Expansion of Medicare Advantage Supplemental Benefits: A New World of Opportunities for Providers

The Florida Bar Health Law Section August 2018

Kathleen M. Premo, Member of the Firm, and Kevin Malone, Associate, in the Health Care & Life Sciences practice, in the firm’s St. Petersburg and Washington, DC, offices, respectively, co-authored an article in The Florida Bar Health Law Section, in the June-July 2018 Health Law Updates, titled “Expansion of Medicare Advantage Supplemental Benefits: A New World of Opportunities for Providers.”

Following is an excerpt:

Hospitals, health systems, provider groups, and residential and community-based long-term care providers (“Providers”) should revisit their relationships with Medicare Advantage plans (“MA Plans”) in light of recent federal legislative and regulatory developments in the rules related to Medicare Advantage (“MA”) supplemental benefits. In particular, Providers should consider how they can partner with MA Plans operating in the Florida market to jointly offer new categories of supplemental benefits, including offering new types of support services for people with chronic conditions and services targeting populations with certain diagnoses.

Regulatory Changes:

The Centers for Medicare & Medicaid Services (“CMS”) recently finalized MA regulatory changes (“Final Rule”) that allow MA Plans to offer “targeted” supplemental benefits that are medically related to a specific disease condition, provided the Plan continues to comply with the non-discrimination requirements. MA Plans are now allowed to determine which diagnoses or health conditions they choose to offer these targeted benefits and they may vary them at the county-level. Under the Final Rule, MA Plans also are expressly allowed to have different cost sharing for benefits covered by specific providers. It will be important for MA Plans to identify in their bids and in their Evidence of Coverage documents which supplemental benefits are offered as “standard” or “targeted” supplemental benefits.

Legislative Changes:

The Bipartisan Budget Act of 2018 further expands the changes from the Final Rule to allow for supplemental benefits targeting beneficiaries with specific chronic conditions. The biggest change from the Bipartisan Budget Act of 2018 is that these chronic-condition-targeted supplemental benefits do not need to be expressly health related, provided that the services “have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.”  This is a new exception to the long-standing medical necessity rules for MA and allows MA Plans to design supplemental benefits that address social determinants of health and in some cases, appear more like traditional, long-term care services.

Implications for Providers:

The new flexibility in the scope and design of supplemental benefits offers providers new business opportunities to offer a full spectrum of newly reimbursable services. The new supplemental benefit rules will create new streams of funding for services targeting high-risk populations and for non-medical services that can help reduce unnecessary utilization. In addition, because supplemental benefits are not subject to network adequacy requirements, they can be covered through a single provider. This allows for a new focus on “single source” care where plan members may seek care from a provider for all their services, supplemental and otherwise.

MA Plans are interested in partnering with sophisticated providers for the supplemental benefit offerings. Providers should consider the populations they currently serve or can serve and explore which supplemental service offerings best align with their care model and competencies.  Providers should then take a proposal to the MA Plans in their region. Although MA Plans will not be able to implement the new supplemental benefits created by the Bipartisan Budget Act of 2018 until plan year 2020, MA Plans will be submitting bids defining these services in less than a year. Considering the timeline for implementing projects like this, Providers should immediately begin assessing the potential for their market and work with experienced MA counsel to begin discussions with MA Plans as soon as possible.