Health insurers are hoping the CMS will roll out favorable 2016 Medicare Advantage payment rates next week, but most observers will be focusing on whether the government moves to an updated risk-scoring system.
The CMS will release final rates and policies after the markets close Monday. In February, the CMS said the benchmark rates for Medicare Advantage plans would decline by 0.95% on average next year. But when factoring in the growth of higher risk scores coded by insurers, the CMS estimated average payments would increase by 1.05%.
The health insurance industry unleashed a six-week lobbying assault through groups such as the Better Medicare Alliance and the Coalition for Medicare Choices. Insurers argued that Medicare Advantage cuts are hurting seniors “in the form of benefit reductions, higher costs and lost choices,” the the Better Medicare Alliance said Friday.
Bipartisan groups in both chambers of Congress also have sent letters to the CMS urging positive rates for insurers and a “stable policy environment.”
Medicare Advantage enrollment is at an all-time high of more than 17.3 million, according to March data from the CMS, and has been growing at more than 8% annually for the past several years.
Financial analysts largely agree that the final rates will either be flat or positive compared with the preliminary rates, as many don't believe the CMS will move full bore to a new risk-adjustment model.
“We expect that a more gentle transition to the 2014 risk-coding recalibration model will be the most likely driver of the positive change … in light of the lobbying from a powerful bipartisan group of senators,” Ana Gupte, a managing director at Leerink Partners, said in a research note this week.
That risk-coding model uses the hierarchical condition categories. Medicare Advantage payments are adjusted for each beneficiary's health status using those categories. The model allows plans to be paid more for patients who are sicker and have more complications.
But in February, the CMS said it will make a full transition to a new, updated hierarchical condition category methodology for 2016, which was first proposed in 2013. That'd be a shift from previous policy, when the CMS has blended the older risk-adjustment model that is more favorable to insurers, with the new one. The switch is attracting the concern of insurers because it could affect their risk scores and bottom lines.
Payments for Medicare Advantage members with chronic kidney disease under the new model are expected to be cut by 23%, according to an analysis by consulting firm Oliver Wyman, for example. America's Health Insurance Plans hired Oliver Wyman to conduct the study.
“It's a multifaceted, challenging concept,” Anne Hance, a partner at McDermott Will & Emery who works in the firm's health insurance group, said of the methodology. “I think that's catching a lot of people's attention.”
Edwin Park, vice president of health policy at the liberal Center on Budget and Policy Priorities, said the CMS wants to move completely to the new hierarchical condition category methodology because it would result in the most accurate payments. Many health plans have been accused of inflating their patient risk scores to get higher payments. Humana and DaVita HealthCare Partners are both caught up in federal probes related to risk-scoring practices.
“It's hard to justify continued resistance to proposals to make Medicare Advantage more efficient when everyone is expecting growth,” Park said.
While the risk-adjustment model will command much of the attention, other policies also remain in question.
Health plans will look for more details on how the CMS will adjust the star-rating program for plans that serve a large number of low-income beneficiaries.
The CMS also has clamped down on the accuracy of Medicare Advantage provider directories and said it may penalize insurers that don't accurately list which hospitals and doctors are in-network.
“I think there is some concern while the agency may have good goals for how provider directories are maintained … there may be some practical aspects the policies don't take into account,” Hance said.