HSCRC PAYMENT CALCULATIONS FOR MEDICARE AND MEDICAID PLANS

Change in Sequestration Policy for Medicare Advantage Plans Effective January 1, 2019

The following calculation is provided to illustrate how the HSCRC sequestration policy change, effective January 1, 2019, will affect Medicare Advantage plans.  Sequestration is not applicable to Medicaid plans, and therefore, there will be no change for Medicaid plans for this policy change.

Calculation January 1, 2019 to June 30, 2019 with Sequestration and Deductible Cost Share:

Base Medicare differential—Plans pay 94% of billed charges, less patients’ cost shares—a 6% differential.  The Plan gets the full benefit of the differential, the same as Medicare fee-for-service.

Sequestration amount – Plans take an additional discount of 2% of the Plan’s payment amount.  No reduction is applied to the member’s cost share.

 

Formula:

Medicare Advantage Plan’s Payment = ((Billed Charges * 94.0%)– Cost Share) * (1-2.0%)

 

Example:

Billed Charges = $30,000

Deductible Cost Share = $1,500

               (($30,000*.94 ) - $1,500) * (1-.02)

               ($28,200 -$1,500) * .98

               $26,700 * .98= $26,166

Plan Payment $26,166, Member Payment $1,500, Total Payment $27,666

 

Change in Public Payer Differential Effective July 1, 2019

The following calculation is provided to illustrate how the public payer differential increase of 1.7 percentage points, effective July 1, 2019, will affect Medicare, Medicare Advantage plans, Medicaid, and Medicaid MCOs. 

For Medicare, the differential will change from 6% of billed charges to 7.7%.  Plans will pay 92.3% of billed charges. 

For Medicaid, there are two parts of the differential.  Medicaid and Medicaid MCOs have the same differential available as Medicare, but it is split into two parts.  There is a base differential of 4%, which all plans are automatically entitled to, and a prompt pay differential of 2%.  On July 1, 2019, the 4% base differential will be increased to 5.7%.  There will be no change in the prompt pay differential.  MCOs that are eligible for both the base and prompt pay differential will pay 92.3% of billed charges.

 

Medicare and Medicare Advantage Calculation Effective July 1, 2019 with Sequestration and New Payment Differential and Cost Share:

New Medicare differential—Medicare and Medicare Advantage plans pay 92.3% of billed charges, less patients’ cost shares, a differential of 7.7%.  Medicare Advantage plans (and traditional Medicare) get the full benefit of the 7.7% differential.

Sequestration amount – Medicare Advantage Plans (and traditional Medicare) take an additional discount of 2% of the Plan’s payment amount.  No reduction is applied to the member’s cost share.

 

Formula:

Medicare and Medicare Plans Payment = ((Billed Charges * .923 ) - Cost Share) * (1.-02)

               (Rounded to the nearest dollar for the example).

Example:

Billed Charges = $30,000

Deductible or Co-insurance Cost Share = $1500

               (($30,000*.923) - 1500) * (1-.02)

               ($27,690 -$1500) * .98

               $26,190 * .98=$25,666

Medicare/Plan Payment $25,666 Member Payment $1500, Total Payment $27,166