Comparing CMS Spending for a Special Needs Plan’s Enrollees with Medicare Fee-for-Service

Abstract

The objective of this analysis was to compare the capitation payments that the Centers for Medicare & Medicaid Services (CMS) makes to SCAN for enrollees in its largest SNP with the payments that CMS would have otherwise made to providers if those individuals incurred claims in the FFS program. The analysis found that, controlling for individuals’ demographic and clinical characteristics, CMS’s payments to SCAN for its enrollees were lower than CMS’s payments to providers for Part A and Part B services delivered to FFS beneficiaries. The analysis was run twice – first with the actual payments received by SCAN and second adjusting the SCAN Health Plan payments to reflect ultimate payment policy (full risk adjustment and no frailty factor). In both cases we have made adjustments for CMS’s payments to physicians and for durable medical equipment (DME) under the FFS program, as discussed in detail in the technical appendix. In the first case, CMS’s average annual payment to SCAN for each enrollee was $1,522 lower than CMS’s average annual payment for services for each FFS beneficiary. That implies about $129 million and $137 million in savings to the Medicare program from SCAN enrollees in calendar years 2006 and 2007, respectively. In the second case, CMS’s average annual payment to SCAN for each enrollee was $2,300 lower than CMS’s average annual payment for services for each FFS beneficiary. That implies about $195 million and $207 million in savings to the Medicare program from SCAN enrollees during 2006 and 2007, respectively, had these payment rules been in place. As healthcare reform discussions continue to take shape, these findings suggest that further exploration of certain MA plan types that care for the frailest or most clinically complex Medicare beneficiaries may be warranted.