Here is a link to the entire document from the CMS website.
Here are some quick notes on the 45 Day Advance Notice and Draft Call letter for 2011:
- Page 5 – Trend calculated at 1.38%
- Page 14 – 2011 Coding Intensity Adjustment of 3.41%
- Page 17 – Phase out of IME (Indirect Medical Education) payment capped at 1.2% in a given county.
- Page 20 – Location of 2012 PFFS network requirements will be based on 1/1/2010 Network plans (HMO/LPPO/RPPO)
- Page 24 – Calculation of LIS Benchmark Part D premium and Reassigns
- Page 27 – Trend for Part D Standard Benefits for 2011 is 0.31%
- Page 29 – Initial look at 2011 Standardized Part D Benefits (no change from 2010 with the exception of a $10 increase in the initial coverage limit). This was primarily due to statutory requirements on rounding.
- Page 83 – New guidance on “Partial Drug Fills” for First time prescriptions.
- Page 84 – Possible change in rules for Auto-Assigning LIS Medicare Beneficiaries who are classified as “choosers”.
- Page 96 – CMS Enrollment Demonstration project scrapped for 2011.
So, to determine the change in payment from 2010 to 2011, you take trend, less coding adjustment, less IME phaseout to get to an approximate change in payment. Let’s assume a 0.8% reduction due to IME phaseout. The figures are multiplicative, so it’s 1.0138 times 0.9659 times 0.992 equals 0.9714 or NEGATIVE 2.86% in 2011 versus 2010.
I don’t have an estimate for trend for 2010, but I’m quite sure it’s not negative. Thus, assuming no major changes in the next 45 days (like a multi year Medicare Physicians Fee Schedule fix) you’re looking at higher premiums and lesser benefits for Medicare Advantage again in 2011 relative to what we have today.
ADDITIONAL NOTE: This story was covered by Nasdaq here. I don’t think they took into account the Coding Intensity Adjustment and the IME phaseout. I’ll check with a carrier or two next week to get their take on the absolute affect to see if the payment will actually be negative (I think it is). Also, the story mentions that a Doc Fix in the next 45 days could result in a 4% boost to the reimbursement rate, but I think this would have to be a multi-year fix (2010 and 2011 both in the next 45 days).
Update 2: Here is a pretty good story from Business Week. Analyst Carl MacDonald added a number of 4% for Medical Trend. If correct, there would be roughly a 6.9% gap that insurers would need to make up with benefit cuts/premium increases. This equates to about a $57.50 PMPM shortfall versus the 2010 plan’s benefit/premium designs.
[...] Also today, CMS free it’s 45 period front attending on their 2011 reimbursement numbers. What I conceive module be vastly assorted in 2011 is that the MAPD plans don’t hit as such motion shack with benefits in 2011 as they did in 2010. Therefore, I would wait a large effect on premiums in 2011 forward the test reimbursement drawing meet most the same. [...]
[...] Also today, CMS released it’s 45 day advance notice on their 2011 reimbursement numbers. What I think will be vastly different in 2011 is that the MAPD plans don’t have as much wiggle room with benefits in 2011 as they did in 2010. Therefore, I would expect a larger impact on premiums in 2011 assuming the final reimbursement numbers stay about the same. [...]