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Apr 22, 2014

CMS’ Final Notice Keeps Pressure on Medicare Advantage Payments

Published

Apr 22, 2014

In this week’s edition of McKnight’s Long-Term Care News & Assisted Living, Avalere’s Jennifer Rak wrote a guest blog piece on the effects of the recently released Final Medicare Advantage (MA) Rates.

While the release has some positive changes for health plans, the impact is mostly negative; although, the overall negative impact is contingent on different plan circumstances like geography, competitive landscape, and quality rating.  Jen notes that this added pressure for health plans will create downstream pressure for providers.

In CMS’ early April announcement, they finalized a -3.4% average update to MA rates, down from February’s -1.9% proposed update.  CMS also announced that they will continue phase in of the ACA-mandated cuts to MA rates, and will end the ACA’s quality bonus demonstration, mostly affecting plans with star ratings of 3 and 3.5.   On the other hand, CMS did announce a few positive modifications for plans, such as changes to the phase in of a new risk adjustment model that creates better payment stability. CMS also did not finalize a proposal to exclude diagnoses captured during home health risk assessments, which would have negatively impacted plan risk scores.

In general, providers should expect reduced reimbursement rates moving forward, due to the added rate pressure on MA plans.  With that said, CMS did provide a greater regulatory control over plan-provider relationships, including limiting mid-year MA plan network changes, and implementing new requirements around notification, transition, and timing around provider network changes.

Overall, with the influx of baby boomers entering the market, as experienced in 2014 open enrollment, MA enrollment is likely to continue to rise into next year.   Payment pressures on health plans will create a negative impact for providers at face, but could lead to incentives toward improved quality moving forward.

 

View Jen’s full blog post.

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