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Centers for Medicare and Medicaid Services Recommends Increase in Payments to Insurers

by Precise Leads

March 2, 2018

The CMS wants to raise reimbursement rates for Medicare Advantage insurers by nearly 2% in 2019.

The Centers for Medicare and Medicaid Services (CMS) announced earlier this month that insurance companies that manage Medicare Advantage plans can expect to pocket a nearly 2% boost in reimbursements from the government in 2019. The average hike of 1.84% is up from the 0.45% increase that insurers are set to receive this year.

Reuters reported that the rate increase fell within the range that analysts had anticipated. Kim Monk, Managing Director of Capital Alpha Partners, told the news service that she had expected a gain of 1% to 2% on average.

The rate hike is good news for major insurers such as UnitedHealth Group, Inc., Humana, Inc., Aetna, Inc., and WellCare Health Plans, Inc., all of which provide coverage for Medicare Advantage beneficiaries and are then paid by the government. Coupled with the recently enacted tax law that suspended the health insurance tax for one year and modest growth in individual Medicare Advantage enrollment this year, the rate increase “further enhances an already favorable 2019” for the plan, David Windley, Managing Director at Jefferies, LLC, told FierceHealthcare.com.

Expanded Benefits

The CMS announcement contained good news for Medicare Advantage enrollees, as well. The agency has decided to expand its definition of covered benefits to include items that help individuals function in their daily lives such as wheelchair ramps. It had previously denied payments for these aids and instruments by deeming them “supplemental” benefits.

The CMS will now pay for benefits “if they compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization.” These services, the agency said, will improve the quality of life and health outcomes of enrollees.

CMS Administrator Seema Verma said in a recent conference call that the agency altered its policy at the request of stakeholders.  “They want a Medicare Advantage program that is flexible, affordable and provides specific benefits that they need now and haven’t been able to get,” she said. “And we’re changing that.”

To combat the opioid crisis, the CMS further proposed several strategies to reduce overuse of the drugs. The CMS recommends limiting the initial supply of pain medications to a set period and identifying beneficiaries who take an opioid with other drugs to enhance its effect, a practice which raises the risk of an overdose or a medical emergency.

Other Changes

The CMS also proposed raising risk scores by 3.1% in 2019, an adjustment which could significantly influence future payments. It’s also recommending changes to how the risk scores are calculated.

For 2019, CMS wants to base 75% of Medicare Advantage risk scores on traditional fee-for-service data and the remaining 25% on encounter data, or information submitted by Medicare Advantage providers. The ratio in 2018 is set at 85% fee-for-service and 15% encounter data.

Several industry groups including, the American Hospital Association and America’s Health Insurance Plans (AHIP), have criticized the revised formula’s increased reliance on encounter data, arguing that encounter data is typically lower than traditional fee-for-service data or not accurate.

Another controversial proposal concerns employer and union bids for Medicare Advantage plans for their retirees. In 2019, CMS wants to eliminate the bidding process for “Employer Group Waiver Plans” and replace them with lump-sum payments to purchasers of those plans based on bids from within the business’s county. According to Modern Healthcare, such a policy would greatly reduce plan revenues. The proposal also received some heat from AHIP, which said it “could lead to disruptions in coverage and benefits” for members in those plans.

The deadline for comments on the proposal is March 5, and CMS will release the final rates by April 2. According to CMS, a third of all Medicare enrollees with be covered by Medicare Advantage in 2018.

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