CMS Proposes Small Rate Hike to Medicare Advantage

Health care plans that improve the quality of care may see higher updates and enhance benefits for enrollees.

The Centers for Medicare and Medicaid Services (CMS) a small increase for the Medicare Advantage and Part D Prescription Drug Programs for 2017. The proposal includes a payment increase of 1.35% to insurers on average in 2017 under the Medicare Advantage program.

“These proposals continue to keep Medicare Advantage strong and stable and as with this past year, support the provision of high quality, affordable care to seniors and people living with disabilities," said CMS Acting Administrator Andy Slavitt. “In particular, these proposals support investment in dually Medicare-Medicaid eligible individuals and those with complex socioeconomic needs.”

Despite the average increase of 1.35% for Medicare Advantage plans, individual plans will vary.

This net payment impact is consistent with last year’s updates and has a similar pattern of Medicare fee-for-service. Furthermore, health care plans that are able to improve the quality of care can see higher updates and enhance benefits for enrollees.

"More than 360 members of Congress and 2 million seniors in the Coalition for Medicare Choices urged CMS to protect Medicare Advantage from any further cuts,” said Americas Health Insurance Plans President and CEO Marilyn Tavenner. “While we are in the process of carefully reviewing all of these provisions, we will be looking closely at any proposals that would undermine health plans' care coordination and disease management programs, especially for low-income individuals. It's critically important that the agency finalize policies that ensure the long-term stability and continued growth of the program for millions of beneficiaries who depend on Medicare Advantage for their coverage."

There is also a proposal for improving the precision of payments to Medicare Advantage plans that work to serve dually eligible or low income enrollees. In order to reflect the socioeconomic and disability status of a plan, CMS seeks to adjust the Star Ratings.

CMS also proposes to revise the methodology for risk adjustment payments of plans in order to more accurately reflect the costs of care for beneficiaries who are dually eligible.

Since the implementation of the Affordable Care Act, Medicare Advantage has reached a record high in enrollment every year since 2010. This continued in 2016, with an increase of 50% to more than 17.1 million beneficiaries.

There are approximately 32% of beneficiaries enrolled in the Medicare Advantage plan, which has had average premiums decrease by nearly 10% from 2010 to 2016.

Those who were in 4 or 5 star contracts have nearly quadrupled since 2009 to 71%. There are approximately one-third of prescription drug plan enrollees who are in Part D plans with 4 or more stars, compared with 27% of enrollees in 2009.