Medicare Advantage Gets a Pay Increase for 2016

Instead of the original 0.95% rate cut for the Medicare Advantage (MA) program proposed in February, CMS announced on Monday that the MA pay rate for 2016 would be a 1.25% increase.

Since 2010, MA enrollment has increased 42% to an all-time high of 16 million beneficiaries. Of the entire Medicare population, nearly 30% are enrolled in a MA plan, according to CMS. In addition, the average premium has dropped 6% between 2010 and 2015.

CMS has estimated that with the government’s MA payments increasing 1.25% in 2016, insurers will likely see overall revenue increase 3.25%, according to the agency’s fact sheet on 2016 payment updates.

“These policies strengthen Medicare Advantage for current and future consumers by encouraging higher quality care,” Andy Slavitt, acting CMS Administrator, said in a statement. “As the Medicare Advantage marketplace continues to grow, consumers are getting access to better care through more choice and competition. Seniors and people with disabilities, including the dual-eligible population, will continue to have an extensive choice of plans, affordable premiums, and better and more transparent information about provider networks and pharmacies.”

At the end of February, America’s Health Insurance Plans (AHIP) released a report that found the proposed MA cuts would cause many beneficiaries to lose access to these plans and disrupt their care. Monthly premiums or benefit changes per member could have been as much as $20, according to the calculation by Oliver Wyman, which compiled the report for AHIP.

“The final rate notice took a notable step to provide stable funding for the Medicare Advantage program,” AHIP president and chief executive officer Karen Ignagni said in a statement. However, the lack of action to address policy concerns around providing care for the chronically ill and vulnerable populations could undermine health plans’ efforts to address the needs of these beneficiaries.