Medicare Advantage plans can expect 1.84% rate hike in 2019

The CMS Thursday proposed to bump up baseline Medicare Advantage payment rates for 2019 by 1.84% on average, up from the 0.45% plans received last year.

The average Medicare Advantage payment rate will increase by 3.1% after taking into account the way health plans code their members' diagnoses, the CMS said. That's up from a 2.95% increase last year.

The CMS will also move ahead with plans to increase the use of encounter data, or information about the care an enrollee received from a provider, to determine risk scores for plans.

In the proposed notice, the agency suggested that 75% of Medicare Advantage risk scores are based on traditional fee-for-service data, and 25% are based on encounter data.

That differs from 2018, when the agency used a risk score blend of 85% of fee-for-service data and 15% of the encounter data in 2018.

Stakeholders such as the American Hospital Association have pushed back at using encounter data after a January 2017 Government Accountability Office report found such information is often not accurate.

"Since the quality of the encounter data has improved, CMS believes it is appropriate to move forward with the proposed increased percentage of encounter data in the blend," the agency said in a release Thursday.

The insurance industry may be dismayed by another proposed change. In 2016, the CMS suggested terminating the bidding process for employers and unions that offer Medicare Advantage plans to their retirees, also known as "employer group waiver plans."

Instead, those plans would receive a lump-sum payment based on county-level individual bids that would have lowered plan revenue.

AHIP had said the policy could disrupt care for the more than 3.6 million beneficiaries enrolled in these plans.

While the move was delayed in the final 2017 and 2018 notices, the CMS now proposes completing the transition to county benchmark rates for retiree plans in 2019.

The agency previously said it would phase in the policy over two years, with half of employer Advantage plan payments to be based on their own bids and half on county benchmarks.

The CMS will accept comments on the proposals through March 5 and release the final 2019 rates by April 2.

Medicare Advantage enrollment is projected to grow by 9% to 20.4 million in 2018. The CMS estimated that more than one-third of all Medicare enrollees, or 34%, will be in a Medicare Advantage plan in 2018.

An edited version of this story can also be found in Modern Healthcare's Feb. 5 print edition.