D coverage. The amount of the increased premium depends on how much above this threshold amount they earn. The new law makes people earning $500,000 or more ($750,000 for a couple) pay an even higher share of their premiums than they pay under current law. Medicare premium increases for higher income people may sound equitable, but they diminish important support for the Medicare program and for maintaining its promise as a universal program for all who qualify.
Another home health provision will allow Medicare determinations to be based as much on the documentation in the home health agency records (and nursing home records if the patient came to home health care from a SNF), as on the documentation of the physician who knows the patient and must certify the need for care. Our experience tells us that this may well lead to unfair coverage denials. Home health records are often not complete, and payment methods too often drive agencies to want to cherry-pick patients (and perhaps document accordingly). Further, the opinion of the patient’s physician has been given great weight under the law (as ruled by many courts), in determining a patient’s need for care and qualifying for Medicare. This section may conflict with the important relationship between a doctor and a patient and give industry too much power in determining what is medically “reasonable and necessary”.
Twenty State Attorney’s General, led by Texas and Wisconsin, announced another lawsuit to sue the federal government over the ACA – March 1, 2018.
Issuance of proposed rules to allow the sale of junk health insurance plans that won’t have to comply with ACA coverage rules or protections – February 22, 2018.
President’s Budget seeks to repeal the ACA and replace it with something similar to the failed Graham-Cassidy plan – February 14, 2018.
Alexander v. Azar (formerly Bagnall v. Sebelius, Barrows v. Burwell), No. 3:11-cv-1703 (D. Conn.) (Observation Status). In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a proposed class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered "outpatient observation" rather than an inpatient admission. When hospital patients are placed on observation status, they are labeled "outpatients," even though they are often on a regular hospital floor for many days, receiving the same care as inpatients. Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare Part A coverage of post-hospital nursing home care, people on observation status do not have access to nursing home coverage. They must either privately pay the high cost of nursing care or forgo that skilled care. The number of people placed on observation status has greatly increased in recent years.
The parties completed discovery on the issue ordered by the Second Circuit: whether plaintiffs have a “protected property interest” in Part A coverage of their hospital stays, which depends on whether CMS has “meaningfully channeled” discretion on the question of patient status determinations. If the Secretary has established criteria for inpatient hospitalization, plaintiffs have an interest that is protected by the Due Process Clause and thus they may be entitled to notice and opportunity to appeal their placement on observation. Plaintiffs received voluminous documentation from the government and conducted depositions of witnesses from the Department of Health and Human Services, Medicare contractors, and some of the hospitals that treated the named plaintiffs. The law firm of Wilson Sonsini Goodrich & Rosati, which has helped the Center in previous litigation, joined as representatives of the plaintiffs during this phase and is continuing to provide invaluable pro bono assistance.
After briefing and a hearing on cross motions for summary judgment on the protected property interest issue and defendant’s supplemental motion to dismiss, the court issued a decision on February 8, 2017, denying both motions for summary judgment and largely denying the government’s motion to dismiss. The court found that all named plaintiffs have standing and none of their claims was moot, even though some have passed away and some have resolved their underlying individual claims. It decided that factual disputes precluded summary judgment on the property interest question, though it did note that CMS considers the billing of hospitalizations as inpatient or observation to be a regulatory matter, under the authority of the Secretary, as opposed to a clinical decision. The court also found that while a treating physician’s status order plays a “role” in Medicare’s review of a hospital claim, it is not dispositive or even presumed to be correct.
As for the motion to dismiss, the court found that plaintiffs have plausibly alleged the other two aspects of a due process claim: state action (in the form of pressure on providers by CMS) and inadequacy of existing procedures (it is undisputed that there is currently no appeal method for patients placed on observation status). The court found that plaintiffs’ claim for expedited notice is now moot due to the new requirements being implemented under the NOTICE Act (“MOON” notice). The parties filed an updated plan for further discovery as plaintiffs continue to press their due process claim.
Update: The parties are now proceeding with discovery on their due process claim. Both parties have served written discovery requests and are in the process of providing written responses and producing documents.
For more information about this case, including a link to the class certification decision, see: https://www.medicareadvocacy.org/court-certifies-nationwide-class-in-observation-status-case/.
For more information about observation status, including pending legislation see: https://www.medicareadvocacy.org/medicare-info/observation-status/.
For more information, see the Center’s website at: https://www.medicareadvocacy.org/medicare-info/improvement-standard/.
For information about and a copy of the Exley settlement, see: https://www.medicareadvocacy.org/exley-v-burwell-settlement-in-medicare-appeals-delay-case-granted-final-approval/.
Sherman v. Azar (formerly Olsen-Ecker v. Burwell), No. 3:15-cv-1468 (D. Conn.) (Lower level Medicare appeals) On October 9, 2015, the Center filed a complaint in United States District Court in Connecticut against Sylvia Mathews Burwell, Secretary of Health and Human Services, on behalf of plaintiffs who have been denied a meaningful review of their Medicare claims at the first two levels of appeal. The case was brought as a class action on behalf of Medicare beneficiaries seeking home health care coverage, and the named plaintiff represents beneficiaries who have received the usual “rubber stamp” denials at redetermination and reconsideration. The plaintiff also filed a motion for class certification, and the government filed a motion to dismiss. Written discovery was served but responses were stayed while the motion to dismiss was pending. Oral argument was held on February 29, 2016.
On August 8, 2016, the judge largely denied the government’s motion to dismiss and granted plaintiff’s motion for certification of a nationwide class. The court concluded that it had jurisdiction and decided that the case was not moot even though plaintiff’s claim had ultimately been approved. The judge dismissed the statutory claim, but found that plaintiff had stated a valid claim for relief under the Due Process Clause. He found plaintiff’s claim of policies or practices causing the denial rate sufficiently plausible to allow the case to continue to discovery. The judge also certified a nationwide class of Medicare beneficiaries of home health care services who had received adverse decisions at the first two levels of appeal on their Part A or Part B claims, and who had received an initial adverse initial determination on or after January 1, 2012.
Plaintiffs and the Secretary each served discovery and provided written responses and document production. Several depositions were held. The court stayed discovery deadlines as the parties discussed settlement.
On December 12, 2017, the parties filed a joint motion for preliminary approval of a settlement agreement and notice to the class. The proposed settlement applies to all beneficiaries whose appeals for coverage of home health services have been or will be denied at the first two levels of review and who received an initial determination or notice of termination of coverage for those services dated on or after January 1, 2012. Under the agreement, the Medicare agency will transmit four memoranda containing important principles for deciding home health appeals to the Medicare contractors that handle those decisions at the first and second levels of review. Class counsel, believes that the principles expressed in the transmittals are key to fair decision-making and will reinforce compliance with beneficiaries’ due process protections in the administrative appeal system. The court granted preliminary approval of the settlement and set a Fairness Hearing date. The notice to the class and the proposed settlement can be found here.
Update: A final fairness hearing was held in at the court in New Haven on February 26, 2018. No objections had been received by class counsel, and the court approved the settlement, finding it fair, reasonable, and adequate. The memoranda to the relevant Medicare contractors will be issued within 100 days of the fairness hearing, after which plaintiffs will file a stipulation of dismissal.
Ryan v. Hargan, No. 5:14-cv-269 (D. Vt.) (Prior Favorable Homebound Determination) On December 19, 2014, the Center for Medicare Advocacy and Vermont Legal Aid filed a class action lawsuit against Sylvia Mathews Burwell, the Secretary of Health and Human Services, to stop Medicare’s practice of repeatedly denying coverage for home health services for beneficiaries on the basis that they are allegedly not homebound, when Medicare has previously determined them to be homebound. (Ryan v. Burwell). The lawsuit was filed in the United States District Court in Burlington, Vermont on behalf of two Vermont residents, Marcy Ryan and John Herbert, as a regional class action lawsuit covering New England and New York.
Written discovery was served. The government filed a motion for summary judgment in November 2016 and plaintiffs filed a cross motion and responded in December. However the parties then entered settlement talks and postponed further briefing while those negotiations proceeded.
Update: Class counsel will alert advocates when CMS has published the application process on its website.
For more information, including a copy of the complaint, see: https://www.medicareadvocacy.org/federal-court-class-action-challenges-medicares-practice-of-repeatedly-denying-home-health-coverage-for-homebound-beneficiaries/.

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