Nearly all Medicare Advantage members have access to plans that charge no monthly premium, and more people are enrolling in what the government has deemed higher-quality plans.
The CMS is also still attempting to weed out private Medicare plans that don't protect consumers or have low clinical standards.
The federal agency said Monday that the average Medicare Advantage premium for 2016 will be $32.60 a month, a drop of 31 cents a month from this year. Almost 3 in 5 Advantage beneficiaries will not face a premium hike next year, the CMS said.
But perhaps more important, experts say, is that 95% of Medicare enrollees will live in an area that offers a private plan with no monthly premium.
Despite the Affordable Care Act mandating multiple years of payment rate cuts that were heavily opposed by the insurance industry, Advantage enrollment has grown every year since 2010, and affordable products have remained prevalent. The average Advantage plan received a 1.25% pay boost for next year.
“The $0 premium is a very important product,” said Tom Kornfield, vice president at consulting firm Avalere Health and a former CMS official. “It is critical for Medicare Advantage plans, and they've been able to maintain this despite changes in reimbursement cuts post-ACA.”
Medicare's annual enrollment period begins Oct. 15, and the federal government is finalizing the plan offerings for seniors who want to shop for the private plans. Nearly 17.7 million people are enrolled in an Advantage plan, as of this month. The remaining 34 million people are in traditional Medicare, which pays providers for each service instead of giving lump sums to private insurers.
About two-thirds of Advantage members are enrolled in plans that have four or more stars, according to the CMS. Star ratings judge a health plan's quality of care provided to members, and companies with at least four stars get a bonus payment from the CMS. In addition, plans that have five stars—a select few—are able to enroll Medicare beneficiaries year-round instead of just during the annual enrollment period. Each plan's star ratings for 2016 will be released Oct. 8.
Health plans that don't meet those quality standards are getting pushed out of the market, and the CMS has beefed up its regulatory oversight of plans that hinder beneficiaries' access to care. The agency has levied 19 penalties so far in 2015, totaling $4.7 million. Aetna received a $1 million fine in April, the largest this year, due to bad information on in-network pharmacies. A Montana-based plan has been hit with two fines totaling more than $550,000 for its noncompliance.
"CMS has gotten more and more focused (on) making sure the right plans are there and beneficiaries are choosing from the best plans possible,” Kornfield said.
However, a recent Commonwealth Fund study found that there is scant competition in the Advantage market. The pending merger between Aetna and Humana, two of the largest Advantage insurers in the country, could stifle competition even more, critics have argued.