Medicare Advantage Improvements for Puerto Rico

Puerto Rico’s status as an unincorporated territory makes it possible for the federal government to treat Puerto Rico differently from the States. One of the areas in which this can easily be seen is in healthcare funding. Puerto Rico receives far less funding than it would if it were a State. For some months, Puerto Rico leaders have been working with the Centers for Medicare and Medicaid Services, which is part of the U.S. Department of Health and Human Services, to provide more equitable funding for Puerto Rico.

One program of particular importance in Puerto Rico is the Medicare Advantage program, also known as Medicare Part C, which covers some 567,000 people in Puerto Rico.

The final determination about Puerto Rico’s funding under Medicare Advantage was made earlier this week. Puerto Rico’s Resident Commissioner, Pedro Pierluisi, released a statement describing the decision as “a very positive result.”

The Centers for Medicare and Medicaid Services (CMS) released a fact sheet detailing the changes.

First, CMS will update the risk adjustment model they currently use to determine payments. “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,” the fact sheet explains, going on to say that “Stakeholders have suggested that the current risk adjustment model fails to capture the full costs of providing care to dually eligible beneficiaries.”

About 49% of Puerto Rico’s Medicare Advantage recipients are dually eligible — that is, eligible for both Medicaid and Medicare. This is a higher proportion than is found in the States, so CMS expects that this change in calculations will be particularly valuable for Puerto Rico. “Based on our modeling,” the fact sheet says, “Puerto Rico would benefit more from these changes than any other state or territory. All of the dually eligible beneficiaries in Puerto Rico are in the full benefit category, due to the lack of a Medicare Savings Program. ”

Adjustments will also be made that take into account the real costs of hospital stays and the generally lower income of benefit recipients in Puerto Rico. The CMS also recognizes that gaining the “star ratings” which provide additional funds for programs that show a high level of quality may be more difficult in Puerto Rico.

The fact sheet also notes the fact that Puerto Rico is not eligible for the low income subsidy which is part of Medicare Advantage. “By statute, residents of Puerto Rico are ineligible for the low income subsidy, which provides cost-sharing and premium assistance to low income Part D enrollees,” the CMS acknowledges. “CMS is finalizing its proposal to estimate a low income subsidy indicator for Puerto Rico [which] 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.

These changes will help level the playing field for healthcare in Puerto Rico, where funding differences have contributed to a shortage of physicians. The CMS also recognizes the extra needs caused by the Zika virus, and plans to provide an extra $250 million to handle this health care crisis.

Pierluisi’s statement linked to the fact sheet and promised to provide more information after further study. “According to one estimate I have received,” Pierluisi said, “the final rule will result in an increase in annual funding to Puerto Rico of approximately $430 million per year.”

“Notwithstanding this positive development,” Pierluisi concluded, “there is still much work that 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.”

Read the full statement.

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