Federal health officials on Monday announced a 0.45 percent increase in rates for the Medicare Advantage program next year, higher than the 0.25 percent hike the government had proposed in February.
The announcement from the Centers for Medicare and Medicaid Services, or CMS, translates to an average revenue increase of 2.95 percent for insurers. The revenues are lower than the 3.05 percent average expected this year but are up from the initial proposed rate, which would have increased revenues by 2.75 percent.
Medicare Advantage, whose beneficiaries are 65 and older, as well as people who are disabled, is administered by private insurers and supplements the traditional Medicare program. It is the fastest-growing part of government healthcare and covers about one-third of Medicare beneficiaries, netting an average of $200 billion in revenue for insurance companies annually.
Rate increases in Medicare Advantage are determined by a variety of factors, including the health status of those enrolled in the program. After the February proposal, the government allowed for roughly 30 days of public comments before setting final rates.
CMS also announced Monday that it will scale back a plan that would have used information about the care an enrollee gets from a healthcare provider, called “encounter data,” to determine risk scores. The government was set to base half of its payments on encounter data next year, but industry groups said they feared the data wouldn’t be accurate.
The agency said that 15 percent of payments will be based on encounter data and the rest will use a traditional fee-for-service model.
Senior Medicare officials said in a call with reporters Monday that they hoped the announcements would result in more plans for beneficiaries to choose from next year.
“Medicare is committed to strengthening Medicare Advantage and the prescription drug program by supporting flexibility and efficiency,” Seema Verma, the newly confirmed administrator for CMS, said in a statement. “These programs have been successful in allowing innovative approaches that give Medicare enrollees options that best fit their individual health needs.”
On the portion of Medicare that covers prescription drugs, called Medicare Part D, CMS announced it would be working on policies to curb the abuse of opioids – painkillers such as oxycodone and hydrocodone, which can be highly addictive and have resulted in a U.S. overdose epidemic.
Officials requested additional input from the public on the Medicare program, saying that the new administration was interested in collecting ideas. The input period will run through April 24.
“We wish to use transparency, flexibility, program simplification and innovation to transform the [Medicare Advantage] and Part D programs,” the agency said.
Marilyn Tavenner, president and CEO of America’s Health Insurance Plans, which represents insurers, said her group looked forward to working with CMS to “reduce unnecessary regulatory burdens, enhance program flexibility and innovation, and promote delivery system reform and patient engagement.”
