Finally, transformation that could work

A few lines in a 1,145-page Medicare rule may transform health care as we know it. If only someone will go along.

Published April 2, the Medicare Advantage (MA) and Part D prescription drug payment rule for 2019[1] says for the first time that MA plans can cover customized at-home services for beneficiaries with chronic conditions.

To quote directly, “In this final rule, we are reinterpreting existing statutory and regulatory authority to allow MA organizations the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different lower deductibles for enrollees that meet specific medical criteria.”[2]

Driven by a provision of the Bipartisan Budget Act of 2018,[3] it’s a significant development. People with chronic conditions do not need another trip into the health care system. They need someone to come to where they live and be sure it’s safe. They need nutritious, safe food in the pantry and the fridge. They need confirmation that their medications are up to date, being taken appropriately, and not interacting badly.

The rule comes in the wake of a new study indicting health care transformation thus far.[4]  “Data suggest a low prevalence of provider risk payment models and slow movement toward new payment and organizational models,” report Burns and Pauly in The Milbank Quarterly March 2018. “Evidence suggests the impact of both on cost and quality is weak.”

But this new direction could drive better outcomes and lower costs for persons with chronic conditions.

MA plans might reasonably be expected to take up this offer soon. Paid on a capitated formula to provide Medicare services to beneficiaries, plans profit when they can manage care and delivery more efficiently with high quality and beneficiary satisfaction. An average hospitalization costs $2,000 per day[5].  Reducing one hospitalization every other year for tens of millions of beneficiaries adds up to significant cost savings. It also likely means improved quality of life for MA beneficiaries. Who really wants to go to the hospital when more timely monitoring and care could make it unnecessary?

And that’s not all. Beginning 2020, the new statute authorizes MA plans to cover “additional telehealth benefits” and requests additional comments for making them so. It authorizes Accountable Care Organizations (ACOs) to provide more telehealth services.  And it clears the way for new stroke telehealth services.[6] These telehealth provisions are not part of the 2019 rule. But here rests the spur to develop health apps that work in the hands of people who can use them.

Gainers: patients and their families, providers of at-home services, health plans, pharma.

Gaining, probably: vertically integrated systems that own at-home care delivery, developers of monitoring apps.

Questioning, possibly: hospitals concerned about revenue lost from fee-for-service care avoided.

Of course there are risks. Bad actors have a new route to defraud Medicare. The new MA authorization does not apply the same way to Medicare fee-for-service. Nor may it closely match commercial or employer-based benefits. It is also unclear how it will work for 9 million people dually eligible for both Medicare and Medicaid.[7]

HHS has more listening to do. And its auditors and investigators are on the watch.

But the benefits of providing people the care they need for better health, regardless of whether it bears a CPT code, suggest that finally policymakers are headed down a right track.

Are you ready?


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[1] Centers for Medicare & Medicaid Services. Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program. Final rule, published April 2, 2018 in public inspection file, slated for publication in the Federal Register April 16, 2018., retrieved 4/5/2018. Also see Press release. CMS lowers the cost of prescription drugs for Medicare beneficiaries. April 2, 2018., retrieved 4/5/2018.  From the release, “As part of today’s announcement and guidance, the agency is reinterpreting the standards for health-related supplemental benefits in the Medicare Advantage program to include additional services that increase health and improve quality of life, including coverage of non-skilled in-home supports and other assistive devices. CMS is expanding the definition of ‘primarily health related.’ Under the new definition, the agency will allow supplemental benefits if they compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization.”

[2] Ibid., p. 158 of the public inspection file version. The next several pages are useful.

[3] P.L. 115-123, Sec. 50322, expanding supplemental benefits to meet the needs of chronically ill enrollees in Sec. 1852(a)(3) of the Social Security Act. See, retrieved 4/9/2018.

[4] Burns LR, Pauly MV. Transformation of the health care industry: curb your enthusiasm? Milbank Quarterly, March 2018 96:1, p. 57-109. ., retrieved 4/5/2018.

[5] Kaiser Family Foundation. Hospital adjusted expenses per day by ownership, 2015.,%22sort%22:%22asc%22%7D, retrieved 4/9/2018.

[6] P.L. 115-123, Sec. 50323, increasing convenience for Medicare Advantage enrollees through telehealth; Sec. 50324, providing accountable care organizations the ability to expand use of telehealth; and Sec. 50325, expanding the use of telehealth for individuals with stroke.

[7] A good basic review of dual eligible policy may be found at Centers for Medicare & Medicaid Services. Dual eligible beneficiaries under Medicare & Medicaid. MLN Booklet, February 2017., retrieved 4/9/2018. Additionally see Kaiser Family Foundation. Dual Eligible., retrieved 4/9/2018.

Frank PurcellComment