I'm sure by now you've heard of the terms macroeconomics and microeconomics, but have you heard of MACRA economics? MACRA (the Medicare Access and CHIP Reauthorization Act) was passed in 2015 and is more commonly known as the "doc fix." Although it was part of a broader move towards payment for value and quality, ushering in a real era of merit-based incentive payment systems (MIPS) and alternative payment models (APM's), it also did something else. It touched on another product quite popular among Medicare beneficiaries,though not as obviously: Medicare Supplement, more commonly known as Med Sup. Med Sup is a standardized insurance policy which primarily covers Medicare deductibles and co-payments.
In fact, some might say that Med Sup came out of this legislative process largely unscathed; something that, in today's political and legislative environment, could very well be a feat of its own. Nevertheless, MACRA did make some important changes to Med Sup and while there has not been much federal movement on this since the summer of 2016, now is a good time to revisit MACRA and assess its implications for your business.
Some of these changes include: SEC. 401. (Of Title IV Subtitle A): LIMITATION ON CERTAIN MEDIGAP POLICIES FOR NEWLY ELIGIBLE MEDICARE BENEFICIARIES. Specifically: Medicare Supplement can’t cover the Part B (i.e. professional medical services) deductible for individuals newly eligible for Medicare starting January 1, 2020. This will impact the availability of current Plans C and F which both cover the Part B deductible. Inforce policyholders can continue to renew their current versions of Plan C or Plan F. Individuals eligible for Medicare prior to January 1, 2020 (NOT newly eligible) can purchase the current version of Plan C or F on or after January 1, 2020. See: Public Law 114-10—Apr. 16, 2015; 129 Stat. 87. Congressional Record. Vol. 161 (2015). https://www.congress.gov/114/plaws/publ10/PLAW-114publ10.pdf
These changes may not appear to be significant on face value but indeed are. This is because there will now be a bifurcation of the market, resulting in two basic classifications:
1) The newly eligible, and 2) Everyone else.
All other things being equal, this will likely result in overall loss ratio’s being beneficial in the early years after implementation, though interested parties must now pay even more attention to actual dollars retained. As such, now is the perfect time to assess overall market position and model potential rating changes in order to help determine what future product portfolios will (and should) look like. Here are some questions one should ask to successfully navigate a post-MACRA world:
What will MACRA do to the national and your local Med Sup markets?
How will MACRA affect your company?
What about your local competitors?
What will drive overall experience in 2020 and beyond?
What kind of numbers are we really talking about?
Given today's broader healthcare reform climate, it seems likely that the move towards payment for value will continue. Consequently, it behooves payers to stop and think about MACRA today as it relates to Med Sup both now and for 2020 and beyond. Product lead times are long and although what's next for broader healthcare reform is anyone's guess, there may be some spillover impact to Med Sup. So, now is the perfect time to stop and think about it. After all, to paraphrase General Dwight Eisenhower – plans are nothing…..planning is everything !!
Location: United States