Dive Brief:
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Payers will get a 3.4% payment increase in the Medicare Advantage (MA) program next year. This is higher than the proposed 1.84% increase.
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CMS also increased the role encounter data will play in determining risk scores. In 2019, CMS will base 75% of MA insurers’ pay on traditional fee-for-service and 25% (up from 15%) on encounter data. Risk scores are expected to increase by 3.1% on average.
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The agency also announced policies to target opioid abuse, including requiring at-risk beneficiaries to use only selected prescribers or pharmacies for opioid prescriptions and limiting opioid prescriptions for acute pain to no more than seven days.
Dive Insight:
In announcing the MA rates and final rule Monday, CMS also upped MA’s effective growth rate prediction from 4.35% to 5.28%. The MA payment increase will help payers keep down MA plan premiums, which actually decreased by 6% in 2018 because of the market’s stability.
The agency also announced it is incorporating most of the proposed changes to its risk adjustment model, including adding mental health, substance use disorder and chronic kidney disease conditions. However, it is not finalizing a model for 2019 “that takes into account the number of conditions an individual beneficiary may have in order to provide stakeholders more time to understand its implications.”
CMS does plan to implement the Payment Condition Count Model in 2020, which the 21st Century Cures Act requires. Stakeholders recently raised concerns about the proposal.
In an investor note, Jefferies analysts said the favorable payment rate comes as the annual health insurer fee remains on moratorium. "This should provide MA plans significant flexibility to enhance benefits, invest in operations and quality, and accelerate enrollment growth in Individual MA," they wrote.
During Monday’s call, CMS Administrator Seema Verma said the agency's actions will save Medicare beneficiaries money on prescription drugs and lead to additional plan choices. CMS said seniors are already saving $320 million on out-of-pocket payments through the 340B program, which lets many hospitals buy drugs at a lower cost.
The 2019 rule also reduces the maximum amount that low-income beneficiaries pay for biosimilars. The agency will also allow certain low-cost generic drugs to be substituted onto plan formularies at any point during the year and increase plan competition by removing the requirement that certain Part D plans have to “meaningfully differ” from another.
America’s Health Insurance Plans praised CMS’ announcement and its “willingness to work with stakeholders to find additional ways to simplify and transform the Medicare Advantage and Part D programs.”
“AHIP commends CMS on enacting policies that overall will strengthen and improve Medicare Advantage for America’s seniors. By finalizing many of its innovative proposals, CMS has acknowledged the value of private sector solutions for Medicare enrollees,” AHIP said in a statement.
MA remains popular with payers and Medicare beneficiaries. Payers love the stable market and its daily stream of new eligibles for Medicare, the ease of converting traditional Medicare members to MA and upfront payments from CMS to cover people with high healthcare costs. MA members also usually transition from an employer-based plan to MA, so they don’t have pent-up healthcare problems, which could lead to more utilization.
One-third of all Medicare beneficiaries are in an MA plan, and that’s expected to grow in the coming years. There were nearly 21 million members at the end of 2017, an 8% increase over the previous year. Payers have increasingly looked at MA as a potential growth area, while at the same time often shunning the Affordable Care Act exchanges.
The top two MA payers continue to grow membership. UnitedHealth Group has more than 5 million MA members and Humana has more than 3.5 million members. MA's success has also gotten the attention of one of the country's largest retails, Walmart. The company is discussing a possible deal for Humana.