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MMAPA is a non-for profit association comprised of the leading Medicaid and Medicare Advantage organizations in Puerto Rico: Humana, MCS, MMM/PMC and Triple-S Advantage. This association was born in 2009 to evaluate and act about the implications of new government policy on funding for Puerto Rico’s healthcare system.
Healthcare in Puerto Rico
While familiar programs such as Medicare, Medicaid, and certain provisions of the Affordable Care Act (ACA) exist in Puerto Rico, they operate under different rules than those that apply to the rest of the USA. Those differences serve to perpetuate disparities and contribute to economic destabilization on the island. Our concerns are not limited to pricing disparities; we also need to ensure appropriate access.
Puerto Rico is the poorest jurisdiction in the United States, as measured by median income, and over the past five years, more than 350,000 Puerto Ricans have moved to the mainland. Consequently, the so called Second Great Migration reduced the size of the labor workforce and the available tax base, aggravating the fiscal situation of the government. For example, the average annual health care cost for a Medicare beneficiary living in Puerto Rico is $5,856; when that beneficiary moves to the mainland, the nationwide average is $9,636 . Average annual Medicaid spending in Puerto Rico is $1,980 ; the national average is $6,060.
In addition, at the National level, Medicare Advantage benchmark payments for 2017 average $826 per member per month. In Puerto Rico, the benchmark will average $473, which is 43 percent below the national average. However, the Health Insurance Tax (“HIT”) is still being applied to plans operating in Puerto Rico. The 2016 HIT tax amounts to an approximately $200 million obligation on Puerto Rico’s Government, its health plans and its citizens.
Puerto Rico’s Medicare Advantage members increased to approximately 570,000 in total. While the national average enrollment in Medicare Advantage hovers around 30 percent, 75 percent of the island’s Medicare beneficiaries choose to enroll in Medicare Advantage. We strongly question the alignment with policy and the actuarial soundness of setting payment rates for 90 percent of the population based on the health care needs of the 10 percent of Medicare A and B beneficiaries that have chosen to remain in fee-for-service Medicare.
The beneficiaries in MA have been able to save more than $2,000 per year in cost of premiums, deductibles and co-insurances covered by MA. In addition, the access to prescription drugs of the Part D program has been possible for most members essentially because the MA funding subsidizes the Part D premium ($31/mo on average), the initial deductible ($325) and the coinsurance of 25%. Not only the beneficiaries can have the care they need, but they have also increased their disposable income to cover other basic needs. The Medicaid-Medicare eligible through the Platino program have also been significantly benefited with additional eyewear, dental, OTC, and other benefits; as well as a much improved primary care, prevention services and access to prescription drugs. The MA program supports the Platino plan which in the aggregate provides a value of over $2 billion to the dual eligible, while the local government has saved millions; currently covering $10 a month or about $25 million a year. In total, it is estimated that the MA program supports more than 40% of all the healthcare resources in the island. It also noteworthy that, on average, the plans in Puerto Rico received a higher score than the national average in the measure related to the quality improvement from the previous year. In general, the MA program is having the flexibility to adapt economic structures and payment methodologies to compensate for preventive care and outcomes, creating a change towards higher quality in the service of plans, physicians and hopefully the behavior of the beneficiary as well.
Platino is Puerto Rico’s integrated Medicare-Medicaid program for individuals who are dually eligible. Platino relies mainly on the Medicare Advantage program platform to provide coordinated and comprehensive services. The program serves as a model for the level of integrated care delivery low-income seniors need and deserve, not only for Puerto Rico, but for the rest of the Nation. However, the continuing reductions in Medicare Advantage benchmarks, coupled with the imminent Medicaid funding cliff, places the continued operation of Platino very much in jeopardy. If Medicare Advantage rate reductions continue and the Platino program is no longer viable, the cost of care of those individuals currently enrolled would shift to Medicaid, resulting in an additional annual cost to the government of Puerto Rico of approximately $800 million. This cost could not be met under current circumstances. The system also relies on MA to maintain its sustainability.
The ACA’s special allocation for Puerto Rico’s Medicaid program provided a welcoming short-term relief, but that allocation is expected to expire very soon, by the end of 2017 or sooner. At that point, the federal contribution to the island’s Medicaid program would be reduced by nearly 75 percent, reverting back to an annual level of approximately $400 million. That fall off the “cliff” will have a devastating effect on health care delivery, the fiscal situation of the Government, and the Puerto Rico economy as a whole. Indeed, there are already signs of instability in Medicaid access in Puerto Rico, with the Commonwealth making weekly payments to health plans to manage tight cash flow. In April, the Commonwealth missed making required payments for the first time. If Puerto Rico does not put up its portion of the required Medicaid funding, federal matching funds cannot be drawn down.
Hospitals in the PR Medicaid program are receiving 1st dollar payment for the Part A benefit for the first time in the Platino program. Parallel to this, primary care physicians have seen complementary payments for improving care, performing annual health risk assessments and doing preventive care. On the other hand, the government has developed an integrated dual-SNP program that benefits from $400+ million from MA to expand coverage and reduce the state government expenditure for this population. This has allowed the government to use the money to expand Medicaid coverage and reduce the uninsured population on Puerto Rico overall. The Medicare Advantage program has developed in Puerto Rico to an extent that it is currently the platform for almost $5 billion in healthcare resources when including the Part D of the MAPD products. This means that between 40-50% of the total healthcare system resources for Puerto Rico is currently dependent on MA.
The ACA cuts will mean that the Puerto Rico MA benchmarks will go down approximately 25% with respect to the 2011 MA rate. A 25% reduction means that when all the cuts are in place, Puerto Rico will lose over $1 billion annually and the health system would be severely injured. The historic disproportionate reimbursement for Puerto Rico Medicare beneficiaries was not a factor in the development of Medicare healthcare in Puerto Rico during the past 10 years, and returning to the past will affect all stakeholders negatively.
Implementing the ACA cuts in Puerto Rico, as legislated today, will noticeably have a very different impact for beneficiaries in the island compared to beneficiaries living anywhere else in the nation. In 2017, Puerto Rico will face a reduction of $118pmpm net, or 20% compared to 2011. In the same 6 years, the average MA benchmark has actually increased by 4% and the benchmark of the lowest 10 jurisdictions in terms of cost has increased 10%.
Why is Puerto Rico getting such higher cuts when it was already the lowest cost geography? There is a reason why the MA benchmark in Puerto Rico is not at 112% FFS cost, but much higher. And it is not because the island’s expenditure in healthcare is higher. The PR MA base rate was at 180% FFS cost in 2011, but still 38% lower than the lowest state in absolute terms in 2017. Percentages are not a solution for the Medicare beneficiaries that already receive the least resources to support their care.
That’s why it is so important to encourage our community of private and public leaders to learn and acknowledge the benefits that the MA program has brought to more than 500,000 beneficiaries in PR, while virtually becoming the oxygen of our healthcare system after the 2000s. We need to acknowledge the facts as a community, and request a revision of the uneven funding cuts for Puerto Rico at the local and Federal levels.