Apr. 8—Medicare Advantage (MA) plans would receive an increase next year instead of a cut proposed in February under final rates released Monday by the Center for Medicare and Medicaid Services (CMS).

Plans will receive a 0.4 percent increase, on average, next year, instead of the 1.9 percent cut CMS had proposed.

Jonathan Blum, CMS principal deputy administrator, said in a call with reporters that the reversal stemmed from several changes identified in a recent CMS analysis, including new, slower projections for Medicare's growth.

The reimbursement rate change, which plans will use when submitting their proposed rates for next year to CMS in June, followed an extensive campaign by insurers to warn about the negative consequences of deep cuts.

The reversal mirrored a 2013 CMS turnaround on MA rates from a proposed more than 2 percent payment cut to a 3.3 percent increase.

It was unclear whether the newly issued final rates would produce an increase for insurers, since the industry's calculations of the size of the original cut diverged from CMS's totals. Specifically, the original proposal would have cut rates by 5.9 percent, according to America’s Health Insurance Plans, the leading industry trade group.

An AHIP-sponsored study concluded the previously proposed rate change would have produced up to $900 in beneficiary premium increases and benefit reductions next year.  

Cuts Required

The Affordable Care Act required a series of increasingly steep cuts to the MA plans that were expected to total $156 billion, according to the Congressional Budget Office, to offset much of the law's costs.

Blum emphasized that he expected the new rates to allow access to increasingly popular MA plans to continue to increase, while their premiums would continue to fall.

MA premiums have fallen by 10 percent and enrollment has increased by 38 percent since enactment of the ACA. Nearly 30 percent of Medicare beneficiaries are enrolled in MA plans.

The new CMS rates allowed a permissible amount of increase in total beneficiary cost to $32 per member per month.

The new rates also aimed to bolster provider networks by strengthening tools used to ensure compliance with established provider access requirements and establishing best practices for MA insurers to follow when they make significant changes to their provider networks.

Additionally, the new rates set reimbursements for Part D Medicare drug plans.
Other proposed policies that were scrapped in the final rate letter include:  

  • Delayed implementation of new Part D risk adjustment model
  • Not implementing some proposed changes to the star quality ratings
  • Not implementing the proposal to require additional coverage in the gap for generic and brand drugs in enhanced alternative plans

Publication Date: Tuesday, April 08, 2014