Medicare Advantage plans to get raise in 2016

After proposing a pay cut of 0.95% in 2016, CMS reconsidered, surprising Medicare Advantage providers with a 1.25% pay raise in its final payment and policy updates for the Medicare Advantage (MA) and Part D Prescription Drug programs.

When the Advance Notice and Draft Call Letter was originally released on Feb. 20, CMS said it would accept comments until March 6. The agency, however, said it wasn’t necessarily feedback that brought this change in payments.

“Growth rates reflect the actuary’s best estimate of Medicare spending, and don’t reflect any change in our policies,” Sean Cavanaugh, CMS deputy administrator and director of the center, said to reporters.

There is no denying the growing popularity of the plans, however.  CMS announced that MA plans had grown 42% since the Affordable Care Act was passed and now account for 30% of all enrolled beneficiaries. Average premiums also are lower than when the ACA went into effect, dropping 6% between 2010 and 2015.

CMS also projects total MA revenue to increase 3.25%, compared to the 1.05% that was proposed back in February, due to an anticipated increase in more intensive services, according to an article in the Wall Street Journal. As more baby boomers continue to reach Medicare age, even small changes can have large impacts.

Ana Gupte, an analyst at Leerink Partners, told the Wall Street Journal that the news "should mean nice growth for Medicare Advantage into 2016.”  Humana and UnitedHealth are the leading players in the Medicare Advantage sector.

Though the increase in payments received the most headlines, CMS made several other announcements as a part of the 2016 Rate Announcement and Call Letter:

  • The Administration will continue its efforts to move toward paying for quality of care rather than quantity by working with plans to better understand how they use value-based payment models to compensate providers offering services to their enrollees, having recently launched the Health Care Payment Learning and Action Network for sharing strategies toward value-based payments across networks.

  • Accurate directories remain a priority, and plans are expected to update their directories in “real time” and have “regular, ongoing communications” with providers.

  • The level of acceptable increase per member, per month for a Medicare Advantage plans will remain $32.

  • Part D plans will provide clear and accurate access to information on preferred cost sharing pharmacies.