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5 Things To Know About The Upcoming Medicare Advantage Rate Notice

posted by Clare Krusing

on February 18, 2016

Tomorrow is the day – The Centers for Medicare and Medicaid Services will release its preliminary Medicare Advantage payment notice and call letter for 2017. You’ve been hearing about this for weeks now, and we know you all will be following tomorrow’s announcement closely. Here’s a rundown of what to expect and how these policy changes could impact the more than 17 million beneficiaries currently enrolled in Medicare Advantage.

What’s the rate notice anyways?

Each year, CMS releases new proposals around Medicare Advantage payments and policies for the upcoming benefit year. These proposals determine how health plans will implement coverage options in the next year that include the care coordination and disease management programs that make up the core of Medicare Advantage. Friday’s proposed rate notice and call letter are just that – proposed notices. But the announcement kicks off an intense 45 days of feedback as to what these proposed changes mean for beneficiaries.

CMS will issue the final 2017 rate notice and call letter on April 4, 2016.

Why does this matter again?

Medicare Advantage rates are complex – various factors determine payments to plans. In this upcoming rate notice, CMS could move forward with proposals that directly undercut the Medicare Advantage programs that improve patient outcomes. Last year, for example, CMS made changes to the risk adjustment model, a system that accounts for beneficiaries’ specific health statuses and needs. Those changes alone resulted in an average 2 percent cut to the program, and in addition, undermined the early intervention work and care delivery for beneficiaries managing chronic kidney disease, rheumatoid arthritis, osteoarthritis and Alzheimer’s disease. If CMS targets these programs again, that would jeopardize the care that improves beneficiaries’ health. Risk adjustment is one of the several policies expected to be in tomorrow’s rate notice.

But why is enrollment in Medicare Advantage continuing to grow even with these cuts?

The fact that seniors love Medicare Advantage and depend on the program for their coverage cannot be understated. And don’t forget that the entire Medicare population is growing too. More seniors = more enrollment gains in both Medicare Advantage and traditional Medicare. Further, plans have worked hard to mitigate the impact of cuts to seniors. MedPAC findings show that Medicare Advantage plans have improved efficiencies to the point that on average their costs for delivering Medicare benefits are six percent below the costs of the traditional Medicare program. Which is why cutting the program further doesn’t make a whole lot of policy sense.

Enrollment is an important gauge for the status of the program, but it’s not the only one. For example, Kaiser Family Foundation found that over time the number of zero-premium coverage options for enrollees has gone down. Given the various ways Medicare Advantage outperforms traditional Medicare – better outcomes, higher beneficiary satisfaction with the program, greater cost-effectiveness in care delivery, and improved coordination among providers – it’s time for policymakers to stop cutting the program that continues to meet beneficiaries’ health needs.

Where does Congress stand on this issue?

If the overwhelming, bipartisan support from more than 360 members of Congress is any indication, it’s safe to say that Medicare Advantage is the only issue in Washington on which everyone agrees. Seniors like it, Congress likes it, the health system as a whole needs it. Bottomline: Don’t cut the program that everyone really likes. Or these 2 million seniors in the Coalition for Medicare Choices will have something to say about it.

So what should we be on the lookout for tomorrow?

You will hear about the proposed rate notice and call letter at the exact same time we do. To catch up on what all of those policies mean, check out our latest Medicare Advantage primer. It includes an overview of the major policy changes that have been made to the program, where AHIP stands on these issues, and what to expect moving forward. The most important take-away for tomorrow: the growth rate is one of several factors included in the rate notice, and it does not reflect the overall payment rate to health plans. It will actually take us some time to digest what these new policies mean, and we’ll be in touch with more details.

In the meantime, keep up-to-date with all the developments via @AHIPCoverage.