The CMS, in its final notice to Medicare Advantage and prescription drug plans, said it would change little from its preliminary guidance on formulas used to determine payment rates, drawing battle lines between itself and the insurance lobby.
In a directive released Monday to the plans that participate in Medicare Advantage, the CMS said it would continue to adjust the annual growth percentage to assume a scheduled 21% physician pay cut even though Congress almost certainly won’t allow that to happen. Still, under current law, the CMS said the growth percentage would be 0.81% for 2010, a slight change from the 0.5% predicted weeks earlier in its preliminary assessment.
Under that formula, Medicare Advantage plans will see reduced payments next year, said Robert Zirkelbach, spokesman for America’s Health Insurance Plans. “Because they are based, in part, on scheduled cuts to physician payments that Congress will never let go into effect, these rates could impact seniors in ways Congress never intended,” Zirkelbach warned.
The CMS also said it would continue to correct for differences in how Medicare Advantage plans coded certain ailments compared with those found in traditional Medicare, resulting in a reduction of 3.41% to plans’ risk scores. This is the first year the CMS has adjusted for different coding patterns, and agency officials warned that the reduction for 2011 will likely be even steeper.
“We can’t predict precisely what we’ll do next year,” Cheri Rice, deputy director of the Medicare Plan Payment Group, told reporters. But Rice said that the current coding data was collected before 2008, and adding the most recent data would have a significant impact on the overall reduction. “If we included the ’08 (data) into the rate adjustment, it would make it larger,” she said.
Last week, the Senate approved an amendment to its budget blueprint that would protect enrollees in Medicare Advantage plans from premium hikes and service reductions due to the provisions outlined by the CMS.
In a follow-up letter to the CMS, two influential senators also expressed concerns over how the agency calculated its rate adjustments. In the letter, Senate Finance Committee Chairman Max Baucus (D-Mont.), and the committee’s senior Republican, Chuck Grassley (Iowa), warned that Medicare’s moves could translate to higher out-of-pocket costs to seniors.
“Not being able to take into account the physician payment update that Congress intends to enact later this year could result in unnecessary premium increases and benefit reductions for current Medicare Advantage enrollees,” the letter states. “It could also lead to unintended payment reductions to physicians that participate in Medicare Advantage.”
Medicare Advantage plans have until June 1 to submit their bids to the CMS.
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