How to Spend: MLR and COVID-19

I am reminded of the effect the public health emergency (PHE) has had on 2020 plan spending on a weekly basis. I field numerous questions on what creative spending would fall in line with the permissible flexibilities previously issued by the Centers for Medicare & Medicaid Services (CMS). In my opinion, the most creative Medicare Advantage (MA) and Part D stakeholders are in sales and marketing, so perhaps those folks need to have a seat at the table!

In a July post, I mentioned benefit enhancements as the topic became more prevalent in my discussions. I am hard-pressed to identify any plan sponsor who could have forecasted the PHE or the benefit utilization stats that are present today.

This leads us to the importance of medical loss ratio (MLR) and the CMS requirements surrounding it. Section 1857(e)(4) of the Social Security Act (“the Act”) requires MA organizations to maintain a MLR of at least 85%. CMS knows this is a concern of the entire industry, and released some Q&As in July regarding spending related to COVID-19.

More recently, CMS issued an enforcement action related to a MA organization’s failure to maintain a MLR of 85% for three years. This does not happen often, but paired with the PHE, it is a stark reminder that many MA organizations may find themselves under the 85% threshold for the first time this year. My tip: field those creative spending solutions, align them with CMS’ permissive actions guidance, and notify your account manager.