Health insurance lobbyists are sharpening their knives this week in preparation for the CMS' scheduled announcement of preliminary 2016 Medicare Advantage payment rates after the markets close Friday.
The setting of capitation rates for Advantage plans has become a fierce annual battle. America's Health Insurance Plans and other industry groups have unleashed media blitzes decrying potential cuts to their rates, warning they would harm seniors' access to care. The CMS has called for small increases or reductions in recent years, driven by mandated reductions under the Affordable Care Act to bring Advantage per-capita costs in line with those of traditional Medicare.
“A big part of this is (the CMS') pulling it out of their backside on prevailing political whims,” said John Gorman, a Washington-based consultant who works with Advantage plans.
For 2016, early signs point to a favorable outcome for health plans. In December, in a preview of preliminary rates, the CMS said payments would go up 2% for 2016, higher than many expected. But few believe the preliminary rate announced Feb. 20 or the final rate to be released April 6 will be that generous.
J.P. Morgan Securities predicts a more modest 0.6% rate bump, slightly above the 0.4% increase Advantage plans got for 2015. Several factors remain uncertain, such as whether the CMS will change the structure of home risk assessments for plan members, which has allowed plans to boost rates based on illness severity.
Gorman predicted good news for insurers, but said the rate formulas released Friday and the final 2016 rates likely will be completely different. “It is a highly malleable figure, and it always has been,” he said.