CMS pitch may usher 1.6% Medicare fund growth for PR

Written by  //  February 27, 2017  //  Financial District, Insurance  //  No comments

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Roberto García-Rodríguez

The Advance Notice and Draft Call Letter recently issued by the Centers for Medicare and Medicaid Services includes proposals that if finally implemented would result in a minor net increase of 1.6 percent to calendar year 2018 Medicare Advantage benchmark rates for Puerto Rico.

According to the Medicaid and Medicare Advantage Products Association of Puerto Rico, this assessment takes into account the impact of the Health Insurance Tax for 2018.

However, the group said the letter includes “much needed relief to certain program challenges, but does not provide a permanent solution to the significant disparities in the island´s Medicare Advantage (MA) funding.”

These disparities result from key differences in how Medicare is applied in Puerto Rico and the MA program´s very high penetration rate on the island, which CMS´s methodology does not take into account, the group said.

Actuaries and technical staff of the MMAPA have jointly assessed the changes to the MA rate calculation formulas that CMS has proposed in its Draft Call Letter, and will “continue lobbying to receive permanent relief for additional healthcare industry challenges, such as the elimination of the Health Insurance Tax, which represents a negative impact of 2.5 percent to healthcare spending for 2018, and a change in the methodology used to establish rates for Puerto Rico,” the group said.

“This slight increase is in the right direction but it is far from restoring funding to adequate levels, due to the significant cuts that Medicare Advantage rates in Puerto Rico have suffered since 2011,” said Roberto García, MMAPA board president and Triple-S Management Corporation CEO.

The MA base rates for Puerto Rico in 2017 are 21 percent below the average in 2011, the year before MA rate reductions began under the Affordable Care Act. Despite the projected minor increase, the gap between MA base rates for Puerto Rico and the rest of the nation continues to increase, the group stated.

“Key issues need to be addressed in the final call letter and we call on all stakeholders in our healthcare system to join in a united effort,” said Jim O’Drobinak, MMAPA Board member and CEO of MCS Healthcare Holdings, LLC.

Need to adjust for zero claims, benchmarks for End-Stage Renal Disease
Two critical issues that need to be addressed are zero claims and the proposed drop in rates for treatment of End-Stage Renal Disease (ESRD). The Call Letter states that CMS will evaluate whether to continue the adjustment for zero claims awarded to Puerto Rico in 2017, which represented a 4.4 percent increase to the local benchmark.

CMS awarded this adjustment to account for the anomalous propensity of cases in which no utilization was registered among traditional medicare beneficiaries on the island.

In addition, CMS proposes continued reductions to MA ESRD Benchmarks, which have decreased over 40 percent since 2012, from $7,000 to $4,200.

“We are concerned about the effect this cut has on providing life-saving dialysis services to such a vulnerable population,” said Rick Shinto, MMAPA member and CEO of MMM Healthcare.

CMS did maintain favorable adjustments for STARs rating methodologies that are unique for Puerto Rico. CMS will also consider increases to certain components of Traditional Medicare cost estimates, used by CMS to calculate MA rates, to more accurately reflect fee-for-service healthcare spending on the island, the group executives said.

“Puerto Rico needs all the help possible to make sure CMS considers significant policy adjustments during the comment period of the proposed rule and implements the same in the final regulation and guidance,” said O’Drobinak.

While Dr. Shinto added, “the priority proposal is for CMS to make the same or a higher adjustment for the unique proportion of zero-claimants in Puerto Rico.”

Juan Domínguez, of First Medical, added, “This is the only short-term opportunity for CMS to bring tangible incremental funding for Puerto Rico healthcare.”

CMS issued the Advance Notice and Draft Call letter on Feb. 1 and expects comments from the public by Mar. 3. The Announcement of Calendar Year 2018 MA Capitation Rates and MA and Part D Payment Policies and Final Call Letter, which sets forth MA rates for 2018, shall be issued no later than April 3, 2017.

Earl Harper, of Humana, said, “beyond incremental changes, Puerto Rico urgently needs a permanent solution to the disparity in MA funding.”

In 2017, Puerto Rico rates were 43 percent below the US average, 38 percent below the lowest state, and 26 percent below the U.S. Virgin Islands. The current scenario for 2018 implies a minor mitigation of the funding cuts experienced since 2011, the group said.

The MMAPA is a nonprofit association whose membership comprises First Medical, Humana, MCS, MMM/PMC, Molina Healthcare and Triple-S.

This association was established in 2009 to evaluate and act upon matters related to new government policy governing funding for Puerto Rico’s healthcare system.

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