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CMS proposes rise in 2017 Medicare Advantage payments

Expected average change in revenue from advance notice policies will be 1.35 percent, agency says

In addition to proposing changes aimed at improving the precision of payments to health plans, the federal government said it wants to raise Medicare Advantage payments by an average of 1.35 percent next year.

The 2017 Medicare Advantage and Part D Advance Notice and Draft Call Letter, released Friday by the Centers for Medicare & Medicaid Services (CMS), comes amid a lobbying effort urging the agency to avoid further cutting MA payments. Last February, CMS proposed a 0.95 percent decrease in MA reimbursement rates for 2016, though ultimately said MA plans can could expect revenue to increase 1.25 percent.

For 2017, CMS says that the expected average change in revenue from advance notice policies will be 1.35 percent, while the expected average change in revenue for plans will be 3.55 percent.

Here are some of the other changes CMS hopes to make:

  • Implement a new risk-adjustment model to increase payments for plans that serve dual-eligible Medicare and Medicaid beneficiaries
  • Continue blending encounter data-based risk scores with Risk Adjustment Processing System-based risk scores, but with a higher percentage of the former
  • Alter Star Rating measures to adjust for plans serving dually eligible enrollees, enrollees who receive a low-income subsidy and enrollees with disabilities
  • Create incentives to encourage Medicare Advantage organizations to offer plans with a lower voluntary maximum out-of-pocket limit for enrollees
  • Make changes to the Part D program to address drug utilization and prevent opioid overutilization at point of sale

America's Health Insurance Plans, which has led the effort to lobby against MA cuts, took a cautious approach in its reaction to CMS' proposals.

"While we are in the process of carefully reviewing all of these provisions, we will be looking closely at any proposals that would undermine health plans' care coordination and disease management programs, especially for low-income individuals," AHP CEO Marilyn Tavenner said in a statement emailed to FierceHealthPayer. "It's critically important that the agency finalize policies that ensure the long-term stability and continued growth of the program for millions of beneficiaries who depend on Medicare Advantage for their coverage."

The Better Medicare Alliance was also skeptical. "There are elements in the CY 2017 Advance Notice that could disrupt stability in payments and policies, subsequently impacting access to affordable, quality care for Medicare Advantage beneficiaries, particularly retirees who receive Medicare Advantage health insurance coverage through an employer," CEO Allyson Schwartz said in an emailed statement.

MA plans are increasingly profitable for health insurers, thanks to enrollment figures that have ballooned from 11 million to 17 million from 2010 to 2016 despite about $150 billion in cuts to the program over 10 years mandated by the Affordable Care Act.

To learn more:
- here's the CMS fact sheet
- read the 2017 advance notice

Related Articles:
Medicare Advantage enrollment surges despite payment cuts
AHIP joins campaign to lobby against Medicare Advantage cuts
Report: CMS underpays Medicare Advantage plans for treating chronic conditions
CMS increases Medicare Advantage payments, reverses February proposal