CMS proposes 2.5% rate hike for Medicare Advantage plans

The Centers for Medicare & Medicaid Services has issued 2013 payment and policy guidelines for insurers participating in the Medicare Advantage program, increasing rates by 2.5 percent, reported The Wall Street Journal.

In proposed guidance published Friday, CMS said the new rates would help keep Medicare Advantage rates low while also maintaining or even improving benefits, Reuters reported. "CMS is proposing policies that will help keep costs low and make Medicare stronger," CMS Deputy Administrator Jonathan Blum said.

CMS said the 2013 guidelines point to an overall annual growth rate of 2.47 percent and a 2.3 percent per capita growth rate next year, Reuters noted.

The guidance brings Medicare Advantage benchmarks more in line with Medicare fee-for-service costs and base part of Medicare Advantage payments on plan quality, according to EmaxHealth.

CMS also noted in the guidance that it will alert Medicare Advantage members if their insurer hasn't achieved at least a three-star quality rating for three straight years and offered special enrollment periods.

Industry analysts responded favorably to the CMS announcement. Capitol Street Healthcare analyst Ipsita Smolinski said the national per capita growth is a positive sign for insurers because Medicare providers soon will see reimbursement cuts. Likewise, Ana Gupte, analyst for Sanford Bernstein, said the growth should be positive for insurers, Reuters noted.

CMS announced a few weeks ago that Medicare Advantage premiums dropped 7 percent, while enrollments increased by 10 percent. To continue that growth trend, the agency focused the guidelines on controlling beneficiary costs and premium increases, lowering drug costs, providing stronger Part D and Medicare Advantage plan quality, reducing inappropriate overuse of prescription drugs and clarifying supplemental benefits, EmaxHealth noted.

The agency will publish final rates on April 2.

To learn more:
- read the CMS guidance (.pdf)
- read the Wall Street Journal article (subscription required)
- see the EmaxHealth article
- check out the Reuters article

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