Centers for Medicare & Medicaid Services
Director, Center for Medicare
Re: 2017 Advance Notice and Draft Call Letter
Dear Deputy Administrator Cavanaugh:
On February 19, 2016, CMS released the 2017 Advance Notice and Draft Call Letter, which proposed various methodological Changes for Calendar Year 2017 for Medicare Advantage (MA) capitation rate, as well as Part C and Part D Payment Policies. In particular, CMS proposed to waive the existing bidding requirements for all MA employer/union-only group waiver plans (EGWPs), and to substitute an alternative payment policy for EGWPs. Under this alternative policy, EGWP benchmarks would be based on the weighted average bids for individual market plans in each country.
These comments are submitted by the UAW Retiree Medical Benefits Trust. The Trust provides health coverage to retirees and their dependents of the United Auto Workers (UAW) who formerly worked for GM, Ford, and Chrysler. The Trust is a Voluntary Employees’ Beneficiary Association (VEBA). The Trust currently provides coverage do 719,000 persons. Of this population, 534,000 are covered by Medicare. The Trust offers their retirees a choice of plans in which they call enroll. At the present time, 161,000 of its retirees have selected and are covered by MA plans. The Trust expects this number to grow in the coming years.
The Trust has significant concerns about the proposal to change the procedure and formula for making payments to EGWPs. We believe that this proposal would create procedures difficulties that would interfere with the ability of retirees to make informed decisions about the type of coverage in which they want to enroll. In addition, we are concerned that proposed policy might result in diminishing the quality of care available to retirees. Finally, we are concerned that the proposed would lead to a substation reduction in payments to EGWPs, thereby resulting in premium increases and/or benefit reductions to retirees.
I. The Proposed Payment Policy For EGWPs Would Hinder The Ability Of Group Sponsors To Communicate Plan Changes To Enrollees.
The Trust is deeply concerned that the proposed change in the payment policy for EGWPs will hinder or make impractical the ability of group sponsors to meet their obligations for communicating with their retirees and seriously compromise the ability of retirees to make informed decisions about their coverage. By linking the payments to the weighted average bids for individual plans in each county, the proposal would delay when MA EGWP plans are able to determine what their final rates will be until August. This means that completing the process of soliciting bids, evaluating bids responses, negotiating with MA plans and making final decisions on benefits and new of reduced plans offering will be postponed until September or October. That, in turn, means the Trust and other EGWP group sponsors will not be able to begin communicating information on benefits and plan offerings until much later in the year, potentially too late to meet regulatory obligations, within Medicare and from other agencies. This will significantly reduce the time available to develop and mail communications and have discussions with the retirees. Because the issues retirees must consider are complicated – involving questions about plan selection, out-of-pocket costs, provider impact, MA versus Original Medicare coverage – the Trust believes it is very important that retirees have ample time to consider all of the information that is available to them. The proposed change in the payment policy for EGWPs will greatly truncate this time period and we believe it could seriously compromise the ability of retirees to make informed decisions about what coverage options are best for them.
Under current bidding process, MA plans are able to determine what their CMS rates will be in April. This enables the Trust and other EGWP group sponsors to solicit bids, evaluate bid responses, negotiate with MA plans, and to make decisions on coverage levels and MA plan offerings during May and June. For organizations like the Trust, with a large number of retirees and plan offerings across the country, this process is complex and involves individuals from several organizations. With most group sponsors of EGWPs, decisions regarding coverage levels and plan offerings must ultimately be approved by a governing body. The Trust and other EGWP sponsors have several obligations from different regulatory bodies that require prospective notice to their retirees before changes can be effective. The Trust must develop communications to retirees regarding benefit changes, on any new or reduced plan offerings, and what alternatives are available in situations where plans are being discontinued. The Trust needs time to complete this process.
Because the Trust has retirees across the country, it engages a multi-prong communication effort during September through November that includes written mailings, phone calls, retiree counselors, and in-person meetings. In 2015, the Trust conducted over 150 in-person group meetings across the country to provide more than 700,000 members the opportunity to hear about benefit changes and plan offerings to ask questions in-person. Our retirees make their coverage decisions during an enrollment period in October and November for a January 1 effective date. We believe that other EGWP sponsors follow a similar timeline.
The Trust urges CMS not to proceed with the proposed change in the procedure and formula for making payments to EGWPs. At a minimum, the Trust submits that it is not feasible to implement the proposed change in the EGWP policy payment for 2017. This would not give the Trust and other EGWP group sponsors enough time to modify their current process for negotiating with MA plans, approving benefit and plan changes, communicating with their retirees, and allowing the retirees ample opportunity to weigh all of the information and to make their enrollment decisions.
II. The Proposed Payment Policy May Result In Group Sponsors Leaving Medicare Advantage, Thereby Diminishing The Quality Of Care Available To Retirees
Because of the increased cost or difficulty in meeting obligations to communicate with enrollees, EGWP group sponsors might be forced into placing all of their retirees into Original Medicare as a result of the proposed change in payment policy. Losing their Medicare Advantage plans will mean that the retirees will lose plan options for enrollment. The loss of those plan options will mean the loss of plans that offer high quality, coordinated care. For example, almost all the Trust’s MA EGWP’s plans are 4 star or higher, and are focused on managing care and eliminating disease.
The Trust’s first and only concern is for its retirees. Offering high quality and managed health plans ultimately leads to a better quality of life, gives retirees control over health care decisions, and provides oversight and care management that does not exist in Original Medicare. Thus, the Trust is concerned that the loss of MA plans options will diminish the quality of care available to retirees and negatively impact their wellbeing.
III. The Proposed Payment Policy Would Cut Payments to EGWPs and Result in Premium Increases and/or Benefit Reductions for Retirees
The Trust also is concerned that the proposed change in the payment policy for EGWPs would result in reductions in the payments to EGWPs. Although the precise impact is not clear, it appears that the reduction could amount to 2.5-5% of payments that would otherwise be received.
In the 2017 Advance Notice and Draft Call Letter, CMS expressly recognized that “to the extend that CMS’ payments are reduced the result would be that employers pay higher premiums for current levels of supplemental coverage provided to employees under the plans”. If the proposed changes are approved as drafted, we similarly believe that EGWPs will inevitably pass on any reduction in their payments by charging higher premiums to retirees or reducing the benefits that they offer. The Trust believes this will make retirees worse off.
The Trust also believes that any abrupt reduction in payments to EGWPs would be unwise and disruptive. We request that CMS allow for more extensive dialog with stakeholders before implementing any payment reduction.
For the foregoing reasons, the Trust urges CMS not to proceed with the proposed change in the policy of paying EGWPs.
Francine Parker, Executive Director, UAW Retiree Medical Benefits Trust