The COVID-19 pandemic has thrown any predictions on healthcare out the window.
That spells trouble for Medicare Advantage (MA) and Part D plans that must submit their bids Monday for the 2021 coverage year.
MA and Part D plan bids must reflect the likely costs insurers will face covering healthcare for vulnerable seniors. But that is very difficult this year as the pandemic has turned healthcare use upside down.
So far, insurers have reported cautious optimism across all markets because the pandemic has caused utilization rates to plummet. Providers have faced a major financial crisis as hospitals cancel elective procedures and consumers fear going to the doctor’s office.
However, there is a concern about whether a surge of healthcare use will occur as consumers seek to catch up on the care they have put off.
“I don’t think anybody knows when the tide will turn,” said Tricia Neumann, executive director of the program on Medicare policy for the Kaiser Family Foundation.
The reason behind the June 1 deadline is to provide enough lead time for the start of open enrollment in October.
MA and Part D plans have to figure out when that surge could occur, which would be a different issue for seniors compared with younger people, Neumann said.
“While you can see pressure in one direction to get back to the doctor and deal with pressing issues, it is also possible there will be some reluctance on the part of seniors to expose themselves any sooner than they have to,” Neumann told FierceHealthcare.
Health plans could submit higher-cost bids to compensate for the uncertainty.
“Projecting 2021 costs depends not only on estimating current cost but also projecting the duration and effectiveness of social distancing, possible seasonality of the virus, the development, timing, and prices of treatments and vaccines,” according to an analysis from the Brookings Institution.
Brookings recommends some policies the Centers for Medicare & Medicaid Services (CMS) can adopt to help MA and Part D insurers.
The analysis called for the implementation of several mechanisms used in the Part D market when it was created by Congress in 2003. These mechanisms included risk adjustment to link payments to beneficiaries’ expected cost and a reinsurance plan to limit plan liabilities for “individuals incurring catastrophic drug expenses,” Brookings said.
The analysis also wanted to use clawbacks on excess profits if the costs exceeded or went under a bid by a specific percentage. The mechanisms were meant to limit risk for the new Part D market and were never a part of the MA market, because plans had decades of experience and extensive data.
But these policies should be implemented into the MA market, Brookings said.
The analysis called for a mandatory program for 2021 MA bids to limit a plan’s losses if an unexpected number of patients reached a preset catastrophic cost limit. The model would also use risk corridors to claw back profits if costs deviate a lot from the bid.
“In periods of substantial uncertainty—when plans are, in essence, placing bets—bids might be equally likely to be overstated or understated,” the analysis said.
CMS could modify the deadline for plan bids to July 1 to give plans a chance to submit a revised bid based on the new policies. CMS has not taken up the recommendations, but it did give flexibility for MA and Part D plans in the final rate notice published in April.
The rule gave MA plans more flexibility to offer and discount telehealth for specialty care. Telehealth use has exploded among providers after CMS gave them more flexibility to get Medicare reimbursement.
The agency finalized a rate of about 4% for the 2021 coverage year for MA and Part D plans.