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Medicare Officials Release Medicare Advantage Policies

By Rebecca Adams, CQ Roll Call

April 6, 2015 -- Medicare officials announced Monday that they stuck to their proposed payment cuts for the private Medicare Advantage plans that serve seniors and people with disabilities. But they unveiled updated cost estimates that show that the plans will get higher payments than the agency previously estimated.

In February, the Centers for Medicare and Medicaid Services (CMS) proposed cuts of 0.95 percent that officials said would translate into an average 1.05 percent increase for most plans after changes in the way that insurers code patients’ conditions are considered. In the final policy that was released Monday, CMS officials said new health spending growth estimates now show that the cut of 0.95 percent will actually be a 1.25 percent increase. And Medicare officials say that will translate into a 3.25 percent per-capita increase for most plans. "The final revenue increase is larger than the February advance notice largely because the Medicare actuaries recently updated Medicare per capita spending estimates for 2014 and 2015," said a CMS press release. "Medicare per capita spending in 2014, 2015, and 2016 is still expected to be below historical standards." 

In recent years, CMS has proposed cuts, only to soften or reverse them when the policies are later finalized. The payment updates were part of two significant documents, a notice, and call letter, released on Monday that affects Medicare Advantage plans, prescription drug plans, pharmacies, and consumers. Medicare officials abandoned a proposal to change the quality ratings of Medicare Advantage plans and tweaked provisions affecting the preferred cost-sharing networks.

In the proposed version that was released Feb. 20, CMS officials outlined changes to plans’ quality ratings because of concerns that plans that serve low-income beneficiaries could be disadvantaged. CMS wanted to cut in half the weight of seven measures for 2016. But CMS Deputy Administrator Sean Cavanaugh said on a call with reporters Monday that most groups that commented criticized the plan. So the agency scrapped it for now but said CMS will continue studying the issue.

Cavanaugh noted that there’s a long history of low-income people getting lower quality care than others. "If that’s what’s going on here, we wouldn’t want to mask that" with adjustments, said Cavanaugh. Although there’s not a consensus on what’s driving differences in star quality ratings among plans that serve low-income people, "this is an issue we’ve made a firm commitment to continuing to explore," he said. 

CMS officials also clarified expectations that insurance plans update their provider directories in real time, and have regular, ongoing communications with providers to determine whether they are accepting new patients. In the proposal released in February, CMS proposed to publish information on whether beneficiaries have sufficient access to preferred cost- sharing pharmacies. CMS also proposed to work with plans that are outliers and either improve beneficiaries’ access or prevent plans from marketing themselves as offering preferred cost sharing in areas where the benefit is not really available. CMS finalized the policies but tweaked them. Rather than working with outliers individually during bid negotiations, CMS said it will require plans that are outliers and have limited access to tell seniors about this in the plans’ marketing materials next year. And plans that are extreme outliers will have to work with CMS to improve access before the agency will approve their ability to offer coverage in Medicare next year.

Lobbying for Higher Payments

Agency officials also said they would essentially keep their proposed phase-in of a new system that will cut many plans’ payments. Plans are paid more for patients who are sicker, and Medicare officials have been moving toward an updated methodology for those payment adjustments. CMS officials say the new risk-coding system is more accurate than the previous one, but health plans have said it will reduce their funding and could detract from programs to manage patients’ diseases. Health plan industry officials, through groups such as the Better Medicare Alliance and the Coalition for Medicare Choices, have lobbied CMS and Congress to block payment cuts and move slowly on the new risk-coding system. America’s Health Insurance Plans, the industry trade group, said that the initial CMS proposal would have the most impact on beneficiaries in New York, Texas and Louisiana. The industry group said that people in those states could face reduced benefits or higher costs totaling more than $120 per month. Lawmakers sent letters urging CMS to prevent any additional cuts, with a letter from senators gathering 53 signatures and one from House members collecting 239 signatures.

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