CMS proposes 1.84% rate increase for Medicare Advantage plans, other policy changes

The federal government on Thursday proposed a 1.84% average rate increase for Medicare Advantage plans in 2019, along with other policy tweaks that officials said are designed to strengthen the MA and Medicare Part D programs.

The rate increase is a good deal higher than the 0.45% increase the agency approved for 2018. However, it could still change before the Centers for Medicare & Medicaid Services finalizes it in April.

After factoring in the underlying coding trend, which CMS expects to increase risk scores by an average of 3.1%, the actual net rate increase for plans would be 4.94%. Comparatively, that net increase was 2.95% for 2018.

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CMS says its proposals will “result in a payment increase that promotes stability and insures that resources will be available to support beneficiaries enrolled in private Medicare plans.”

Indeed, industry analysts were largely positive on the rate proposals. To Jefferies’ David Windley, the update “further enhances an already favorable 2019” for Medicare Advantage plans due to the one-year suspension of the health insurance tax and the fact that individual MA market enrollment growth appears to be modestly accelerating this year.

Similarly, Leerink Partners analyst Ana Gupte called the rate increase a “solid tailwind” that in addition to the tax suspension, will be “instrumental in catalyzing meaningful privatization of Medicare Advantage.”

The health insurance industry’s major trade group, America’s Health Insurance Plans, indicated it will offer comment on the proposals after examining them more closely.  

“AHIP will review the advance rate notice carefully to ensure the Medicare Advantage program is protected from policies that could impact the long-term stability of the program and seniors’ access to quality, affordable health care that meets their individual needs,” Marilyn Tavenner, the group’s president and CEO, said in a statement.

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Indeed, as is always the case with its advance notice and call letter, CMS proposed a host of other policy changes for MA and Part D plans. For example, the agency wants to redefine health-related supplemental benefits to include services such as nonskilled in-home supports, portable wheelchair ramps and other devices that may be necessary to assist patients.

On a call with reporters Thursday, CMS Administrator Seema Verma said the agency based its proposals on the changes that various stakeholders said they wanted to see in the MA program.

“They want a Medicare Advantage program that is flexible, affordable and provides specific benefits that they need now and haven’t been able to get,” she said. “And we’re changing that.”

CMS is also proposing new measures in the Part D program that aim to address the opioid epidemic, such as implementing a supply limit for initial fills of prescription opioids for acute pain, and asking plan sponsors to make changes to their formularies that essentially limit patients’ access to certain combinations of drugs.

Other notable policy changes concern the MA star rating system. Among other policy tweaks, CMS wants to add quality measures for statin use and make changes that would decouple audits and enforcement actions from star ratings.