Ritter Insurance Marketing, Craig Ritter

CMS Reimbursements for MA Plans Less than Expected

The recent announcement of a .85 percent increase in reimbursements to Medicare Advantage plans is a surprising twist on the trend we’ve come to expect.

After an initial proposal of 1.35 percent increase in February, the Centers for Medicare and Medicaid Services revised their figure based on estimates of how much medical services cost.

Last year, the final notice increase in reimbursements was 1.25 percent, a more than 2 percent improvement from the early proposal. This year’s figure is .5 percent less than the initial proposal, which breaks from the increases we’ve seen in the last few years.

However, plans might be considered for higher reimbursements through bonus payments as a reward for improving the quality of care. These bonuses are in line with CMS’ push to improve plan quality and care coordination.

Beneficiary grouping

In another big change, CMS will break out all Medicare beneficiaries into six groups in order to better calculate total reimbursements per member. Aged (over 65) and disabled beneficiaries will themselves be split into three more groups: dual eligible for both Medicare and Medicaid, low income subsidy (LIS) and non-LIS.

Compensation will be higher for duals, lower for LIS and lowest for non-LIS. We’ll see plans featuring a lot of dual eligible will receive more reimbursement than those whose membership is primary non-LIS. Coupled with the less-than-expected reimbursement increase, bids could be a bit more challenging for plans that don’t have high dual-eligible populations.

End of EGWPs?

And finally, I expect the move from Employer Group Waiver Plans (EGWPs) to individual business to accelerate.

Despite hard lobbying from unions and insurance companies groups, including AHIP, CMS didn’t balk on their plans to significantly change compensation for EGWPs. However, they did spread the implementation of new pricing over two years instead of one.

While I don’t expect an end to EGWPs, it certainly will reduce the incentive for Employers and Insurers to use the Waiver Plans.

Posted by filed under Affordable Care Act, AHIP, CMS, Insurance Products, Medicare Advantage, Part D, Retirement, Uncategorized .

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