May 23, 2024

After the Center for Medicare and Medicaid Services (CMS) determined that it would not implement any of the recommendations submitted by the healthcare sector to increase funding for these programs, private industry representatives expressed disappointment and indicated that in the long term it will further aggravate the industry’s economic status.

In its final report on Monday, CMS announced that it maintained at 3.7% the average increase in Medicare Advantage (MA) rates in the United States for 2025, the second year of the implementation of the new risk adjustment model of the Medicare Advantage program in Puerto Rico.

However, for months, the public and private sector had been advocating as one voice for further increases in the funds allocated for the medicare and medicaid programs.

Puerto Rico healthcare system demands Medicare funding adjustments

It is estimated that by 2025, when the second year of the implementation of the new risk adj…

They had demanded that payments to Medicare Advantage plans in Puerto Rico be brought in line with those in the U.S. Virgin Islands, which are 21% higher. This adjustment would have had an impact of between $1 billion and $1.2 billion annually, as previously reported by the Secretary of the Puerto Rico Department of Health, Carlos Mellado.

At the system-wide level, it is estimated that Puerto Rico has an annual per capita budget of $5,200 for population health services, while the average for the entire United States is $14,200, almost triple.

“CMS addressed, point by point, each one of the recommendations and in many of them they refer to the fact that, for legal reasons, they were not able to do it because, legally they are not allowed, to do some of the things that have been suggested. That is understandable. But, in some of them, they found that some of the suggestions were based on faulty logic, and, therefore, they found a reason not to do everything that was suggested. They came to the conclusion that the process they go through every year is adequate,” said Thurman Justice, Triple-S chief executive officer and president, in an interview with The News Journal, who also called the report “disappointing,” and who a few weeks earlier had been hopeful that the efforts would bear fruit.

The federal agency welcomed the suggestions and recommendations in the document. However, they mentioned that section 1853 of the law prescribes the general approach that fee-for-service (FFS) per capita costs used in developing MA rates and CMS has limited discretion to incorporate specific adjustments or exceptions.

“The law requires that MA benchmarks be based on a county’s average Medicare FFS per capita costs, and there is no evidence that Puerto Rico’s fee-for-service costs are higher than the costs observed in the FFS claims data and, therefore, there is no basis for revising Puerto Rico’s MA benchmarks,” the document reads.

They argued that using data related to actual Medicare FFS costs in Puerto Rico is the best approach for developing the estimate of per capita FFS costs for the contract year and reported that they have seen no evidence to suggest that Medicare FFS costs in another jurisdiction are a reliable method.

“As we stated in the 2017 and 2018 calendar year Rate Announcements, and based on the number of FFS beneficiaries used in the development of the 2025 rate book FFS rate, we have determined that the FFS data in Puerto Rico is sufficient to establish more accurate benchmarks,” they concluded.

Medicare funding disparity impacts health care industry

Given the need to increase the federal funds granted to Medicare and Medicaid beneficiaries,…

For economist Odalys Arroyo, manager of Advantage Business Consulting, the CMS decision is “devastating” for the health care system in Puerto Rico.

“Maintaining funding disparity is limiting access to health services to a population that is continually growing. This can lead to worsening health conditions. In addition, this funding constraint will continue to jeopardize the stability of hospitals. It will also continue to put pressure on physicians and in particular specialists. This decision puts at stake the quality of life of more than 600,000 beneficiaries,” Arroyo stressed.

According to the economist, by not being able to offer adequate compensation, it creates a shortage of medical professionals on the island and leaves a labor market with very low salary indexes, which is used year after year by CMS to calculate the labor index.

Arroyo led the study commissioned by the local government and the private sector to determine the impact of the Medicare funding disparity on the healthcare system.

Dr. Jorge Argüelles agreed with the above, for whom this decision puts more pressure on the industry, in which investment is increasingly discouraged.

“Although I have my license up to date and everything, one of the reasons I stopped practicing some time ago was precisely because of the compensation received not only from Medicare and Medicaid, but also from local medical plans…. Let’s remember that in Puerto Rico we have had a significant migration of physicians. There are fewer and fewer physicians, not only general practitioners, but specialists, where there are specialties that can be counted on the fingers of one hand,” Argüelles said.

According to the economic study, the demographic profile of healthcare professionals indicates that 47.3% of physicians are 60 years of age or older, and the average hospital salary is 60% below the national average.

Some optimism

Meanwhile, Jaime Pla, president of the Puerto Rico Hospital Association, although also disappointed with the decision, remained optimistic about the 3.7% increase, saying that, although it is not what they were looking for, it should be able to mitigate the economic impact of the sector.

He argued that this increase needs to be distributed among the parties, to benefit the industry and not put more pressure on medical facility operations.

“Providers are in a circumstance where they are not receiving the reimbursements they would receive if they were in the United States, and that is affecting us, because we continue with the trend that at any moment health professionals can leave Puerto Rico, because the reimbursement they are given is not enough. I believe that with the 3% that was given, they should consider what they can give to the providers additionally,” Pla said.

He also said that when negotiations with health insurance companies begin, if hospitals are not given a reasonable increase, other factors such as the increase in the cost of living, inflation in services and in the cost of medical devices, will result in a blow to hospital finances.

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