ACA Medicare Provisions Improve Benefits, Spend

Just before a budget agreement was reached between the White House and Congress, Wisconsin Rep. Paul Ryan, chairman of the House’s Budget Committee, released his budget proposal, The Path to Prosperity: Restoring America’s Promise, which would convert the Medicare program into a voucher program for future beneficiaries to purchase private health insurance.

Meanwhile, the Centers for Medicare & Medicaid Services has released 2012 policies for Medicare health and drug plans implementing provisions of the Patient Protection and Affordable Care Act (ACA) that are related to the Medicare Advantage (MA, or Part C) and Prescription Drug Benefit (Part D, or PDP) Programs. The final rule includes provisions to raise revenues, curtail spending, and protect beneficiairies.

CMS estimates that implementing all the proposals in the final rule will result in net savings to the Medicare program of about $76 billion for fiscal years 2011 through 2016. Most of these savings are due to the ACA’s reforms to MA payments.

Key ACA provisions implemented in the final rule would achieve the following results:

• Limit to original (fee-for-service) Medicare levels cost-sharing under MA plans for specified services (administration of chemotherapy services, renal (kidney) dialysis services, and skilled nursing care).
• Prohibit MA plans from charging cost-sharing for in-network preventive services for which there is no cost sharing under original Medicare.
• Implement the new requirement that higher income Part D beneficiaries pay an Income Related Monthly Adjustment Amount.
• Implement statutory changes to close the Part D coverage gap (the “donut hole”).

Provider participation requirements would achieve the following results:

• Prohibit Part C and D program participation by MA organizations and Part D sponsors whose owners or directors served in a similar capacity with another organization that terminated its Medicare contract within the previous two years.
• Require that Part C and Part D organizations (1) use physicians or other appropriate health care professionals with sufficient medical and other expertise, including knowledge of the Medicare program, to review organization determinations involving medical necessity, and (2) employ a medical director who is responsible for ensuring the clinical accuracy of all organization determinations and appeals involving medical necessity.

To strengthen beneficiary protections, CMS is authorized to require MA plans to periodically mail enrollees an explanation of benefits for their medical benefits. This will help ensure that beneficiaries receive regular updates on their health care use and out-of-pocket costs so that they can better evaluate their options for health care coverage.

To enable CMS to limit Part C and D program participation to stronger applicants and to remove consistently poor performers, CMS will set requirements for those plans’ fiscal solvency. For plans that lack a minimum 14 months of performance history, CMS will deny a new application or service area expansion due to insufficient information to determine the plan’s capacity to comply with the requirements of the Part C or Part D programs.

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