Change in
Sequestration Policy for Medicare Advantage Plans Effective January 1, 2019The following calculation is provided to illustrate how the
HSCRC sequestration policy change, effective January 1, 2019, will affect
Medicare Advantage plans. Sequestration
is not applicable to Medicaid plans, and therefore, there will be no change for
Medicaid plans for this policy change.
Calculation
January 1, 2019 to June 30, 2019 with Sequestration and Deductible Cost Share:
Base
Medicare differential—Plans pay 94% of billed charges, less patients’
cost shares—a 6% differential. The
Plan gets the full benefit of the differential, the same as Medicare
fee-for-service.
Sequestration
amount – Plans take an additional discount of 2% of the Plan’s
payment amount. No reduction is
applied to the member’s cost share.
Formula:
Medicare Advantage Plan’s Payment =
((Billed Charges * 94.0%)– Cost Share) * (1-2.0%)
Example:
Billed Charges = $30,000
Deductible Cost Share = $1,500
(($30,000*.94 ) - $1,500) *
(1-.02)
($28,200 -$1,500) * .98
$26,700 * .98= $26,166
Plan Payment $26,166, Member Payment $1,500, Total Payment $27,666
Change in
Public Payer Differential Effective July 1, 2019
The following calculation is provided to illustrate how the
public payer differential increase of 1.7 percentage points, effective July 1,
2019, will affect Medicare, Medicare Advantage plans, Medicaid, and Medicaid
MCOs.
For Medicare, the differential will change from 6% of billed
charges to 7.7%. Plans will pay 92.3% of
billed charges.
For Medicaid, there are two parts of the differential. Medicaid and Medicaid MCOs have the same
differential available as Medicare, but it is split into two parts. There is a base differential of 4%, which all
plans are automatically entitled to, and a prompt pay differential of 2%. On July 1, 2019, the 4% base differential
will be increased to 5.7%. There will be
no change in the prompt pay differential.
MCOs that are eligible for both the base and prompt pay differential
will pay 92.3% of billed charges.
Medicare and
Medicare Advantage Calculation Effective July 1, 2019 with Sequestration and New
Payment Differential and Cost Share:
New
Medicare differential—Medicare and Medicare Advantage plans pay 92.3%
of billed charges, less patients’ cost shares, a differential of 7.7%. Medicare Advantage plans (and traditional
Medicare) get the full benefit of the 7.7% differential.
Sequestration
amount – Medicare Advantage Plans (and traditional Medicare) take an
additional discount of 2% of the Plan’s payment amount.
No reduction is applied to the member’s cost share.
Formula:
Medicare and Medicare Plans Payment =
((Billed Charges * .923 ) - Cost Share) * (1.-02)
(Rounded
to the nearest dollar for the example).
Example:
Billed Charges = $30,000
Deductible or Co-insurance Cost Share =
$1500
(($30,000*.923) - 1500) * (1-.02)
($27,690 -$1500) * .98
$26,190 * .98=$25,666
Medicare/Plan Payment $25,666 Member Payment $1500, Total Payment $27,166