The new Health Care Law (PPACA 2010) mandated that 2011 payment rates be frozen. Therefore, the 2011 rates are the same of the 2010 rates. I have a copy of the capitation rates for all counties in the US here.
However, if you look at Page 6 of the CMS announcement, you will find that all Medicare Beneficiaries in 2011 will have a 3.41% REDUCTION to the 2011 capitation rate based on Coding Intensity.
Thus, if you assume about 2.5% for Medical Inflation, you will get an approximate 6% difference between the 2010 and 2011 reimbursement rates which translates to about $500/year or around $40/month. This will be higher is high cost areas and a little lower in low cost areas. This means that if you freeze all other costs, the 11.5 million Medicare Advantage enrollees will pay about $40/month more.
There are a number of expenses that can be reduced, however, that can impact the premium affect on the enrollee. For example, benefits can be cut, administrative costs can be cut, profit can be reduced and plans can try to reduce payments to medical providers (mainly for network plans).
Craig.
You are a great resource. The spreadsheets on MA penetration in each county is amazing. And to see that quite a few counties have nearly 50% enrollment in MA plans is shocking. KFF.org only provides statewide average numbers, so I always thought the highest numbers were 35% in places like California and Penn. In Arizona, where I live and work, we are at 45% in Phoenix and Tucson. That means big upheaval when the cuts hit the fan.
[...] View the comments in the blog post here! Contained are links to overall MA and PDP enrollment from April 2010 as well as MA and PDP % market share by State/County for every county in the United States! [...]
Craig:
Your updates are very valuable. Great info. I’d like to know where we can get info about usage of MA and PDP. For example, what percentage of the eligible population chooses MA verses Original Medicare. How many enrollees in the PDP programs, both stand alone and MAPD’s make it to the “donut hole” and how many make it through the “donut hole”. As always, thanks a million!
Dave:
Here is a page which breaks down the total number of MA versus PDP enrollments (11.6 million in MA versus 17.6 million in PDP): http://www.cms.gov/MCRAdvPartDEnrolData/MCESR/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=2&sortOrder=descending&itemID=CMS1234511&intNumPerPage=10
Here is a report which gives % market share of MA products by state/county: http://www.cms.gov/MCRAdvPartDEnrolData/MASCPen/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=2&sortOrder=descending&itemID=CMS1234724&intNumPerPage=10
Here is a report which gives % market share of PDP products by state/county: http://www.cms.gov/MCRAdvPartDEnrolData/PDPSCPen/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=2&sortOrder=descending&itemID=CMS1234725&intNumPerPage=10
I don’t have stats on “Donut hole” usage (at least off the top of my head). I remember seeing stats, if I can remember where, I’ll post to the blog!
You will find numerous expenditures that could be decreased, nevertheless, that may effect the premium have an effect on about the enrollee.
Craig,
When you mention cutting “administrative costs” to reduce the premium to enrollees, do you think commissions will be reduced to brokers?
I don’t see commissions being cut. Currently, they amount to about 3% of total premium (for a “$0″ premium product) and about 2.5% of a premium based product (say, $80/mo) which is, for an individually sold product, extremely low already. I’m thinking that commissions are highly demand elastic (going back to econ class). There are a great many “goods” an agent can “substitute” for selling MA. (Example: Other MA carriers, Med Supp, Life, Annuities, etc.) MA is already not very commission competitive to Med Supp, although it’s attractive to sell for other reasons. I think even a small reduction in commissions would result in an abnormally large drop in sales. I’ve seen it first hand in other markets.
Some of the admin costs which should be cut would include all of the paper that MA plans generate and ship, unfortunately, CMS mandates that things like SB’s, Formularies and Provider Directories be printed out on paper. It would save a couple bucks per enrollment kit (plus tons of landfill space) to put these things on a CD (not to mention shipping costs) or to have them accessible via a company website on a 24/7 basis. CMS doesn’t allow this, however. I heard that plans generally print 7 to 10 kits to generate one enrollment. So if you are saving, say, just $2/kit, you would save $14 to $20/enrollment. Folks who don’t own a computer could be given the full kit, of course. Talk about eco-unfriendly!!
Further, I think that electronic enrollment would be a great way to increase efficiency. Less paper and the companies wouldn’t have to pay admin staff to key in the information, less errors/typos, etc.. This would speed up the process, as well.
Considering the elimination of OEP, Health Plans will need to look even closer at their salaried sales staff. It’s tough to pay someone a salary for 52 weeks when they can only fully sell product for 7 weeks. I think this makes independent agents more valuable to the Health Plans.
Craig: your April 15, 2010 column on cutting adminis-
trative costs was brilliant but too logical. The govern- ment (CMS), would never go for your suggestions. If one would extrapolate the numbers, it could save huge amounts of money (and landfill space) as you indicate. Craig you would never make a politician; a good businessman, but not a government politician.
Bob: I’ll let you know when I decide to run. . . .don’t hold your breath!
Denise,
I know for a fact that the rate are higher with DUAL Speical needs plans the theory being it cost much more to manage a Dual’s care and medical problems than it does a non-dual. I sell alot of DUAL plans. DUAL SNP plans have been extended through 2013 with the new health care law. I just don’t know how much more. If you aren’t already I can tell you selling to DUALS is very fulfilling and it gives you the opportunity to sell all year and you get many referrrals if you know how to work it.
Great information. I did not realize a person who is disabled had a different payment rate for their MA plan. Is that everyone on Social Security Disability? And is the “Risk” column for chronic illness plans? What about dual eligible plans?
Denise,
I’m not an authority here, but I have some idea of how this works. The “Risk” column is like a base rate. Then, the companies add diagnostic codes to their members (diabetes, high blood pressure, etc.) and get an additional payment for each condition. This is a very critical piece, as you can imagine. If you look at Tables I-VII (page 36-52) of the “Call Letter” (a couple blog posts down), you get lists of “disease coefficients” of a multitude of conditions which increase they payments that the plans get. For example, an individual who is diabetic with an amputated toe, but who is now well controlled, could be much more profitable than someone in “average” health.
Regarding Chronic illness plans, you’ll find co-efficients on page 52 which include Medi-Medi, Medicare only and disabled.
I think there is a more extensive listing of these codes someplace, but not sure where.