Chairman Blumenthal and members of the committee, I am
We appreciate this opportunity to testify on issues surrounding provider networks in the
Our testimony focuses on the following:
. Background information about the MA program, including its role as a safety net for over 14.5 million seniors and individuals with disabilities, the value MA plans deliver to beneficiaries, and the deep funding cuts that have been imposed on the MA program through recent legislative and regulatory changes that may negatively impact beneficiaries.
. The opportunity for high-value provider networks to preserve benefits and mitigate the cost impact on beneficiaries as the MA program faces a future of severe underfunding.
. The leadership role health plans are playing in advancing delivery system reforms.
II. Background on the Medicare Advantage Program
More than 14.5 million seniors and people with disabilities currently are enrolled in MA plans because they value the care coordination and disease management activities, improved quality of care, and innovative services and benefits that are available through these plans. These MA enrollees account for approximately 28 percent of the
MA Plans Provide Value to Beneficiaries
MA plans offer a different approach to health care delivery than beneficiaries experience under the
The success of these strategies is evidenced by survey findings which show that MA enrollees are highly satisfied with the care they receive through their health plans. A
Furthermore, a broad range of research findings consistently demonstrate that the innovative strategies adopted by MA plans translate into better health outcomes for enrollees:
. A 2013 study published in Health Affairs found that MA plans' performance measures for breast cancer screening, diabetes care, and cholesterol testing were consistently better when compared to FFS Medicare. For example, in 2009 mammography screening rates were over 13 percent higher, eye tests for individuals with diabetes were 17 percent higher, and cholesterol screening rates for individuals with diabetes and cardiovascular disease were 7-9 percent higher in MA plans compared to FFS. n2
. Data published in
. A study published in the
. Research published in
The value that MA enrollees receive through their plans also can be seen in the additional services and benefits that are offered by MA plans - but are not available in the Medicare FFS program. While these extra features vary from plan to plan, the following are specific examples of the additional services and benefits that many MA plans offer to improve enrollees' coverage and manage their overall health and well-being on an ongoing basis:
. Case management services;
. Disease management programs;
. Wellness and prevention programs;
. Coordinated care programs;
. Prescription drug management tools integrated with medical benefits;
. Tools and data collection to address disparities in care for minorities;
. Nurse help hotlines;
. Enhanced coverage of home infusion, personal care and durable medical equipment;
. Personal health records to offer beneficiaries greater control over their health information and to coordinate information better; and
. Vision, hearing, and dental benefits coordinated with medical services.
MA plans also protect beneficiaries from high out-of-pocket costs. In 2014, all MA plans offer an out-of-pocket maximum for beneficiary costs, and almost 60 percent of enrollees are in plans that have annual out-of-pocket maximums of
MA Has Strong Consumer Protections, Including Network Adequacy Standards
Another important feature of the MA program is that enrollees have strong consumer protections. This includes extensive network adequacy standards, established by the
Additionally, coverage is "guaranteed issue" and MA plans offer coverage to all beneficiaries regardless of their age or health status, although Special Needs Plans (SNPs) enroll only vulnerable beneficiaries who meet certain criteria. All beneficiaries who choose an MA plan pay the same premium as all other plan enrollees. CMS performs annual reviews of MA plan benefit packages to ensure that they are appropriate to beneficiaries with all health conditions. In addition, nearly 90 percent of all MA enrollees are enrolled in MA plans that offer Part D prescription drug benefits, which allows beneficiaries to receive medical and prescription drug coverage from the same health plan - similar to how people receive coverage in the commercial market. MA plans typically re-design and reduce the cost sharing that applies under the Medicare FFS program. They may offer lower cost sharing as an additional benefit and typically eliminate deductibles and establish copayments rather than coinsurance.
Additional consumer protections provide that an MA enrollee who is not satisfied with a plan's decision about providing or paying for covered services may exercise appeal rights through an internal plan appeals process, as well as automatic external review if the plan's decision is not wholly in the beneficiary's favor. MA plans also comply with detailed requirements associated with CMS oversight activities that include operational and financial audits, evaluation of quality improvement projects, validation and evaluation of data on a broad spectrum of operational activities (e.g., customer service, resolution of appeals, and provider network adequacy), review and approval of plan marketing materials, and strong standards for the conduct of marketing activities.
The MA Program Faces a Future of Severe Underfunding for Enrollees' Benefits
While it is very clear that the MA program is highly valued by beneficiaries, we are deeply concerned that the program is facing a future of severe underfunding that jeopardizes the stability of these plans for the beneficiaries they serve.
The Affordable Care Act (ACA) imposes more than
To further illustrate what these cuts mean for beneficiaries, the table below provides data estimating the combined impact of the ACA's funding cuts and the new health insurance tax on MA enrollees in
In the face of these funding cuts, MA plans are working hard to maintain access to high-value benefits and services for their enrollees. However, in 2014, beneficiaries across the nation are beginning to experience the impact of these cuts in the form of higher out-of-pocket costs, fewer choices, and reduced benefits. Beneficiaries in over 2,000 counties across the country in which more than 60 percent of all MA enrollees live have fewer plan options today compared to 2013, and many enrollees are experiencing higher premiums and out-of-pocket costs.
Looking forward, we have serious concerns about the underfunding of the MA program and how this will harm beneficiaries - particularly vulnerable enrollees with complex needs and low incomes - as the ACA's cuts are phased in at an increasingly faster rate over the next several years. These concerns underscore the importance of maintaining the future viability of the MA program and avoiding any additional funding cuts through either the legislative or regulatory process. We urge the committee and the entire
III. The Role of High-Value Provider Networks
As a direct result of the serious funding challenges facing the MA program, the need is greater today than ever before for innovations that deliver increased value to beneficiaries with the increasingly limited resources that are available to support the MA program. In response to this challenge, MA plans are working to preserve benefits and improve quality for enrollees by developing high-value provider networks at a time when the nation is transitioning toward a 21st century health care system and away from FFS payment systems. We urge the committee to view these efforts through this prism as you focus on these innovations.
Improving Quality and Efficiency Through High-Value Provider Networks
In the effort to advance delivery system reforms, one of the many areas in which health plans, including sponsors of MA plans, are making great strides is in the development of high-value provider networks. Health plans typically develop these networks using performance metrics - with a strong emphasis on quality criteria - to select high-performing, cost-effective providers. Using widely recognized, evidence-based measures of provider performance, such as those endorsed by the
A recent survey of health plans examined performance measures used by private payers and found that the performance measures used in high-value network and tiering programs most often focus on cardiovascular conditions, diabetes, preventive services, and patient safety. This study n7, authored by AHIP researchers and published by Health Affairs in
A central goal of high-value provider networks - including those offered by MA plans - is to improve both health care quality and efficiency through ongoing evaluation of provider performance, assessment of resource use, referrals to other high-performing providers, and the exchange of health information with the plan and other providers caring for the same patient. Private sector high-value networks also discourage enrollees from using poor quality providers and services that have been shown by evidence to be ineffective. Additionally, these strategies to move towards greater reliance on high-value networks may also be used by health plans to offer technical assistance to providers in organizing care, and provide physicians with other decision support tools and ongoing feedback on performance compared to peer groups.
Another key advantage of high-value provider networks is that they create strong incentives for providers to offer competitive prices, in response to the increased number of patients they gain as a member of the network. This, in turn, enables health plans to deliver substantial savings to their enrollees, in addition to connecting them to high-quality providers.
Research Findings on the Benefits of High-Value Provider Networks
A number of studies and research findings indicate that high-value provider networks are successful in encouraging consumers to take advantage of better-performing providers and facilities while helping to reduce spending. For example:
. One plan's program assesses providers across 21 specialties based on quality of care and cost efficiency, with the best-performing providers receiving a "
. Another plan's tiered provider network uses clinical performance and cost efficiency criteria to assess providers in 12 specialties and enables employers to set the level of incentives to reward employee behavior. The plan reports that its high-value providers are 1 percent to 8 percent more cost-efficient relative to other providers within the network. n9
. Recognizing in-network hospitals and selected specialties (general surgery, ob-gyn, cardiology, orthopedics, and gastroenterology) on quality, cost efficiency, and accessibility performance generated savings for one plan of up to 10 percent. n10
. A study of a high-value network in
. Health plans are also incorporating high-value and tiered networks as part of new innovations in care delivery and payment - including adoption of patient-centered medical homes and value-based insurance design. By combining multiple payment and benefit design strategies, these innovations are assuring greater value and efficiency in care delivery while promoting affordable coverage. n13
IV. Other Health Plan Innovations in Delivery System Reform
In addition to advancing high-value provider networks, health plans - in both the commercial market and in public programs - have demonstrated leadership in implementing a broad range of delivery system reforms and new payment models.
Partnering With Providers to Address Both Quality and Efficiency
Health plans are redesigning payment mechanisms to move away from the practice of rewarding volume through FFS payments and toward encouraging better outcomes and improved efficiency through accountable care organizations (ACOs), patient-centered medical homes, and bundled payments. In moving away from retroactive payment to a prospective design, these new models are built on accountability, shared risk, and population-based care.
AHIP has convened three invitational summits over the past two years bringing together health plans and their provider partners to discuss how they have restructured their payment contracts, key features of their programs, and the results they are seeing. While these initiatives are at various stages of development and implementation, we have observed two distinct features that are fundamental to the new models being launched across the country: (1) collaboration between health plans and their provider partners; and (2) both quality performance and cost reduction goals are being negotiated. This approach allows health plans to engage in meaningful population-based measurement and gives providers confidence that performance metrics are transparent and fair.
Another major development is that health plans are redesigning benefit structures at the same time they are changing payment mechanisms. These changes are designed to work synergistically to reward providers for achieving results, while also rewarding patients for making choices to use higher-performing hospitals and physicians and regularly obtaining services that are crucial for chronic care management. Strategies advancing either payment restructuring or benefit design cannot work optimally if they are working alone. To maximize results, they need to be aligned and coordinated, and health plans are in a unique position to make that happen.
In building new payment models, health plans are offering their provider partners more data, as well as decision-support tools. These data help physicians recognize gaps in care, such as which patients need comprehensive case management, which patients are most at risk of developing serious conditions, and which are in need of immunizations and preventive care.
From our research, we have noted several characteristics that are present in today's plan-provider collaborative models that are yielding promising results. Buy-in for these new arrangements must start with leadership. Clinical integration, a culture of initiating change, a robust health information technology infrastructure, and acceptance of new payment arrangements criteria. n14 In addition, a relationship of three or more years is critical to achieving efficiencies among all partners.
Preliminary data suggest that new private sector ACO models are off to a strong start, with initial quality improvements of approximately 10 percent, a 15 percent decrease in hospital readmissions and total inpatient days, and an initial annual savings of
Plans also are moving to budget-based methodologies in their provider contracts. n16, n17 This approach combines a fixed per-patient payment (adjusted annually for health status and inflation) with substantial performance incentive payments tied to nationally accepted measures of quality, effectiveness, and patient experience. Other developments in the market today involve the creation and implementation of non-financial infrastructure and support systems. Plans have introduced an array of programs designed to support physicians with patient-centered medical homes, providing access to skilled care coordinators, improved data sharing, and reporting among participating practices. n18, n19
Patient engagement and consumer transparency tools are important complements to enhanced provider partnerships. Health plans are working closely with patients on an array of programs that help increase medication compliance, promote rewards for seeking health appraisals and meeting personal goals, and provide low-cost or no-cost coverage for certain preventive and other high-value benefits. Health plans also are making information about premiums, cost-sharing, and deductibles available in readily understood, web-based formats.
Innovations in value-based insurance design (VBID) have been developed to help improve health - encouraging individuals who are healthy to stay healthy, and encouraging individuals with certain risk factors, and/or those with chronic conditions, to seek treatment. A key component of these strategies is a health-risk assessment (HRA) tool, along with administrative data to help are all key plans identify individuals at risk and provide customized action plans. Indeed, data from a number of sources show that these programs are helping to increase drug therapy compliance among chronically ill patients n20 and producing non-medical benefits, including increased productivity among the working-age population, and reduced absenteeism. n21 Another important step has been the development of culturally competent care plans that bring together the patient, the patient's family and/or caregivers, and a team of providers and experts to coordinate medical care and necessary home and community-based services. n22, n23
Thank you for considering our views on these critically important issues. We look forward to continuing to work with committee members to strengthen and preserve high quality, affordable health plan choices through the MA program, while ensuring - as essential steps toward achieving this goal - that funding for the MA program is stabilized and that MA plans have the flexibility to advance high-value provider networks and other innovations that promote quality and efficiency for
Additionally, our members are fully committed to continuing to play a leadership role in advancing delivery system reforms that improve health care quality and efficiency for
n3 Lemieux, Jeff, MA;
n4 Cohen, Robb,
n5 Brennan, Niall MPP & Shepard, Mark BA. "Comparing Quality of Care in the Medicare Program."
n7 A. Higgins, "Provider Performance Measures in Private and Public Programs: Achieving Meaningful Alignment with Flexibility to Innovate," Health Affairs 32, no. 8 (2013).
n14 Ellis P, Sandy LG, Larson AJ, Stevens SL. Wide variation in episode costs within a commercially insured population highlights potential to improve the efficiency of care. Health Affairs (Millwood). 2012;31(9): 2084-2093.
n15 Higgins A, Stewart K, Dawson K, Bocchino C. Early lessons from accountable care models in the private sector: partnerships between health plans and providers. Health Affairs (Millwood). 2011;30(9):1718-1727.
n16 Song Z, Safran DG, Landon BE, et al. The 'Alternative Quality Contract,' based on a global budget, lowered medical spending and improved quality. Health Affairs (Millwood). 2012;31(8):1885-1894.
n18 Patel UB, Rathjen C, Rubin E. Horizon's patient-centered medical home program shows practices need much more than payment changes to transform. Health Affairs (Millwood). 2012;31(9):2018-2027.
n19 Raskas RS, Latts LM, Hummel JR, Wenners D, Levine H, Nussbaum SR. Early results show WellPoint's patient-centered medical home pilots have met some goals for costs, utilization, and quality. Health Affairs (Millwood). 2012;31(9):2002-2009.
n20 Chernew ME, Juster IA, Shah M, et al. Evidence that value-based insurance can be effective. Health Affairs (Millwood). 2010;29(3):530-536.
n21 Fendrick AM. Value-based Insurance Design Landscape Digest.
n22 Gazmararian J, Carreon R, Olson N, Lardy B. Exploring health plan perspectives in collecting and using data on race, ethnicity, and language.
n23 Claffey TF, Agostini JV, Collet EN, Reisman L, Krakauer R. Payer provider collaboration in accountable care reduced use and improved quality in Maine Medicare Advantage plan. Health Affairs (Millwood). 2012;31(9):2074-2083.
Read this original document at: http://www.aging.senate.gov/download/?id=3adb1e28-4bda-4bef-aca9-38d1f61e3cd9&download=1
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