In February 2018, Congress passed the Bipartisan Budget Act (BBA), which included a requirement that telehealth be allowed to be included as a basic benefit, rather than a supplemental benefit, in the Medicare Advantage (MA) program. CMS proposed rules in November 2018 to implement this provision and is seeking comments due December 31. Increasing access to telehealth in the Medicare Advantage program is a win as ATA members strive to ensure that all populations have access to remote care. But what does this policy mean and how will it actually work when the proposed changes go into effect in 2020? This policy alert outlines the mechanics of the proposed policy.
What is the difference between basic and supplemental benefits in MA?
Generally, supplemental benefits are used by MA plans to add benefits that help attract customers to their plans, while benefits in the base bid are paid for more inclusively by the Medicare Trust Fund. That is why the ATA supported updating the policy: because telehealth should be a basic benefit, not just an add on.
The difference between basic and supplemental benefits is explained in good detail in the Regulatory Impact Analysis portion of the proposed rule (starts page 69). Supplemental benefits are generally paid with rebates (when the MA plan bids below the benchmark plan). These rebates are usually modest, limiting more costly supplemental benefits to be offered. Less often, supplemental benefits are paid for by additional premiums that an enrollee pays. But of course, there’s a tradeoff with offering a higher premium, richer plan and attracting enrollees who might be primarily driven by premium cost.
What financial impact is this policy expected to have?
When a benefit is included as a basic benefit, that benefit is paid for by the Medicare Trust Fund through the aggregate capitated rate that the plan is paid. With respect to the basic benefit “additional telehealth benefit” provided under the proposed rule, CMS estimates that there will be a fairly modest uptick in the capitated rate (all other things being equal) of $.09 in 2020, which will be indexed each year. All told, the extra cost to the Trust Fund is $80 million over 10 years. Importantly, because the rule excludes capital and other infrastructure costs that the plan might incur for offering additional telehealth benefits, the increased Medicare spending is muted.
Will MA plans be required to offer telehealth benefits when they become basic benefits in 2020?
MA plans will not necessarily be required to cover telehealth benefits when they become basic benefits. Instead, when MA plans bid the base price for their plans, they will be able to include some of the cost of telehealth if they offer telehealth services, therefore making their bid stronger.
MA plans’ bids are checked against the fee-for-service (FFS) county benchmark, which is based in large part on the average per-beneficiary FFS spending level. If the plan’s bid is lower than the benchmark, it gets a rebate which it can use to add supplemental benefits such as new benefits or to buy down beneficiary cost sharing.
How does this drive MA plans to adopt telehealth? What are the incentives?
To give an example to make this more actionable, let’s say it historically it has cost an MA plan $50 per member per month (PMPM) to provide behavioral health benefits notincluding any telehealth, and that $50 is also the average FFS spending per the county benchmark. Under this policy, the MA plan can add telehealth behavioral health to the cost of traditional behavioral health benefits. If adding telehealth benefits ends up saving the MA plan money, maybe they then project providing behavioral health at $40 PMPM, freeing up $10 extra dollars to buy down cost sharing for their beneficiaries. If telehealth remained a supplemental benefit, then this $10 savings gets split between CMS and plans (plan’s portion is the rebate). So by moving telehealth to an basic benefit, you give the MA plan 100% of the projected savings to move around within the bid.
Therefore, the uptake of telehealth in MA plans under this policy is really dependent on the ability of telehealth to drive down costs. We believe that telehealth has the potential to do this either in cases where telehealth is a substitution service or in cases where telehealth is an added service that prevents more costly visits down the line like ER visits or rehospitalization. Similar to Congressional Budget Office (CBO) projections for legislation that would expand access to telehealth in Medicare FFS, actuaries calculating the cost of the telehealth services to an MA plan would need to appropriately take those cost savings into account.
The ATA welcomes member feedback and questions and stands ready to work with members, Congress, and CMS to finalize this policy in such a way that advances access to remote health care services.