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Lawmakers Have Been Fighting to Address Puerto Rico’s Health Care Crisis, Including the Unfair Medicare Advantage Rates That Include Inadequate Payments to Individuals With Dual Eligibility 

After Lawmakers’ Push, CMS is Implementing New Formula That Will Increase Medicare Advantage Payment Rates for Low-Income Beneficiaries & Lead to An Expected Revenue Change of 1.25 Percent

Schumer, Gillibrand, Velazquez, Serrano: These Are Significant Steps to Address the Unequal Healthcare Reimbursement for Puerto Rico, But More Must Be Done

U.S. Senators Charles E. Schumer and Kirsten Gillibrand and Representatives Nydia M. Velázquez and José E. Serrano today announced that, after their concerted and sustained push, the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) have made significant, positive changes in the 2017 Medicare Advantage and Part D program in Puerto Rico. Prior to this change, the Medicare Advantage payment rates and policies unfairly compensated Puerto Rico when compared to the states. The new rates and policies will benefit thousands of Puerto Rican residents and increase annual Medicare payments by more than $40 million. As a result, the expected revenue change for Medicare Advantage plans in Puerto Rico is 1.25 percent. The lawmakers said that if this change had not been made, the expected revenue change for Medicare Advantage plans in Puerto Rico could have decreased by 8.5 percent.

“Residents of Puerto Rico are American citizens and deserve access to the same quality affordable health-care as in the states, but unfortunately they are burdened with unequal treatment and unfair rates,” said U.S. Senator Charles E. Schumer. “I am pleased that CMS is moving in the right direction on this issue by making major changes to Puerto Rico’s Medicare Advantage program. These changes will increase payment rates for thousands of Medicare beneficiaries in Puerto Rico.”

Schumer continued, “While these are good and significant first steps, there is still more to be done to end the unequal treatment and the healthcare crisis that plagues Puerto Rico. I will continue to fight hard in Congress with my colleagues like Representatives Nydia Velázquez and José Serrano to achieve fairness and equal treatment for Puerto Rico.”  

“Our fellow citizens in Puerto Rico are facing a health care crisis,” said U.S. Senator Gillibrand. “The changes announced by CMS to Puerto Rico’s Medicare Advantage program are a good first step to stabilizing Puerto Rico’s health care system and ensuring access to high-quality, affordable health care. I will continue to work with my colleagues in Congress to address the remaining federal policies that continue to disadvantage Puerto Rico’s health care system and advocate for legislation to help put Puerto Rico on the path to recovery.”

Rep. Nydia M. Velázquez (D-NY) said, “I was pleasantly surprised to see CMS take a step in the right direction. By setting rates and other policies strengthening the Medicare Advantage program in Puerto Rico, CMS has helped stabilize the island’s future.  Still, much more must be done to address the crisis in Puerto Rico and I remain committed to that goal.  I will continue working to bring fairness and equity to the 3.5 American citizens living in Puerto Rico.”

“Puerto Rico’s economic crisis is having a dire impact on the health care system. These changes will provide much needed relief to thousands of Medicare participants, help expand access to health care, and provide a measure of stability to Puerto Rico’s health care system. Much more needs to be done, but this is an important step in the right direction,” said Congressman José E. Serrano. 

“I and other Members of Congress have been fighting hard to stabilize and strengthen the Medicare Advantage program in Puerto Rico, which provides health insurance to nearly 570,000 seniors and disabled individuals on the island, including nearly 300,000 low-income seniors.  The final payment rates for 2017 represent a hard-fought victory for MA beneficiaries in Puerto Rico.  I want to thank my congressional colleagues for their tremendous teamwork on this issue over the years, and to express my gratitude to Secretary Burwell and her team at HHS and CMS for their personal attention to this important matter.  Much work remains to be done to ensure that Puerto Rico is treated fairly under federal health programs, whether it be Medicaid, traditional Medicare or Medicare Advantage, but the rule is a real accomplishment that we should pause to reflect upon and appreciate,” said Pedro R. Pierluisi, Puerto Rico’s representative in Congress.

Governor Alejandro J. García Padilla said, "I want to thank HHS Secretary Burwell for her engagement and willingness to help Puerto Rico, as well as the tireless advocacy of Senators Schumer, Gillibrand and Representatives Velazquez, Serrano, Gutierrez and Pierluisi. While this is a win for the almost 600,000 Medicare Advantage beneficiaries in the Commonwealth, we still have a long way to go to achieve parity in federal funding for Medicare and Medicaid, which we so desperately need to continue to provide care for the 3.5 million American citizens in Puerto Rico."

"We appreciate the leadership of Health and Human Services Secretary Sylvia Burwell in obtaining important adjustments to the 2017 Medicare Advantage rates that provide Puerto Rico with much needed additional resources." said Dennis Rivera, President of the Puerto Rico Healthcare Crisis Coalition. "Senator Schumer, Congresswoman Pelosi and Resident Commissioner Pierluisi's advocacy were also key in our efforts to bring parity to Puerto Rico's federal healthcare programs."

According to CMS, the Medicare Advantage program covers 567,000 beneficiaries in Puerto Rico. Approximately 277,000 beneficiaries – approximately 49 percent of all Medicare Advantage enrollees in Puerto Rico – are enrolled in Medicare Advantage Dual-Eligible Special Needs Plans. Approximately sixty percent of Puerto Rico’s population relies on either Medicare or Medicaid.  For too long, some of the Medicare policies have proven either unfair or unworkable for Puerto Rico, such as money to help low income citizens afford medicines and Medicare Advantage rates. Moreover, Puerto Rico receives less federal funds for health care than any state.

Schumer personally spoke with Secretary Burwell regarding this issue and pushed for changes to Puerto Rico’s Medicare Advantage plan.

As a result, CMS will implement a number of changes in the 2017 Rate Announcement that will significantly benefit Medicare Advantage enrollees in Puerto Rico. Under the change, the expected revenue change for Medicare Advantage Plans in Puerto Rico is 1.25 percent, not accounting for the expected growth in coding acuity that has typically added another 5.1 percent.  Overall, these changes mean that CMS will pay more for individuals with dual eligibility (those who are eligible for both Medicare and Medicaid). The lawmakers explained that these individuals are often low-income.

According to CMS, the changes include:

First, CMS will implement a revised risk adjustment model that will increase the payments made to plans that enroll a large proportion of full benefit dually eligible enrollees. CMS uses the risk adjustment model to adjust payments to plans to reflect the relative health of their enrollees based on diagnostic, demographic, and other factors. Schumer had noted that the prior risk adjustment model failed to provide adequate compensate to dually eligible beneficiaries. The new model changes this by separating the benefits into three categories:  full benefit dually eligible beneficiaries; partial benefit dually eligible beneficiaries; and non-dually eligible beneficiaries. 

Secondly, Congress passed a law last year that would increase the payments made to Puerto Rico hospitals for inpatient services under Medicare fee-for-service (FFS).  According to CMS, this change would not be reflected until 2018 because of timing of the enactment. However, CMS will adjust  the fee-for-service basis for 2017 Medicare Advantage payments to reflect the higher payments that will be made to Puerto Rico hospitals in 2016.

Third, CMS will make changes to Medicare Advantage plans that achieve high Star Ratings, and are therefore eligible for Quality Bonus Payments. The current Part C and D Star Rating system is sensitive to the low income subsidy/dually eligible and disability status of a contract’s enrollees. CMS will implement an interim analytical adjustment to account for low income subsidy/dual eligible and/or disability status.  The adjustment factor will vary by a contract’s proportion of low income subsidy/dually eligible and disability status beneficiaries. This interim adjustment should have an overall positive effect on Puerto Rico plans with high numbers of vulnerable enrollees.  

Fourth,  Puerto Rican residents are ineligible for the low income subsidy, which provides cost-sharing and premium assistance to low income Part D enrollees. CMS is finalizing its proposal to estimate a low income subsidy indicator for Puerto Rico to be used in conjunction with the interim analytical adjustment. The low income subsidy indicator will identify beneficiaries in contracts operating solely in Puerto Rico whose incomes would result in a low income subsidy designation in the 50 states and DC. Stakeholders have suggested that the lack of the low income subsidy makes compliance with some measures – like medication adherence – more difficult. To address this difference in benefits, CMS will implement a differentiated weighting for the three medication adherence measures in the calculation of the overall and summary Star Ratings for contracts operating solely in Puerto Rico. 

Lastly, CMS will adjust the fee-for-service experience for beneficiaries enrolled in Puerto Rico to reflect the propensity of zero dollar claimants nationwide, rather than based off the propensity of zero dollar claimants solely in Puerto Rico. CMS sought public comment on this issue in the Advance Notice due to the larger proportion of FFS Medicare beneficiaries in Puerto Rico with no Medicare claim reimbursements and concerns that this was leading to lower Medicare Advantage Rates in Puerto Rico. This change resulted in an average increase in the standardized FFS costs in Puerto Rico of 4.4 percent for 2011 through 2013. Accordingly, a 4.4 percent adjustment was applied to the pre-standardized Puerto Rico FFS rates supporting the CY 2017 ratebook development.                                                                                                    ###