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.