Feds propose higher Medicare Advantage payments

The final 2017 rates won’t be published until April 4, giving the insurance industry 45 days to lobby for a bigger increase. CMS officials said Friday that revenue growth for Medicare Advantage plans could jump by 3.55 percent.

The actual increases will vary by plan, and plans that increase the quality of care could receive more, said Sean Cavanaugh, CMS deputy administrator.

Medicare Advantage, an alternative to the traditional Medicare program, has become popular over the last decade. Nearly one-third of seniors, or about 17 million Americans, are enrolled in it.

Typically Medicare Advantage’s biggest fans, Republicans have strongly criticized new methodologies under the Affordable Care Act that have resulted in cuts to the program, cuts that Democrats argue bring it into line with how much traditional Medicare pays out in benefits.

The Centers for Medicare and Medicaid Services proposed some changes to Medicare Advantage’s risk adjustment model and its star ratings program, which rewards higher-performing plans.

After proposing a 1-percent payment cut to insurers last year that prompted major pushback from the insurance industry, CMS withdrew that plan.

Medicare Advantage works by private insurance plans bidding to offer health benefits to enrollees, unlike in traditional Medicare, where the program pays health providers directly for services provided.

UnitedHealth Group, Humana, Kaiser Permanente and Aetna have the most market share in Medicare Advantage.

Seniors wouldn’t feel the effect of any payment changes until late October, when they begin enrolling in their 2017 Medicare Advantage plans.

Cavanaugh told insurers to take into account a one-year moratorium on a health insurance tax when developing their Medicare Advantage rates for 2017 plans.

Plans should “reflect that wherever possible in their bids where they can bid lower and get more supplemental benefits for our beneficiaries,” he said.