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CMS Final Medicare Advantage Rate Notice for 2025 worsens funding gap

for beneficiaries in Puerto Rico

MMAPA and Healthcare Coalition will continue to seek fair solutions for US senior citizens living on the island

 

 

San Juan (April 4, 2024) - Following a thorough analysis of the CMS Medicare Advantage (MA) 2025 Final Rate Notice, the Medicaid and Medicare Advantage Products Association (MMAPA) technical committees concluded that the disparity in MA base payment rates for Puerto Rico will worsen in 2025, which implies a reduction in available funds and impacts for beneficiaries and providers.  The average MA benchmarks for all US will be 65% higher than the average for PR  ($1,130 US Average, $684 PR) which is more than twice the distance that existed in 2011, when average MA rates were already 32% higher than those applicable to beneficiaries residing on the island ($797 US average, $595 PR). Furthermore, while an increase in health care costs of around 6% is predicted, the adjustments from 2024 to 2025 are causing a segment-level reduction in MA revenue of 1.55% for Puerto Rico.  In general, for 2025 the program will have to manage a deficit of more than $400M as a result of the payment cuts and the inflation of health care expenditures, which includes increases in prescription drug prices.  In addition, health care plans in the MA segment of Puerto Rico just reported an unprecedented aggregate loss of over $500M in 2023, based on statutory financial statements submitted to the National Association of Insurance Commissioners (NAIC).

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“MMAPA was hopeful that CMS would take administrative action to mitigate the growing payment gap for beneficiaries living in Puerto Rico just as they did in 2011, especially after HHS Secretary requested additional information on March 14th, giving plans a deadline of March 22nd, right before the scheduled release of the MA rates for 2025. In an unprecedented effort, the association, and a large group of stakeholders -more than 60 government officials and community organizations- highlighted the special circumstances surrounding the program in Puerto Rico and provided new data and analysis to support some affirmative action from HHS.  All the community is disappointed that, after presenting new data on the funding gap and historic anomalies in the formulas applied, HHS and CMS did not make the fair and necessary administrative adjustments needed for low income US senior citizens in our island”, said MMAPA president, Roberto Pando.

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Important components that set Puerto Rico’s situation apart are as follows:

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1. With 24% of the population over 65, Puerto Rico has the largest proportion of seniors in the U.S., and 38% of its residents live below the federal poverty line, which is four times higher than the national average.

2. Of the 657,000 beneficiaries on the island covered by Medicare Advantage, over 300,00 are dual eligible beneficiaries receiving Medicaid support.

3. Only 5% of all eligible beneficiaries continue to receive their Medicare benefits through Original Medicare FFS Parts A & B, with the remaining 95% choosing Medicare Advantage.

4. In Puerto Rico, just 9% of Original Medicare FFS participants pay and enroll in a stand-alone Part D pharmacy plan, this is in contrast to 70% of beneficiaries nationwide.

5. Low-income Medicare beneficiaries in Puerto Rico are not eligible for over $2,100 in monthly benefits and support due to exclusions from Medicare, Medicaid, and Social Security programs exclusive for citizens residing in Puerto Rico. MA has been helping to subsidize these gaps.[1]

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In summary, the following significant and unique aspects of the MA program and its beneficiaries in Puerto Rico are highlighted in comments submitted to HHS and CMS:

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1. Original Medicare FFS does Not work in the same way in PR - Standard payment formulas in Medicare, including MA, have produced abnormal results due to decades-long data anomalies and statutory discrepancies.

   • HHS and CMS have administrative authority to rectify anomalies, given this history, and raise MA rates of Puerto Rico to a minimum of that of the US Virgin Islands. MA rates in the USVI are 26% higher than Puerto Rico, but Part A and Part B fee schedules are at similar levels in Puerto Rico, compared to the USVI and Florida, which has MA benchmarks at 65% over PR.

2. Poverty and Benefit Exclusions Unique to PR - Irreplicable combination of exclusions from Federal Medicare, Medicaid, and other federal assistance programs, poverty, and high cost of living.

   • In response to these circumstances, the MA program is offering higher supplemental benefits in Puerto Rico, since it is covering essential Medicare benefits that the low-income population has covered by other programs in the states. The majority of MA supplemental benefits money is used to assist individuals in covering their Part B and Part D premiums as well as their Parts A&B deductibles and coinsurances.

   • The higher MA supplemental benefits in Puerto Rico reflect existing needs and have become the reason why many beneficiaries have access to essential Medicare benefits, not the opposite

 

[1] Beneficiaries that reside in Puerto Rico are not eligible for the following core benefits:

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1. Medicare Savings Program (MSP) which would pay the $174.70 monthly Part B member premium, which is deducted from the social security check for dual eligible members.

2. Part D Low Income Subsidy (LIS) which pays over $400 monthly in pharmacy expenses for beneficiaries up to 150% FPL, estimated to be more than 400,000 in PR.

3. LTSS – Long Term Services and Supports – which provides institutional long-term care and in-home services at a cost of $700 per month for dual beneficiaries.

4. SSI – Supplemental Security Income as part of the Social Security check which pays an additional $600 per month for low-income seniors if they migrate to a state.

5. NAP – the nutritional assistance program would pay approximately an additional $120 per month for food and produce for low-income beneficiaries that are in MA.

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On the other hand, it is noteworthy that the MA program provides non-primarily health related benefits to address health related social needs across all the United States. These benefits are part of HHS and White House policy priority to address social determinants of health[1] are carried out within the MA program through two specific initiatives that CMS established: Special Supplemental Benefits for the Chronically Ill (SSBCI) and Value-Based Insurance Design (VBID). Plans in Puerto Rico and around the country include benefits like food and produce, home repairs, daily living support, and others that are part of specific guidance and benefits lists provided by CMS. Furthermore, CMS always reviews and approves these benefits provided in Puerto Rico, as for all the US, in accordance with Federal policy.

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Pando added that “All the MA plans in Puerto Rico replied to the HHS Secretary’s request for additional information. MMAPA also submitted a letter summarizing some of the main aspects based on segment-level analysis carried out by an external technical company. Unfortunately, Puerto Rico’s particular poverty circumstances and statutory requirements that force MA to cover beneficiaries’ basic needs have seemed to become barriers to the efforts to close basic payment disparities. We urge the Biden Administration, as well as leaders in the Administration and in Congress to look for a way to take meaningful action. In Puerto Rico, all participants are enrolled in plans that reached four-star above quality. Health care providers and systems have progressively increased quality, but no community or market in the U.S. can sustain the current incongruence in Puerto Rico: Medicare FFS rates at levels similar to Florida (Part B), but with MA benchmarks that are 61% of the average MA benchmarks in Florida.  Having a minimum level of MA benchmarks, at least similar to this applicable in USVI, is crucial for the MA program in Puerto Rico to have a fair chance to develop and continue addressing essential beneficiary needs and support provider compensation.”

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What comes next?

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“We are committed with all the community to continue working for a fair chance for the beneficiaries and the Medicare Advantage, part D and Medicaid programs of Puerto Rico. We look forward to subsequent communications with HHS, to seek solutions in the short term that derived from all the analysis submitted. We will also continue the efforts to educate and seek Congressional support with the purpose of finding the process that can get solutions done to address the funding inequities for Medicare Advantage beneficiaries.  We express our gratitude to all government officials and organizations that continue to be involved in this calling. We are convinced that action will be taken to close these disparities because we believe it is the morally and humanly correct course of action for Medicare beneficiaries and the best decision for the Medicare Advantage program from the national perspective as well.”, concluded MMAPA president.

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[2]  https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf

 

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About MMAPA

The Puerto Rico Medicaid and Medicare Advantage Products Association (MMAPA) is a non-profit organization that brings together the major Medicaid and Medicare Advantage entities in Puerto Rico. Founded in 2009, MMAPA is dedicated to advancing public policy solutions to address Puerto Rico's healthcare challenges.

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