The CMS is proposing a modest increase in baseline Medicare Advantage payment rates for 2018 of 0.25% on average, down from 0.85% last year. The agency will also consider not enforcing planned cuts to employer-based Medicare Advantage plans.
When factoring in the risk coding tendencies, the average change in Medicare Advantage insurers' revenue is expected to climb 2.75%, according to a release from the CMS posted late Wednesday. That compares with 3.05% in 2017.
The agency is again proposing higher payments to plans that enroll large amounts of low-income seniors that are eligible for Medicare and Medicaid.
It is also putting the brakes on plans to increase the use of encounter data, or information about the care an enrollee received by a provider, to determine risk scores for plans. In a 2017 Medicare Advantage pay notice, it said it intended to base 50% of payments on such data in 2018.
By 2020, it planned to base Medicare Advantage risk scores 100% on encounter data. Industry opposed this plan as this data is often found to be inaccurate.
“Plans will effectively receive a rate cut if the data are used for payment,” America's Health Insurance Plans said in a notice prior to the release of the 2018 rates.
The CMS has been dinged twice by the Government Accountability Office for not adequately validating the thoroughness and accuracy of Medicare Advantage encounter data, most recently in a report issued last month.
As a result, it is proposing again to use the ratio set up in 2017. In that, 75% of Medicare Advantage risk scores are based on traditional fee-for-service data and 25% are based on encounter data.
Ankur Goel, a partner at McDermott Will & Emery, says the CMS likely recognized that more works needs to be done to better authenticate encounter data.
The insurance industry also won another battle. Last year, the CMS had proposed terminating the bidding process for employers and unions that offer Medicare Advantage plans to their retirees, also known as “employer group waiver plans,” or EGWPs. Instead, those plans would receive a lump sum payment based on county-level individual bids which would have lowered plan revenue.
In the 2017 final notice, it instead decided to phase that policy in over two years with half of employer Advantage plan payments based on their own bids. The other half will be based on county benchmarks. The CMS at the time said it planned to have this change for all such plans in 2018.
AHIP had said the policy had the potential to disrupt care for the more than 3.6 million beneficiaries enrolled in these plans. In the 2018 proposed notice, the CMS is asking the industry to comment if it should maintain the split it had in place in 2017.
AHIP President and CEO Marilyn Tavenner said in a statement the trade group was still reviewing the notice.
Medicare Advantage plans were projected to receive $198 billion in 2016, accounting for 27% of total Medicare spending, according to a report by the Congressional Budget Office. Since 2004, the number of beneficiaries enrolled in private Medicare plans has more than tripled from 5.3 million to 17.6 million in 2016, according to the Kaiser Family Foundation.
Comments on the proposals are due March 3 with the final rate document expected out by April 3.