2016 Medicare Advantage Call Letter

The Medicare Advantage program continues to show healthy growth (haha) and the premiums for that program and the other terms and conditions affecting participating plans draw intense interest.  2016’s draft letter setting forth those terms is out.  (Call Letter)  In terms of rates, on the surface it looks like plans could expect about a 1% increase, but by the time you go through all the gyrations, who knows what the increase, or decrease, will actually look like.  The letter always has useful data in it.  The Medicare FFS program is projected to see about a 1.47% per capita spending increase in 2016; while Medicare Advantage per capita growth is estimated at a trend of 1.14%, with an additional adjustment coming from changes in prior year estimates of trend.  CMS is rebasing the county MA rates, and refiguring which quartile the counties are in, which affects how much of the Medicare FFS per capita amount gets put into the MA rates.  Star rating bonuses will only be paid to plans with 4 or more stars.  Knowing that many plans are gaming the risk score system to increase payments, CMS is applying a 5.4% coding adjustment to the rates for 2016.  CMS continues to believe, based on several analyses, that Medicare Advantage enrollees are on average healthier than those beneficiaries in the traditional, fee-for-service branch of Medicare.  The entire risk adjustment methodology is being intensively explored by CMS, and it is suggesting it may use a new approach in 2016 and beyond.  Part D rates for the Medicare drug benefit are similarly being adjusted.  In regard to Part D, CMS intends to use the same risk-sharing corridors it has used in past years.

For Star Ratings, a medication therapy management review completion measure will be added as well as returning several dropped measures and modifying how others are calculated.  Several cholesterol management measures are being dropped, since guidelines have changed.  Several categories of new measures for 2017 and beyond were also identified, including care coordination and depression management.  No sign that CMS recognizes the criticism that it has too many measures, most of which don’t appear to actually affect ultimate outcomes.  Other timely topics include a discussion of network adequacy and disclosure, likely a reaction to the significant narrowing of Medicare networks by some plans last year, and a discussion of risk assessment methods, including the use of in-home assessments.  CMS is considering adopting a standard risk assessment form and it listed some “best practices” in regard to conducting in-home assessments.  Finally, CMS is proposing to limit the use of specialty drug tiers by Part D plans.  The final call letter, to be released in April, will probably change some of what is in the draft, but this documents gives a good indication of the priority issues from CMS’ perspective.