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Medicare Advantage: What Did CMS Propose In The 2018 Advance Notice?

What is the Advance Notice?

The Centers for Medicare & Medicaid Services (CMS) released the 2018 Advance Notice on February 1, 2017, which lays out the proposed policies governing plan payment for 2018. The agency has large discretion over certain payment policies and addressed several issues of critical importance to MA plans. Stakeholders have 30 days to comment on the Advance Notice prior to CMS issuing a Final Rate Notice on April 3.

What CMS Proposed: By the Numbers

Policy changes proposed by CMS for 2018 include:

CMS’s estimate of the overall impact on MA funding of the policies proposed in the Advance Notice, which is well below the projected cost inflation rate (i.e., effective growth rate) of 2.8 percent.

The reduction in MA funding due to a technical update to the risk score called “normalization” that assumes risk scores of beneficiaries enrolled in traditional Medicare dramatically increased from 2015 to 2016.

The estimated reduction in payments to Employer Group Waiver Plans
(EGWPs), enrolling over 3.6 million beneficiaries, if CMS fully transitions to a new payment methodology first implemented in 2017.