On December 14 and 15, 2023, the Medicaid and CHIP Payment and Access Commission (MACPAC) held a virtual public meeting. The meeting included the following sessions:

• Annual Analysis of Medicaid Disproportionate Share Hospital (DSH) Allotments to States;
• Potential Areas for Comment on CMS Proposed Rule on Medicare Advantage for CY 2025; and
• Medicare-Medicaid Plan (MMP) Transition Monitoring: Interviews on Stakeholder Engagement.

The full agenda for the meeting and the presentations for the sessions are available here.

MACPAC REVIEWS FINDINGS FROM ANNUAL ANALYSIS OF DISPROPORTIONATE SHARE HOSPITAL ALLOTMENTS

Disproportionate Share Hospital (DSH) payments are statutorily required to offset uncompensated care for Medicaid-enrolled and uninsured individuals, with payments varying widely by state due to limitations by federal allotments. DSH payments to individual hospitals must not exceed uncompensated care costs for Medicaid and uninsured individuals.

MACPAC analysis found that 7.9 percent of the U.S. population was uninsured in 2022 (26 million individuals), a significant 0.4 percentage point decrease from 2021. Moreover, in FY 2021 U.S. hospitals reported $39 billion in charity care and bad debt, and in 2019, DSH hospitals reported $21 billion in Medicaid shortfall on Medicaid DSH audits. When measuring hospital finances, MACPAC found negative operating margins after DSH payments and positive total margins after COVID-19 provider relief funding (PRF). More specifically, all hospitals had operating margins at -0.8 percent and total margins at 10 percent, while deemed DSH had operating margins at -4.6 percent and total margins at 9 percent. Additionally, MACPAC identified 694 hospitals that provide essential community services (e.g., inpatient psychiatric, burn services, etc.). 92 percent of these hospitals provided at least one service and 55 percent provided three or more services compared to 38 percent of non-deemed DSH.

An $8 billion/year DSH allotment reduction in FYs 2024-2027 is scheduled to begin January 20, 2024, with an estimated reduction range from 5.1 to 90.0 percent in FY 2024 alone. The commission has long held that DSH policy should be assessed in the context of base payments in fee-for-service (FFS) and managed care, upper payment limit (UPL) supplemental payments, and managed care directed payments. In fact, in recent years, some states have begun substituting managed care directed payments for DSH payments. As such, MACPAC is looking to examine newly available data on all types of supplemental payments to create a long-term work plan and will consider how different types of Medicaid payments to hospitals work on their own and interact with one another.

John B. McCarthy was the only commissioner to speak, asking for clarification on how paid taxes appear in the cost report and stating for the record that a 2 percent Delivery System Reform Incentive Payment (DSRIP) may seem small compared to the other supplemental payment types, but can be a large number for some states. This chapter will be published in the MACPAC March 2024 report and staff will continue to monitor congressional action on DSH.

MACPAC FOCUSES ON DUAL ELIGIBLE SPECIAL NEEDS PLANS IN DISCUSSION ON POTENTIAL COMMENTS AREAS FOR THE CY 2025 MEDICARE ADVANTAGE AND PART D PROPOSED RULE

MACPAC staff discussed potential areas for comment on CMS proposed rule on Medicare Advantage (MA) and Part D (PD) for Calendar Year (CY) 2025. Discussion focused on Dual Eligible Special Needs Plans (D-SNPs) as these plans have become more widely available to beneficiaries, with more than 5 million dually eligible beneficiaries receiving their Medicare benefits and sometimes their Medicaid benefits through D-SNPs in 2023.

The proposed rule includes provisions to increase the percentage of dual eligible beneficiaries getting care from the same parent organization, including changes to Medicare special enrollment periods, limiting enrollment in certain D-SNPs for individuals enrolled in an affiliated Medicaid managed care plan under the same parent company, and limiting the number of D-SNPs that MA organizations can offer in certain circumstances. Other provisions affecting dual eligible beneficiaries include lowering the threshold at which regular MA plans become D-SNP look-alike plans, and changes impacting how MA plan encounter data is shared with state Medicaid programs for care coordination or quality improvement. Additionally, it would require plan notices in languages most spoken in the state for individuals who do not speak English proficiently.

The commissioners’ discussion centered around plan switching, with commissioners concerned that switching plans frequently could cause problems with continuity of care, which is especially important for dual eligible beneficiaries. Plan switching means it is also more important to track quality of care. One commissioner suggested letting beneficiaries on integrated plans have the option to switch plans, and not let beneficiaries on non-integrated plans switch plans. Commissioners noted is important to consider how many plans each state has, since states with smaller number of plans may run into more issues than states with more options. Commissioners emphasized that it is important to continue to allow beneficiaries to change plans more frequently as some beneficiaries have a real need for changing plans with little notice.

Commissioners were also concerned that allowing individuals to switch plans monthly based on need gives more power to brokers and marketing tactics. Plans that have better brokers and marketing may be more desirable even if they are not the most ideal plan for the beneficiary. One commissioner brought up concerns with states only having a few D-SNP plans, especially if they are using passive enrollment. This is a problem because if one plan is doing well in one state, but not well in another, enrollment must be cut off in both states, which is especially challenging in states with limited plan options.

One commissioner suggested that beneficiaries in lower quality plans should be able to move to higher quality plans but not switch down to lower quality plans during certain time frames. The commissioner suggested this would incentivize plans to provide higher quality so they can have switch over status; however, measuring quality may be complicated because some quality metrics take years to come out.

MEDICARE-MEDICAID PLAN TRANSITION MONITORING: INTERVIEWS ON STAKEHOLDER ENGAGEMENT

Medicare-Medicaid Plans (MMPs) allow for fully integrated coverage for dually eligible beneficiaries by covering all Medicare and Medicaid benefits through a three-way contract between CMS, the state, and the health plan. These plans are being sunset by the end of 2025, and beneficiaries in these plans will be transitioned to Dual Eligible Special Needs Plans (D-SNPs). CMS began this transition in May 2022 through rulemaking, adding elements of MMPs such as the integrated appeals and grievance processes, and service area alignment for fully integrated D-SNPs and highly integrated D-SNPs with their companion Medicaid plans. MACPAC is monitoring this transition through a framework that includes examination of stakeholder engagement, procurement activities, system changes, and enrollment processes. This session focused on stakeholder outreach strategies from state interviews.

Over the course of the transition between MMPs to D-SNPs stakeholder engagement is suspended. The Commissioner’s plan for reimplementation of stakeholder engagement following the transition is split into two parts: examining existing engagement and examining enhanced engagement. For existing engagement, the outreach strategies will be through advisory committees and ombudsman programs. Enhanced engaged outreach strategies will include listening sessions, focus groups, and virtual outreach (via webinars and email listservs). Stakeholder engagement also brought feedback to states that included maintaining integrated features in the new D-SNP (one ID card, no cost-sharing, access to a care coordinator) and improved case management. Commissioners will next explore procurement activities. Most states plan on having thorough examinations of stakeholder concerns before and after the procurement period.

During discussion, commissioners worried that states are not adequately concerned about the transition and that states are not taking active steps to engage with and target beneficiaries for feedback. This discussion then included information about how states planned to emphasize that stakeholder engagement phase is an ongoing process that will occur throughout the transition, rather than a one-time engagement. This will allow for continuous feedback and give states the ability to address the concerns of beneficiaries throughout the whole process. In their interviews with states, MACPAC found that states have not been concerned with the feedback they are getting as most of the feedback that has been already received was anticipated and is the feedback the program has continually been receiving.

Commissioners also expressed concern about provider engagement in the process as their input is just as important as that of the beneficiaries; however, the interviews have found the providers to be quite vocal in the transition and plan to continue providing feedback. In terms of procurement the only question was how Medicare Advantage timeframes which will be addressed through the interviews on procurement, as it was not the main focus of the first round of interviews.

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This Applied Policy® Summary was prepared by Emma Hammer with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at ehammer@appliedpolicy.com or at 202-558-5272.