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Medicare Advantage Pay Rates to Increase, Not Decrease, in 2016

The Centers for Medicare and Medicaid Services (CMS) announced on April 6, 2015, that payments to Medicare Advantage plans will go up in 2016, reversing a proposed slight decrease that was announced in February 2015.

CMS estimated that the government’s Medicare Advantage payments will rise about 1.25% for next year.The increase in payment was announced as part of the CMS “Fact Sheet: Moving Medicare Advantage and Part D Forward” and is a change from the projected decrease of 0.95% announced earlier this year.

Last year and the year before, CMS also issued final payments higher than those in its earlier proposals. The payments have become an annual political issue, as plans lobby intensely to keep payments from dropping, typically winning support from many lawmakers. Many lawmakers signed written letters urging CMS to reverse the payment rate decrease after February’s announcement.

CMS said the new modification in the spending growth rate estimates stemmed from factors including “higher than expected spending on inpatient hospitalizations” and on other services such as therapy and rural health clinics. The final payment estimate was largely tied to tweaks in estimates by the Medicare agency’s actuaries on how fast spending has been growing in the program, rather than changes in policy compared with the earlier proposal.

Medicare Advantage plan enrollment has increased by 42% since passage of the Affordable Care Act in 2010 to an all-time high of more than 16 million beneficiaries, with nearly 30 percent of Medicare beneficiaries enrolled in a Medicare Advantage plan.

The final payments are definitely a favorable outcome relative to the original February proposal. The increase in payments will help plans make their offerings more attractive, with richer benefits or lower costs to beneficiaries, which should mean nice growth for Medicare Advantage into 2016.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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