Medicare Advantage Plans to Get Average Raise of 0.4 Percent in 2012

Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...

The Centers for Medicare & Medicaid Services said April 4 that Medicare Advantage plans will receive an average payment increase of 0.4 percent, a decrease from the agency's earlier estimate of 1.6 percent.

Jonathan Blum, director of the Center for Medicare, told reporters that the change stems not from policy changes on the part of CMS but from new economic assumptions. He said he expects the plans to remain “very stable and very attractive.”

The MA payments will vary based on location and a plan's quality rating, Blum said during a discussion of the agency's final rate announcement and Call Letter for 2012. CMS released a preliminary version of the notices Feb. 18.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, a trade group for private insurers, said in a statement that CMS had taken a reasonable approach to payment rates but that MA rate reductions called for in the Patient Protection and Affordable Care Act continue to be of concern.

“While damaging cuts passed by Congress are scheduled to go into effect in the years ahead, the agency is taking a balanced approach toward payment methodology in 2012,” he said.

Blum said the biggest difference from the preliminary notice is a change in the Medicare Advantage growth rate factor, which measures the estimated growth in per capita expenditures for beneficiaries and is a key factor in determining capitation rates. CMS had estimated a factor of 0.7 percent for 2012 but in the final notice revised that figure to negative 0.16 percent, due to lower 2010 Part B physician outlays, Blum said.

Blum also said that CMS had finalized as proposed the percentages for the quality bonus demonstration program and coding adjustment.

Part D Updates.

In addition, CMS released the annual updates to the Medicare Part D prescription drug benefit parameters. CMS is required to update the statutory parameters for the defined standard Part D benefit by the annual percentage increase in the average per capita Part D spending.

The final updates are unchanged from the agency's estimate: The Part D deductible will increase from $310 to $320, the initial coverage limit from $2,840 to $2,930, and the out-of-pocket threshold from $4,550 to $4,700.

By Sarah Barr


The rate announcement and Call Letter are available at http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2012.pdf.