Monday, October 9, 2017

CHRONIC CARE Act (S.870) And Flexible Digital Benefits in Medicare Advantage

The CHRONIC Care Act (S.870) is a major piece of Medicare legislation that has now passed the Senate.   It passed the Senate Finance Committee last spring, and has a budget-neutral score from the Congressional Budget Office.   It provides improved benefits in traditional Medicare for home-based chronic care management and telemedicine, and provides pathways for broader elective benefits for Medicare Advantage plans.

CHRONIC raises a larger issue, though. 

Financially, Medicare Advantage plans and services are divided in two for budget and contracting.  There is one set of financing rules for benefits that match Traditional Medicare parts A&B; and a separate set of rules that provide\ carved-out "enhanced benefits" such as dental or vision.   The fact that individual pieces of "one-off" legislation are required to allow M.A. plans to provide telemedicine benefits points to a cumbersome problem that reflects an outdated framework.

Here, I argue that M.A. plans should be able to provide additional benefits such as digital health delivery within their regular M.A. funding without interference from CongressM.A. plans would continue to be required to provide all the Part A, Part B benefits of traditional Medicare and of course, to meet all M.A. quality metrics.

The CHRONIC Care Ac of 2017

For an up-to-date summary by Billy Wynne at Health Affairs, see his October 5, 2017 post here.  See a June 2017 article by former senators Daschle and Frist here, and a deep dive analysis by the Bipartisan Policy Committee, here.  The budget neutral CBO analysis is here, and the full bill can be found here.

Medicare's Excessive Controls on Telemedicine Delay Innovation - By Handcuffing the Payment System

Medicare has a number of delivery methods that are designed to enhance innovation, such as Accountable Care Organizations and Medicare Advantage.  However, telemedicine can't improve quality and reduce costs in these systems unless the law makes it feasible.

  • For example, ACO's get small rebates from CMS for saving costs.  
  • If the ACO can save Medicare $10 and get a $3 bonus by converting a $100 office visit to a $90 telemedicine visit, the ACO loses a ton of money if it gets no reimbursement at all for the $90 telemedicine visit.  Similarly for Medicare Advantage. 
Section 303 of the CHRONIC Care Act Will Allow Telemedicine in M.A. Base Bids

Section 303 of CHRONIC would be effective in Plan Year 2020, and would allow M.A. plans to include the costs of telemedicine in their base budget, which is funded in a risk-adjusted and capitated way, pegged at a level similar to the regional costs of traditional Part A, Part B. 

Under Section 303, base bids will be able to include "additional telehealth benefits" which would be outside the telehealth benefits in traditional Medicare as enumerated at SSA 1834(m), that is, outside an A/B benefit.  At Section 303, additional telehealth benefits are defined as "clinically appropriate [services furnished by] electronic information and telecommunications technology when a physician or practitioner is not at the same location as the enrollee."   Further definition would be undertaken through notice and comment regulation. 

Analysis

Medicare Advantage plans were set up with concerns that providing capitated payments to health plans would incentivize the short-changing of medical services to raise the profitability of the M.A. plan.

Therefore, M.A. plans are required to provide all available Part A and Part B services to Medicare patients.  Budgets are closely monitored (including loss ratios) and plans aren't allowed to keep profits by restricting services.  Rather, unspent money is given back to Medicare or distributed as "extra benefits" to members (such as dental or vision benefits) or distributed as lower copays.   The mechanisms to control and budget the base spending (the A and B equivalent spending) and to control any excess profits and define "extra benefits" are a lot of red tape. 

When the issue is ensuring that M.A. patients get "enough" healthcare, the rules make sense.

When health systems and plans can innovate better ways to deliver similar or higher quality care, regardless of convoluted A/B rules, the system doesn't make sense.   Medicare Advantage plans should be able to deliver care through the best and most modern available channels.   Today, where Part B carve-outs and carve-ins and extra benefits are onerously defined by bits of legislation and by extra layers of contracting, innovation is impeded.   For example, the CHRONIC Care Act is a big step forward, but it defines telemedicine as practitioner-based, when it should include other kinds of benefits like preventive medicine and behavioral medicine (for example, diabetes and cardiac prevention programs.)   If a health plan has, say, $100M for physician visits, it should be able to flexibly adapt between telemedicine and in person visits depending on the location, patient mix, clinical circumstances, etc.   No government purpose is served by making the combinations as difficult and over-regulated as possible.   CHRONIC Section 303 is a step in the right direction, but M.A. plans should be given more freedom, within their fixed budgets and existing quality rules.  Section 303 is scored by the highly conservative Congressional Budget Office to save $80M - we should let M.A. plans save money through new technologies whenever they want. 

Legacy Rules Depended on Legacy Bookkeeping

Whatever the intention of the original rules, they depended on legacy fee-for-service bookkeeping, which is increasingly out of step with modern bundled and capitated payments. It may be increasingly impossible to enforce the rules under modern health systems medicine.
Let's say an M.A. plan in San Diego gets $10,000 from CMS per patient.  It passes on $3000 per patient to San Diego Physicians Associates to manage office and outpatient care.    
San Diego Physicians Associates seamlessly provides a range of telemedicine, concierge-like, and preventive services for its $3000 per year per patient capitation.   But these aren't called out separately in its contract with the M.A. plan.  
Thus, it's impossible for the M.A. plan to try and allocate costs among covered and "non covered" telemed and preventive services, because they're capitated somewhere downstream in a modern risk-sharing and bundled system.  
CMS Could Still Track to A/B Finances, But With Less Red Tape and Legal Paperwork

To the extent necessary (and possible)... CMS could still track benefits that fall outside of traditional Part A and B, but this could be kept to the financial reporting level and not the contracting level.  And after M.A. plans provide all A/B services, just like to day when they want extra money that is above their capitation it would require extra contracting.  Just like today.

But let's modernize.  When M.A. plans can provide some selective, cost-saving services within their capitated budget, then they would be free to do so, without additional contracting. 

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Several blogs appeared in Health Affairs a few days after this October 9 essay and touch on related themes.  On October 17, John O'Shea of Heritage Foundation argues for more flexibility in Medicare Advantage, which will help achieve the goals MACRA is lumbering towards (here).    On October 12, Huilgol et al. make yet another plea for more flexibility in telemedicine benefits, including in urban areas (here).  On October 17, Chernew and Barbey argue we need a better framework for "understanding savings" in value based environments like ACOs (here).