It has been reported that lifting the Medicare Advantage (MA) benchmark cap is a priority for Congress in the upcoming lame duck session. At Better Medicare Alliance (BMA), we agree that the benchmark cap should be lifted because it negatively impacts quality of MA plans by decreasing supplemental benefits and increasing cost sharing for beneficiaries.
The President, MedPAC and Congress all agree the issue should be addressed, the question is how. CMS has denied discretion to waive the cap based on an interpretation of the Affordable Care Act (ACA). Legal arguments have been made that CMS has the regulatory authority to address the issue. However, as long as CMS maintains the inability to overturn the current policy, the benchmark cap must be addressed by a change in law.
BMA released an issue brief detailing the impact of the MA benchmark cap on beneficiaries that can be viewed here. The brief lays out the issue, the impact on beneficiaries and potential administrative and legislative solutions to address the issue.
CMS published the 2017 Star ratings on October 12, 2016. Nearly 70%of beneficiaries in MA with prescription drug coverage contracts earned over four Stars. Currently, over 3 million MA beneficiaries in 4-Star (on a 5-Star scale) or higher plans in over 1,400 counties are impacted by the benchmark cap. This means MA beneficiaries are not receiving the full benefits of being in high-quality plans.
The Department of Health & Human Services (HHS) is working to tie payments in Traditional Fee-For-Service (FFS) Medicare to quality and value. YCouldet in MA, payments are already tied to quality through the Star Rating system, which rewards MA plans with a four-Star rating or higher with a Quality Bonus Payment (QBP). The QBP goes directly to beneficiaries and must be applied to reducing cost sharing or increasing benefits for beneficiaries. Almost one in six MA beneficiaries in bonus-eligible 4+ Star or higher plans miss out on additional benefits due to the benchmark cap.
BMA’s coalition of 75 ally organizations includes Indiana University Health (IU HealthPlans) which operates an MA plan in capped counties. Beneficiaries may not receive the full complement of supplemental benefits that could be offered as a result. IU HealthPlans provide insurance to Medicare beneficiaries including preventive services, chronic disease management programs, and supplemental benefits such as dental coverage. Due to this high level of care, IU HealthPlans earned a Star Quality Rating of 4.0 (out of 5) Stars for 2016. This high rating makes the plan eligible for Quality Bonus Payments; however, 60% of the counties in which IU HealthPlans operate have a benchmark cap, preventing them from receiving the bonus. For beneficiaries, this means fewer resources are available that could lower cost sharing or expand existing benefits like dental and vision. As long as the benchmark caps are in place, 6,000 IU HealthPlan beneficiaries, as well as other MA members in those counties with the cap, may not receive the full complement of supplemental benefits that could be offered.
Some states are disproportionately impacted by the benchmark cap. In 11 states, at least 25% of beneficiaries in high quality MA plans with at least 4 Stars are in capped counties. In Vermont, Rhode Island, South Dakota and North Dakota nearly all beneficiaries in high quality MA plans are impacted. California has the most beneficiaries impacted by the benchmark cap, with over 250,000 beneficiaries in high quality benchmark capped plans, which is 11.5% of MA beneficiaries in the state. In addition, Pennsylvania, Ohio, Michigan, and Wisconsin all have over 100,000 beneficiaries impacted. In nearly 500 counties across the U.S., 80% of beneficiaries in plans with 4+ Stars are negatively impacted by the benchmark cap.
Across the country, the benchmark caps disincentives quality and value. Over 3 million MA beneficiaries are negatively impacted by the benchmark cap in the form of increased cost-sharing and decreased benefits that include vision, dental, hearing care and innovations like telemedicine. There is broad consensus from the Administration, Congress, and MedPAC that the benchmark cap policy undermines quality and perpetuates inequality for beneficiaries. The impact of the benchmark cap on the Star Rating system must be addressed to preserve the goal of incentivizing quality and value in MA.
 HHS FY 2017 Budget in Brief - CMS - Medicare. HHS.gov. Web; MedPAC, Medicare Advantage Benchmarks. Harrison, Scott. Oct. 8, 2015. Web; H.R.2570, the Strengthening Medicare Advantage through Innovation and Transparency for Seniors of 2015. Web.
 Source: CMS, Monthly Enrollment by Contract/Plan/State/County, September, 2016; CMS, Part C and D Medicare Star Ratings Data, 2016; CMS, Medicare Advantage ratebook and Prescription Drug rate information, 2016