Baseline Medicare Advantage payment rates for 2017 will rise by 1.35% on average, an early win for health insurance companies in the final Medicare rate battle of the Obama administration.
When factoring in the risk-coding tendencies, the average change in Medicare Advantage insurers' revenue will climb 3.55% next year.
The proposal is a major shift from last February, when initial benchmark rates were cut by an average of 0.95% before factoring in risk-score trends.
Several major policies also are embedded within the CMS' advance rate notice, including changes that will help insurers with many low-income seniors, known as dual-eligibles, because they qualify for Medicare and Medicaid.
The CMS included changes to the Medicare Advantage risk-adjustment model and ratings system that will, in essence, boost taxpayer funding for plans that enroll higher numbers of low-income seniors.
The Affordable Care Act phased in cuts to the program's benchmark rates over six years, and 2017 will be the last year of those payment reductions. Previously, the federal government overpaid Medicare Advantage plans, and the ACA sought to bring the capitated payments in line with traditional Medicare spending.
Yet, despite the final ACA-mandated cuts, average payment adjustments will remain positive for 2017, according to the CMS.
The amounts will vary for each health plan, but many industry observers believe 2017 will be “the best rate environment we've seen in years,” said John Gorman, a consultant for Medicare Advantage insurers and a former CMS official.