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Oak Street Health Weighs in on 2024 Medicare Advantage Rate Notice

As a part of our mission to rebuild health care as it should be — and one way we help support the communities we serve — is to regularly weigh in on policy conversations affecting the health of our patients and ability of our providers to deliver top quality care.

Right now, while it may be under the radar for our patients and most Americans on Medicare, there is a big ongoing debate — from large insurers and advocacy groups to small providers and health systems — regarding the 2024 Medicare Advantage Advance Notice, which governs the Medicare Advantage program and is now utilized by half of Medicare beneficiaries, 30 million Americans. These proposed changes to the Medicare Advantage (MA) program will affect how healthcare providers working with MA plans operate across the country.

On March 6, 2023, Oak Street Health submitted a comment letter to the Centers for Medicare and Medicaid (CMS) saying we agree that many of the agency’s proposed changes will help increase the integrity of the MA program and send resources towards patients with conditions that need them, including kidney care, dementia, cancer, and rheumatoid arthritis. We also support CMS’ goal to stop inappropriate coding of patient health conditions; coding should be used to accurately capture the true picture of a patient’s health and risk factors, and inform care delivery plans designed to address care gaps and identified patient needs. Many of CMS’ proposals move risk adjustment in this direction. 

Adjusting payment based on the disease burden of a population is critical to enabling providers to deliver the necessary resources to take care of the most vulnerable Medicare beneficiaries. For example, at Oak Street Health, we custom built our care model to provide the resources moderate and lower income older adult populations with higher disease burdens need. At the same time, it is equally critical that risk scoring does not become the driver of success for value based care providers; success in these areas must be driven by keeping patients happy, healthy and out of the hospital. 

At Oak Street Health, we are proud our team has driven strong results for our patients across programs, regardless of the risk arrangement. For example:

  • We were the 4th highest saver of 513 Accountable Care Organizations participating in the Medicare Shared Savings Program (MSSP) in 2020, achieving a savings rate four times greater than average for the participating organizations. And we did this in a program where HCC risk scores are capped at 3%.

  • In 2021, during the first year of the Centers for Medicare and Medicaid Innovation (CMMI) Global and Professional Direct Contracting Model (now called ACO REACH), we achieved the highest net savings in the model, a rate nearly 12 times greater than the net savings rate for the GPDC model as a whole; we also achieved a 100% quality rating.

We feel these results definitively show that our success is driven by our ability to provide outstanding care to our patients.

Equally as important in this debate is ensuring changes to risk adjustment models do not divert resources away from those seniors who need quality care the most. We believe some of CMS’ proposed changes may put underserved Medicare beneficiaries at risk for a disproportionate cut in their benefits. We come to this conclusion with deep experience serving these communities, 42% of our patients are dually eligible for both Medicare and Medicaid, 77% of our centers are located in Medically Underserved Areas and more than half of our patients are Black, Latino or Indigenous Americans.

We conducted an internal analysis on the new proposed risk adjustment model across the patient population we serve, finding that in some areas, the new model diverts resources away from these communities. Our analysis showed:

  • Patients who are both full benefit dually eligible and Black or African American would see a $480 per member per year reduction in risk-adjusted resources, compared to the change in payment seen for patients who are non-duals and White.

  • Patients who are full benefit dually eligible would see a $240 per member per year reduction in risk-adjusted resources compared to the change in payment seen for patients who are non-duals and White.

Ultimately, what this means is Medicare beneficiaries who are most at-risk, those bearing the scar tissue of the American healthcare system, who often have had their health neglected over years or decades, will face the steepest cutbacks if these proposed changes are implemented. 

In our letter to CMS, we recommended limited, targeted, clinical adjustments CMS can make as they finalize this proposal to ensure the 2024 Rate Notice does not unintentionally harm these communities and also achieves one of the agency’s stated goals — promoting health equity. Those recommendations include:

  • Increasing demographic coefficients for dually eligible beneficiaries: People over 65 who are eligible for both Medicare and Medicaid have the highest rates of mortality and hospitalization among all patients. CMS calculates coefficients that contribute to a patient’s risk score, which determines the resources that will be allotted for their care. Our proposed change would make sure that more resources are devoted to caring for the needs of dually eligible beneficiaries and those with certain complex chronic conditions.

  • Further increasing disease coefficients for certain chronic conditions overall, and specifically for dually eligible beneficiaries with those conditions: 39 conditions for dually eligible patients are reimbursed at a lower rate than for those that are not dual eligible. We request that those be made equal, as it better reflects the actual cost of care.

  • Revisiting a limited number of removed codes in CMS’ proposed model (v28 CMS-HCC) and reintroducing a clinically relevant subset: CMS has proposed removing thousands of codes entirely from Medicare Advantage’s risk adjustment model, with the intention to cut down on coding abuse. We are requesting CMS revisit a narrow set of those codes impacting the cost of care in five specific areas because of the disproportionate reduction in payments for dually eligible patients shown by our analysis.

  • Adding new codes into the proposed v28 CMS-HCC model capturing diagnoses that are inordinately prevalent in underserved communities: We recommend CMS include coding for two major conditions that disproportionately affect Medicare beneficiaries in marginalized communities.

Importantly, our recommendations are not advocating for overall increased funding to Medicare Advantage compared to what CMS has proposed. We believe any increases from the proposals above can be offset by moderately decreasing demographic coefficients for non-dual patients, which increase under the current proposed rule.

We look forward to continuing to engage CMS, the Biden-Harris Administration, and key stakeholders as we work to remake healthcare as it should be. 

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