Another round of successful lobbying to avoid Medicare Advantage rate cuts has netted a small increase of 0.4 percent to the average plan, and insurers are looking at the programs continuing to grow. But changes are afoot.
Yes, the Centers for Medicare & Medicaid Services increased rates instead of cutting, and yes, MA programs are predicted to grow at a rate of around 10 percent through 2016, to the point where in a few years it could be covering one-third of all seniors or more, but there will be pressures – the sort of pressures that may bring about significant changes.
For instance, during a conference call about MA 2015 rates, Jonathan Blum emphasized that although the agency granted a rate increase for 2015, it will be staying true to the Affordable Care Act's directive of bringing the per-beneficiary costs down over time.
In the 2015 go-around, CMS demonstrated its commitment by not going forward with a proposal to exclude data collected during home risk assessments from enrollee risk calculations and by easing in a new hierarchical condition category for risk adjustments, while still keeping a total beneficiary cost benchmark of $32 per-member per-month as originally proposed this past winter.
"We are very confident we will continue to see a very strong program going forward," Blum, CMS' then-deputy principal administrator, said during the conference call.
And while the MA market is expected to continue to experience strong growth, plan sponsors are likely to see tighter margins, industry analysts say. That's because they disagree with CMS' calculations and predict that upcoming regulatory changes will have a more severe impact.
Attention from lawmakers over narrowing networks is another issue putting pressure on MA plans. Plan sponsors dodged heightened oversight from lawmakers in response to concerns raised when the largest Medicare Advantage insurer, UnitedHealth Group, moved to trim about 2,200 physicians from its Medicare network in Connecticut (and was subsequently sued).
While CMS decided not to extend the 30-day minimum amount of time Medicare Advantage insurers need to follow to notify providers of termination, the agency is going to require them to notify regional CMS account managers of significant provider terminations at least 90 days ahead of time and is letting beneficiaries enroll in a new plan mid-year if one of their treating doctors or hospitals is removed from their plan's network, among other alterations to the rules.
And then there is what consultant John Gorman predicts will be an industry-altering "Hunger Games-style 'reaping'."
The Medicare Advantage quality bonus demonstration is ending this year, and for 2015, CMS is going to reject renewal of both Medicare Advantage and Part D prescription drug plans that are rated with less than three stars for three consecutive years.
Going into 2015, eight Medicare Advantage plans have had less than three stars for three straight years, including four special needs plans, Gorman found, and there are more than a few that have had less than three stars for at least two years. "Dozens of plans are now dead men walking," Gorman, a former federal managed care regulator, wrote in an analysis of the rates.