CMS changes will cut Medicare Advantage payments, report says

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Recently proposed changes to Medicare Advantage payment rules will result in an estimated 0.5 to 3.9 percent cut on average to MA payments in 2017, according to a new report.

The report, which was prepared for America's Health Insurance Plans (AHIP), says the impact of the cut to MA payments is likely to vary among Medicare Advantage organizations (MAOs). AHIP has lobbied against further MA cuts, saying such cuts would negatively affect enrollees.

Among the proposed changes, the Centers for Medicare & Medicaid Services (CMS) wants to create new risk adjustment models for dual-eligible beneficiaries and individuals with disabilities. But those changes, the report says, would reduce program funding by 2.1 percent, damaging plans' efforts to improve beneficiaries' health through early detection and prevention of chronic conditions.

The report also touches on the effect that quality improvement will have on MA payments, saying that the improvement in quality star ratings for 2017 will increase payments to plans by 0.1 pecent on average. However, because the Affordable Care Act has now applied a 4.91 percent "MA coding intensity adjustment"--and mandated an annual incremental increase in the adjustment starting in 2015 into 2019--that will further reduce payments by 0.25 percent each year.

CMS says in its 2017 Medicare Advantage and Part D Advance Notice and Draft Call Letter that it plans to raise Medicare Advantage payments by an average of 1.35 percent, with the expected average change in revenue for plans at 3.55 percent.

The AHIP-commissioned report concludes by saying the estimated reimbursement reductions will vary considerably by market and MAO. But these changes could "have a significant impact on the sustainability of MAO program participation and the ability of MAOs to provide stable benefits and affordable premiums to their members," it says.

To learn more:
- read the report (.pdf)

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