Optimize and Sustain Your Medical Loss Ratio Score

Medicare & Medicaid Services will once again require detailed background information in support of Medicare Advantage plans’ Medical Loss Ratio scores. That means avoiding problems with how plans report remittances, claims, revenue, and other costs. Plans should stay on top of their provider contracts, better handle PBM processes, and focus on helping providers mitigate coding errors.

Change Healthcare Government Programs Consulting services helps plans prepare for the new detailed Medical Loss Ratio reporting required by CMS.

Every year, we see new issues in the way Medicare Advantage plans construct their Medicare & Medicaid Services (CMS) Medical Loss Ratio (MLR) scores. Plans that are aware of these potential pitfalls may stand a better chance of optimizing and sustaining their MLR scores.

That’s important because CMS will begin to require more detailed documentation to support MLR scores in 2023, just as they did before CMS asked plans to report scores—without detailed documentation—between 2018 and 2022. In addition, CMS will now ask plans to add information about supplemental coverage, such as over-the-counter medication, as well as dental and vision coverage.

Even before new, detailed reporting requirements kick in next year, we’ve started to see problems in how some plans report remittances, claims, revenue, and other costs.

Optimize and sustain Medical Loss Ratio scores by strengthening relationships among members, plans, and providers.

The goal is to serve members not only with episodic and chronic conditions but also to provide preventative care—all while retaining MLR scores that meet the minimum. (Or course, if the MLR number is too high, there’s negative pressure on a plan’s revenue and margins.)

There are three key challenges that can negatively affect MLR scores: not staying on top of provider contracts; imperfect handling of pharmacy benefit management (PBM) processes; and errors in provider coding.

MLR scores are the proportion of premium revenues spent on clinical services and quality improvement compared with what a plan spends. As of 2012, CMS required plans to issue rebates to enrollees if the percentage in the prior premium year does not meet the minimum standard of 85% of premium dollars. CMS originally asked plans to provide MLR scores with detailed backup information in 2014.

Focus on monitoring provider contracts, reviewing PBM processes, and coding with full histories.

Here are three important actions that can help plans enhance their MLR scores:

1. Monitor new and existing provider contracts.
2. Review pharmacy benefit management (PBM) processes.
3. Help providers not only minimize errors in coding but include full histories.

Staying on top of provider contracts requires constant monitoring by the plans. Plans should build new contracts—and examine existing contracts—from the perspective of what the plan can easily check and monitor. Plans should examine key performance indicators (KPIs) for providers’ financial and quality-of-care metrics.

Plans also should understand what’s changed over time for providers. Think about the radical effect on finances due to COVID-19 or fluid Social Determinants of Health (SDoH).

Education programs not only help providers; they can help maintain good Medical Loss Ratio scores.

Plans with a strong provider-training program help solidify the plan-provider partnership, all to the benefit of the member. For instance, when reviewing PBM processes, formularies, and rebates, plans can educate providers on the use of effective generics. It’s important for providers to prescribe effective step therapy and generics, whether with Part B drugs (biological, chemotherapy, or biosimilars) or the wider range of Part D drugs.

Inputting the right diagnosis codes affects a plan’s risk adjustment scores. All ambulatory-care claims should include the appropriate diagnosis coding. And annual member checkups should include full histories.

Providers should input codes that match a complete patient diagnosis that may not be part of a particular encounter. The result: a more holistic view of the health of the patient.

When plans and providers work together, member satisfaction can improve.

Anything providers and plans can do to get consumers into care—not just for chronic conditions but for preventative care as well—will help MLR scores. A strong preventative care program helps Healthcare Effectiveness Data and Information Set (HEDIS) performance measurements that score quality of care, which consumers can use to compare plans. HEDIS measures play a major role in determining Star Ratings for a plan.

By optimizing and sustaining MLR scores, plans and providers can together bring a focus on quality of care, claims payment, and a benefits structure that supports consumer wellness.

CMS uses information from member-satisfaction surveys, plans, and healthcare providers to give overall performance star ratings to plans. By managing the MLR, results can be mirrored through member satisfaction in quality and performance.

While Change Healthcare’s Government Programs Practice helps plans with the Medical Loss Ratio reporting they submit to CMS, the important goal for all is to promote and support provider processes to help heighten member wellness.

Learn more about Change Healthcare’s Government Programs Consulting.