RISE reviews the latest headlines that impact Medicare, Medicare Advantage, and Medicaid.

National health care spending on the rise

Total national health care spending in 2019 grew 4.6 percent, according to a study conducted by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) and published by Health Affairs. The report includes health expenditure data through 2019 and therefore does not include any of the effects of the coronavirus disease 2019 (COVID-19) pandemic on health care spending, CMS said in an announcement. CMS expects future reports for 2020 will measure the impact of the pandemic on total health care spending as well as on the distribution of spending among the services, payers, and sponsors of health care.

According to the report, Medicare spending (21 percent of total health care spending) grew 6.7 percent to reach $799.4 billion in 2019, which was slightly faster than the 6.3 percent growth in 2018. The acceleration in 2019 reflected faster growth in Medicare private health plan spending (39 percent of total Medicare expenditures in 2019), which increased 14.5 percent following growth of 12.6 percent in 2018. Growth in fee-for-service Medicare expenditures slowed in 2019, increasing 2.2 percent compared to 3.0 percent growth in 2018. Overall, Medicare enrollment growth was steady in 2019, increasing 2.6 percent—the same rate as in 2018.

Medicaid spending (16 percent of total health care spending) increased 2.9 percent in 2019 to reach $613.5 billion. This was similar to the 3.1 percent rate of growth in 2018. CMS said the growth was influenced by faster spending growth for most goods and services and a decline in the net cost of insurance—a decline that was in part due to the health insurance tax moratorium in 2019.  In 2018 and 2019, Medicaid enrollment was estimated to have decreased 0.9 percent and 1.5 percent, respectively.

Out-of-pocket spending, which includes copayments, deductibles, and spending not covered by insurance, represents 11 percent of the total health care spending at $406.5 billion in 2019. CMS said spending grew 4.6 percent in 2019, which was faster than the 3.8 percent growth in 2018.

CMS launches new Medicaid MCO model for dually eligible beneficiaries

The Centers for Medicare & Medicaid Services’ (CMS) Center for Medicare & Medicaid Innovation on Thursday announced a new model for Medicaid Managed Care Organizations (MCOs) to help improve health outcomes for beneficiaries who are in both Medicaid managed care and Medicare fee-for-service (FFS). The Global and Professional Options of the Direct Contracting Model encourages Medicaid MCOs to partner with providers and suppliers and implement care coordination programs that can improve quality and reduce Medicare FFS costs.

The model would allow participants to take actions such as establish a process to connect aligned beneficiaries to a primary care provider, particularly high-value Medicare FFS health care providers; deploy care coordinators or in-home aides who provide Medicaid long term services and supports to also actively promote flu vaccines, preventive screenings, evidence-based falls prevention, and diabetes management activities; and enter into value-based purchasing arrangements with nursing facilities that factor in facilities’ hospitalization rates.

Participants must obtain a letter of support from their state Medicaid agency to join the model.  CMS will track both Medicare and Medicaid expenditures to ensure there is no cost-shifting from Medicare to Medicaid or vice versa.

“Beneficiaries eligible for both Medicare and Medicaid are some of our most vulnerable neighbors and friends, and the COVID-19 pandemic has made this abundantly clear as this population had some of the highest rates of hospitalizations for COVID-19,” said CMS Administrator Seema Verma in the announcement. “For too long we have struggled to deliver acceptable outcomes for this vulnerable population, but today’s model is a game changer. It represents a significant step toward addressing these longstanding issues and ensuring they receive the coordinated care they rightfully deserve.”

Feds issue final rule for grandfathered group health plans

The U.S. Departments of Labor, Health and Human Services, and Treasury finalized a rule last week that allows grandfathered group plans to increase cost-sharing requirements without losing their grandfather status. The Affordable Care Act allowed plans that existed before the law was enacted on March 23, 2010 to continue to offer coverage that doesn’t meet all of the health care reform law’s requirements.

The final rule is meant to offer greater flexibility for grandfathered group health coverage, the three departments announced. It clarifies that grandfathered high deductible health plan (HDHP) may increase fixed-amount cost-sharing requirements, such as deductibles, without losing grandfather status. This change ensures that participants and beneficiaries enrolled in that coverage remain eligible to contribute to a health savings account. The final rule also provides an alternative method of measuring permitted increases in fixed-amount cost sharing that allows plans and issuers to better account for changes in the costs of health coverage over time. 

“This final rule helps provide Americans with access to affordable insurance from employers and unions by ensuring flexibility to adjust these plans in changing circumstances,” said U.S. Secretary of Health and Human Services Alex Azar in the announcement.