Getting ahead of the many operational and regulatory changes coming out of the Centers for Medicare & Medicaid Services (CMS) requires health plans to develop programs, strategies and infrastructures that support long-term success. Medicare Advantage (MA) and Prescription Drug (Part D) health plans that continuously foster healthy behaviors among members with the right resources will be in the strongest position to address current and emerging quality measures.
Ensuring you have a strong organizational foundation to cultivate healthy behaviors and reach new performance targets begins with designing your CMS bid and benefits package to fuel continuous improvements in plan performance.
What is a CMS Bid?
By contracting with the federal government, MA and Part D plans agree to deliver the same Part A and Part B services as traditional fee-for-service Medicare. In return, CMS provides plans with monthly payments to fund these services. CMS calculates these payments based on estimated costs submitted by health plans during the competitive bidding process. From a health plan’s perspective, a CMS bid is the projected revenue a plan needs to fund member benefit packages.
What is the Bid Submission Process?
Plans are required to submit an individual bid for each contract within a plan to CMS every June. This standardized process allows CMS to review a health plan’s estimated revenue requirements and costs of providing value-based care for each upcoming calendar year. The bid submission process includes:
- Benchmarks announcement: To begin, CMS will outline the pricing methodology and benchmarks for bids each year through the Annual Rate Notice and Call Letter. Benchmarks are the projected cost of providing Part A and Part B services to a traditional Medicare member with average health. These targets will change depending on the county or region a health plan operates in.
- Bid submission: Once CMS has set the benchmarks for a county or region, MA and Part D plans calculate the cost of providing care for their populations. MA and Part D plans are expected to match their bid as closely as possible to the benchmarks, but each bid will vary depending on the risk score of members, the quality of the plan, administrative expenses, taxes, licensing fees and profit margins.
- Base rate calculations: CMS will compare each bid to the benchmark to determine the plan’s base rate, or the monthly payment it will provide the plan for each member. Plans that bid below the benchmark will receive a base rate equal to their bid and receive a rebate. Plans that bid above the benchmark will have their base rate set at the benchmark.
- Risk adjustment: Through a process called risk adjustment, CMS refines the base rate of a plan to reflect the health status of each member. Depending on a member’s risk score, CMS adjusts the base rate to determine the estimated cost of care.
- Determining premiums: When a plan bids above a benchmark, they are allowed to charge members premiums to make up the difference. Premiums will stay the same flat rate for all members, but CMS will adjust the base rate for members with higher risk scores to enable plans to provide for costs.
- Determining rebates: CMS provides rebates to plans that bid below the benchmark. Rebates are calculated as a percentage of the difference between the bid and the rebate, typically between 50% and 70%. Plans with higher Star Ratings may receive higher percentages. Rebates are meant to be used for supplemental benefits, to reduce cost-sharing or to fund new methods of delivering care.
Bids are extremely complex and must balance multiple components including benchmarks, risk adjustment scores, premiums, potential rebates, projected Star Ratings and quality bonus payments. Submitting a CMS bid is a time-consuming, resource-heavy and manual process that demands the attention of an entire health plan.
How Does a Bid Impact Plan Performance?
The relationship between bids and quality improvement scores is cyclical. Bids provide the revenue that fuels continuous improvements in Star Ratings scores, which further improve the marketability of a bid and a plan as a whole.
Designing bids with benefits that empower members to improve health outcomes helps ensure that benefits and services support stronger Star Ratings. Achieving higher Star Ratings results in higher enrollment rates, with nine in ten members choosing plans with four or more Star Ratings. Plans that earn quality bonus payments can incorporate more benefits and lower premiums into their bids, further increasing enrollment, retention and revenue. In fact, nearly seven in ten MA members are enrolled in plans that do not have supplemental premiums except for Part B services.
Core Framework of a Successful Bid
Maximizing the potential of the bid during the current period of change means rethinking how MA and Part D plans structure their programs, services and supplemental benefits. While bids act as revenue projections for health plans, they also serve as product portfolios. Bids that fund the right benefits, resources, tools, programs and services ultimately empower members to access the care they need and allow contracts to reach their quality goals.
Addressing Member and Quality Challenges
Constructing a bid to the unique situation of each contract and member population allows health plans to zero in on the key drivers of stronger Star Ratings. At a contract and Plan Benefits Package level, plans should pay close attention to what quality measures are preventing them from achieving four or more Stars and determine what resources they need to cross over the threshold. In turn, capturing feedback is vital for understanding the issues members are facing in their day-to-day lives and developing strategies to improve member experiences.
Getting Ahead of Proposed and Upcoming Measures
The 2024 CMS Proposed Rule and the 2024 CMS Advance Notice have proposed several major quality and operational changes coming to the Star Ratings program. While it is tempting to construct a bid to address the immediate challenges, these new measures, like health equity, will require multi-year strategies. Incorporating proposed and upcoming measures into your bid projections will lay the foundation for stronger, more efficient quality improvement initiatives and lower costs of care down the line.
Keeping the Health Insurance Value Proposition Top of Mind
Amidst the mathematical and quality components that make up bid submissions, plans should not forget about the key values that MA and Part D plans are designed to support. At its core, a successful health plan provides a product that delivers on the promise of:
- Providing coverage for clinical care and prescribed medications
- Coordinating care to ensure members can easily get appointments and medication
- Paying claims accurately
- Tailoring benefits to support member needs
- Establishing seamless and positive experiences
As plans prepare their bids to address quality and financial requirements, they should remember that bids are meant to fuel positive member experiences and improved health outcomes. Beginning a bid with these end goals in mind allows plans to build member-centric programs that power stronger Star Ratings, higher quality bonus payments and more effective care management programs.
Enhancing Your Bid with the Right Tools and Insights
Future-proofing your bid rests on the ability to accurately evaluate and anticipate quality performance, risk adjustment scores and member needs on top of efficiently closing care gaps. Given the significant amount of time and staffing that is required for the bid submission process, plans do not always have the capacity to fulfill their quality improvement strategies alone. Incorporating the right member engagement technology into your work plans allows you to reach the final mile of your plan performance initiatives without draining resources from day-to-day operations.
Healthmine’s digital suite augments health plans’ abilities to fulfill their quality and financial goals. From a single platform, you can evaluate contract performance, surface insights into member behaviors and deliver the right outreach to help members adopt healthy behaviors. Supported by a dedicated team of account manager, you will always understand where you need to direct resources to have a powerful impact on plan performance and quality scores. When used to address quality measures, member experiences and health outcomes, our platform meets the definition of quality improvement expenditures in the 85% medical loss ratio in bid calculations.
Discover how to surface meaningful insights into plan performance and initiate data-driven strategies to improve Star Ratings through Healthmine’s member engagement solutions. Contact us for a demo.
Healthmine is the leading member engagement and rewards solution focused on empowering people to take the right actions to improve their health.
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