Featured in AIS Health Daily, April 11, 2018

Final Rate Notice Projected 3.4% Payment Increase

A longer version of this article was published in the April 5, 2018, issue of RADAR on Medicare Advantage. Subscribe today for biweekly strategies and analysis for Medicare Advantage, Medicare Part D and managed Medicaid.

April 11, 2018

The final 2019 payment notice and Call Letter for Medicare Advantage and Part D plans projected a sizable payment increase averaging 3.40% and finalized various proposals aimed at granting MA sponsors greater flexibility to meet the needs of individual enrollees.

CMS initially projected that plan payments would improve by 1.84% on average in the draft Call Letter released Feb. 1. Driving the new, higher expected average change in revenue was the use of a 5.28% effective growth rate.

“That was surprising because it seems in the past when there’s been an increase in trend, usually what you’ll see is CMS will implement something that might have an offsetting impact so that the increase — usually if it’s a positive increase — in the final notice will be similar to what was originally communicated,” says Brian Collender at Deloitte Consulting LLP.

Meanwhile, CMS finalized a proposal to move to an individual MA market bid approach for Employer Group Waiver Plans. Pat Dunks, a principal and consulting actuary with Milliman, predicts that plans with significant EGWP membership will probably need to reduce benefits and/or increase premiums to employers or unions, whoever they’re selling to.

CMS also is finalizing an updated CMS Hierarchical Condition Category Risk Adjustment model that incorporates most of the proposed changes for Part C risk adjustment that were included in Part 1 of the Advance Notice.

The Call Letter portion of the 270-page document finalized several proposals to give MA sponsors greater flexibility around benefit design. It also clarified that MA plans can offer targeted cost sharing and supplemental benefits for specific enrollee populations based on health status or disease state as long as similarly situated individuals are treated uniformed.

Finally, the Call Letter made some star ratings enhancement.


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