what is a regional benchmark for medicare insurance plans

4 In general, a plan’s service area is defined by zip code and may consist of a county, groups of counties, whole states, or the entire nation, unless the plan is participating in the Regional MA program, in which case the plan’s service area consists of a region, or multiple regions, as defined by the Secretary. Benchmarks are calculated on a county-by-county basis. A plan submits a single bid for its service area, and CMS calculates a single benchmark for that plan based on the counties included in the plan’s service area.

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What is the health insurance benchmark plan?

The Kaiser Family Foundation website provides in-depth information on key health policy issues including Medicaid, Medicare, health reform, global health, HIV/AIDS, health insurance, the …

How do benchmark rates affect Medicare bids?

Benchmark plan is the term used to describe the second-lowest-cost Silver plan available in the exchange, and it’s also the term for the plan that each state designates as the standard for essential health benefits (EHBs).

What is the benchmark premium for Medicare Part D?

Dec 01, 2021 · Fee-for-service expenditure data by county: Tables for aged, disabled, and ESRD beneficiaries. Medicare Advantage plans (See related links at bottom of page.) Health plans (See related links at bottom of page.) Prescription drug coverage (See related links at bottom of page.) Out of network payments (See downloads below.)

Are bids less responsive to benchmarks in areas with more insurers?

Jul 29, 2021 · Alaska had the largest benchmark decrease last year. New Mexico will have the largest benchmark increase with a 2022 LIS benchmark of $34.31 as compared to $28.17 in 2021. Hawaii had the largest benchmark increase in 2021. Idaho and Utah will have the highest 2022 benchmark premium of all CMS PDP regions at $42.93 .

What is a benchmark in Medicare?

What is the 2021 Part D benchmark premium?

How are Medicare Advantage rates calculated?

Who is the largest Medicare Advantage provider?

What is CMS benchmark?

What is the LIS benchmark?

Why do doctors not like Medicare Advantage plans?

What is the most popular Medicare Advantage plan?

Do you still pay Medicare Part B with an Advantage plan?

What are 4 types of Medicare Advantage plans?

Does Medicare cover dental?

Is Blue Cross Blue Shield Medicare?

What is a benchmark plan?

There are two different meanings for the term benchmark plan. Both have to do with the Affordable Care Act, although they have very different purpo...

Why is the second-lowest-cost Silver plan called a benchmark plan?

The second-lowest-cost Silver plan is important because its price is used to calculate premium subsidies. For an exchange enrollee with income in t...

Why is the state's standard plan for essential health benefits called a benchmark plan?

The ACA created a broad framework for essential health benefits, but left it to states to determine exactly what would need to be covered. EHB requ...

How does benchmark plan work?

This is because the benchmark plan is determined solely based on price: You look at all of the available plans in a given area, arrange them in order by premiums, and the benchmark plan is whatever plan ends up in the second-lowest-cost spot among all the available Silver plans.

How many categories of care are included in the Essential Health Benefits?

The essential health benefits, as defined in the ACA, include ten broad categories of care, described in more detail here:

What is the second lowest cost silver plan?

The second-lowest-cost-Silver plan is thus called a benchmark plan because it’s the plan that the enrollee will be able to purchase for exactly that percentage of their income; the subsidy amount is benchmarked based on that plan’s price. The enrollee can pick a lower-cost plan and pay a smaller amount in premiums, or they can pick a higher-cost plan and pay the difference in additional premiums.

What is EHB in the ACA?

The ACA created a broad framework for essential health benefits, but left it to states to determine exactly what would need to be covered. EHB requirements apply to individual and small group health plans with effective dates of 2014 or later. These plans are required to cover the essential health benefits, with no dollar cap on out-of-pocket costs.

Does a small group health plan include dental?

All individual and small group health plans sold since 2014 include coverage for all of these services (with the exception of pediatric dental if stand-alone plans are available for purchase ). But the specifics of exactly what is covered vary from state to state.

What is benchmark price?

Payers and policymakers have examined many approaches to address excessive prices, most of which rely on establishing a fair price, sometimes known as a “benchmark price.” Sometimes prices are benchmarked against the average or the median price for a procedure, however this approach fails to account for already excessive prices that might be built into that average or median. Another common approach is to benchmark prices against the rates set by the Centers for Medicare and Medicaid Services (CMS) for Medicare beneficiaries.

How does rotating RUC occupancy affect Medicare?

One analysis found that rotating RUC occupancy resulted in a statistically significant three to five percent increase in Medicare expenditures related to corresponding highly specialized procedures. Researchers focused on work RVUs (wRVUs), which are only a portion of the total RVU evaluated by the RUC and are based on time and mental effort required to perform a procedure. 47 This indicates that member specialists are likely to value related specialty procedures more highly, especially because changes were not correlated with reimbursement components that are not subject to RUC action (e.g. malpractice RVUs which are computed using malpractice insurance rates).

How does Medicare work with private payers?

Private payers usually establish provider prices through contract negotiations. If providers and payers are unable to agree on contracted prices, the provider is typically excluded from the insurer’s network. Medicare, on the other hand, is a price setter and uses a variety of approaches to determine the prices it will pay, depending on whether it is paying a hospital, doctor, drug or device. Through its rate setting process, Medicare aims to cover the costs that “reasonably efficient providers would incur in furnishing high-quality care.”3

What is upcoding in Medicare?

Hospitals and physician practices may be upcoding, a practice whereby providers use billing codes that reflect a more severe illness or expensive treatment in order to seek a larger reimbursement from Medicare. A study of 364,000 physicians found that a small number billed Medicare for the most expensive type of office visit for established patients at least 90 percent of the time. 50 One such example is a Michigan orthopedic surgeon who billed at the highest level for all of his office visits in 2015. The probability that these physician practices are only treating the sickest patients is quite low. In the past, CMS has justified reductions in payments to hospitals and physician groups to compensate for the costs of this upcoding—a vicious cycle we would not want to perpetuate.

Why are hospitals in concentrated or heavily consolidated markets using high revenues from private payers?

MedPAC analyses have asserted that hospitals in concentrated or heavily consolidated markets use high revenues from private payers to invest in cost-increasing activities like expanding facilities and clinical technologies —thereby leading to negative margins from Medicare because of an increased cost denominator. 16.

What is the CMS system for outpatient care?

25 Medicare originally based payments for outpatient care on hospitals’ costs, but CMS began using the Outpatient Prospective Payment System (OPPS) in August 2000. 26 This system pays hospitals based on predetermined rates per service using the Ambulatory Payment Classifications (APCs). APCs are associated with one or more Healthcare Common Procedure Coding System codes (HCPCS codes) which are updated annually. This payment method, compared to cost-based reimbursement, aims to incentivize cost-control and to give CMS the ability to predict and manage program expenditures. To account for geographic differences, CMS adjusts the labor portion of the national unadjusted payment rate (60 percent) by the hospital wage index for the area. Payments are further adjusted for rural vs. non-rural, patient severity, and whether the facility complies with certain rules, for example, participating in the hospital Outpatient Quality Reporting Program.

What is the ratio of payment to cost in hospitals?

We note, however, that a hospital’s ratio of payment-to-costs reflect a combination of external factors such as the local costs for wages or utilities and the hospital’s own behavior, including how efficiently it manages its resources . 13 A 2019 MedPAC analysis found that hospitals that face greater price pressure operate more efficiently and have lower costs. Relatively efficient hospitals, which MedPAC identified by cost, quality and performance criteria, had higher Medicare margins (-2 percent) than less efficient hospitals. 14

What is benchmark in a bid structure?

In this structure, the benchmark can be thought of as a subsidy that effectively shifts demand. If the benchmark rises by $1, the bid needed to generate any given premium rises by $1 in the case when the target premium exceeds zero and by less than $1 in the case when the target premium is negative (when there is a rebate).

How do benchmark rates affect bids?

Benchmark rates affect bids because they shift the demand curve. For example, if a plan’s equilibrium net benefit package to enrollees is x*, and the benchmark increases, the optimal plan bid to achieve x* may also rise. This exemplifies the standard result from models of imperfect competition. In the short run, a shift in demand will increase prices even if the marginal cost curve is perfectly elastic. Other models could also produce a positive relationship between benchmarks and bids. For example, in a bilateral bargaining model, a shift in benchmarks (which are known) could affect reservation prices of each side, which could affect plan costs and hence bids. If providers anticipate that plans will receive higher benchmarks, they may negotiate for higher fees to extract a part of that rent.

How many Medicare Advantage plans were there in 2010?

From 2006–2010, there were over 12,000 unique Medicare Advantage plans. After excluding regional PPOs, special needs plans, and employer-sponsored plans, Figure 3shows the number of HMO, LPPO, and PFFS plans in each year. While less managed plans have grown in recent years, HMO plans remain the dominant plan type, especially in larger and more urban counties. We focus on HMO plans in our main analyses. Figure 4shows the population-weighted average market benchmark rates, HMO plan bids, and HMO rebates. In econometric analysis, we use plausibly exogenous changes in benchmarks. Our basic identification comes from comparing how bids change in markets with large exogenous changes in benchmarks to how bids change in markets with small exogenous changes in benchmark.

What is MA in Medicare?

The MA program, formerly known as Medicare Part C and Medicare+Choice, provides Medicare beneficiaries the choice of health insurance plans that provide Medicare coverage offered by commercial insurers in lieu of traditional FFS Medicare. More than 25 percent of Medicare beneficiaries today are enrolled in MA. In the last decade, MA enrollment has more than doubled from 4.5 million in 2003 to 11.4 million in 2010 (MedPAC 2011), its highest level since the inception of the program (Figure 1). During this time, MA has commanded increasing policy interest, with growing implications for the trajectory of Medicare spending as well as beneficiary access and quality of care (Gold, 2012; Guram and Moffit, 2012).

How did Medicare Modernization Act change the Medicare benchmark?

The 2003 Medicare Modernization Act (MMA) further altered the way benchmark payments were set and dramatically increased Medicare payments to MA plans. Beginning in 2006, MA plan payments were determined via a competitive bidding system, which sought to leverage market forces to encourage more efficient and higher quality plan options (McGuire, Newhouse, and Sinaiko, 2011). CMS began to calculate plan payments by comparing their bids against pre-determined county-level “benchmark” rates in the counties a plan proposed to serve. Benchmark updates were determined by the maximum of: a 2 percent increase, an urban or rural “floor” update, the prior year national average growth in fee-for-service Medicare spending, and an own-county fee-for-service update. This final update path was calculated by trending forward a county’s own fee-for-service spending in a five-year period spanning eight years prior to three years prior. The MMA also updated the risk adjustment system used in setting the benchmark, adopting the CMS Hierarchical Condition Category (CMS-HCC) system.

What is Medicare bidding?

Bidding has been proposed to replace or complement the administered prices in Medicare pays to hospitals and health plans. In 2006, the Medicare Advantage program implemented a competitive bidding system to determine plan payments. In perfectly competitive models, plans bid their costs and thus bids are insensitive to the benchmark. Under many other models of competition, bids respond to changes in the benchmark. We conceptualize the bidding system and use an instrumental variable approach to study the effect of benchmark changes on bids. We use 2006–2010 plan payment data from the Centers for Medicare and Medicaid Services, published county benchmarks, actual realized fee-for-service costs, and Medicare Advantage enrollment. We find that a $1 increase in the benchmark leads to about a $0.53 increase in bids, suggesting that plans in the Medicare Advantage market have meaningful market power.

How many steps are there in Medicare bidding?

The Medicare bidding system can be summarized in the following four steps. Let jdenote plans and kdenote counties.

How much is the average gross margin for Medicare Advantage?

Average Gross Margins. Gross margins for Medicare Advantage plans averaged $1,608 per covered person per year between 2016 and 2018 – about double the average annual gross margins for plans in the individual and group markets ($779 and $855 per member per year, respectively; Figure 1).

Why are Medicare Advantage plans' gross margins higher than their loss ratios?

Although loss ratios are similar across the three markets, gross margins are much higher for Medicare Advantage plans because both medical expenses and premiums are substantially higher for Medicare Advantage enrollees. In other words, a 5% margin, for example, in the Medicare Advantage market is a larger amount than a 5% margin in the individual or group market. People on Medicare tend to use more health care and incur higher medical expenses than people in the individual and group markets, and the federal payments (premiums) to Medicare Advantage plans are tied to the medical expenses of people in traditional Medicare. For instance, in 2018, Medicare Advantage enrollees spent an average of 1,856 days in a hospital per 1,000 enrollees, compared with averages of 304 and 294 hospital days for people in the individual and group markets, respectively ( Appendix Table 2).

What is a fully insured group plan?

Group Market. The fully-insured group market, the largest of the three markets (over 30 million people in 2018, excluding plans regulated by California’s Department of Managed Health Care), serves employers and their employees that are enrolled in fully-insured health plans. This market includes both small and large group plans, but excludes employer-sponsored insurance plans that are completely or partially self-funded, which account for 61% of all workers with employer-sponsored insurance. 1 Plans typically receive premium payments from both employers and their employees. While both average claims and average premiums for enrollees in the group market have increased, the market has been relatively stable for insurers over the past decade.

What is the individual market?

The individual market, which accounted for about 14 million people in 2018, includes coverage purchased by individuals and families through the Affordable Care Act’s exchanges (Marketplaces) as well as coverage purchased directly off-exchange, which includes both plans complying with the ACA’s rules and non-compliant coverage. (e.g., grandfathered policies purchased before the ACA went into effect and some short-term plans). The federal government provides subsidies for low-income people in the Marketplace and includes measures, such as risk adjustment, to help limit the financial liability of insurers. Insurers in the individual market receive premium payments from enrollees, plus any federal subsidies for people in the Marketplaces. Individual market premiums and plan availability have been considerably less stable than the Medicare Advantage and group markets.

Why are simple loss ratios higher than gross margins?

As with the gross margins, the simple loss ratios do not account for administrative expenses, and medical loss ratios as defined by the ACA are generally higher because the ACA calculation makes adjustments for taxes, fees, and quality improvement expenses. As with the analysis of gross margins, medical expenses as a percentage of premiums collected were averaged across three years (2016 to 2018) to even out year-to-year fluctuations in the individual market.

How much is risk adjusted Medicare?

The federal government makes risk-adjusted payments (higher payments for sicker enrollees and lower payments for healthier enrollees) to plans ( averaging $11,545 per enrollee in 2019) to cover the preponderance of the cost of Medicare benefits for plan enrollees, with some plans charging enrollees an additional premium.

Is Medicare Advantage profitable?

This analysis suggests insurers are profitable in each of the three markets. There is a particular focus in policy debates right now on Medicare Advantage plans. Several Medicare-for-All and other health reform proposals would allow private insurers to administer benefits under a new Medicare-like public option, which could be lucrative and attractive for health insurers, depending on how payments to plans are set. Based on the history of Medicare Advantage plans, setting payments to private plans at the appropriate rate remains a challenge, given competing goals of broadening plan choice and fiscal accountability. With a new public program or option, policymakers are likely to face similar challenges, depending on their goals and priorities.