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CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans

CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans
Proposed policies continue Secretary’s initiative tying Medicare payments to value and maintain stability of Medicare Advantage program

The Centers for Medicare and Medicaid Services (CMS) today released proposed changes for the coming year for the Medicare Advantage (MA) and Part D Prescription Drug Programs that will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.

“The proposed rates will enhance the stability of Medicare Advantage program and minimize disruption to seniors and care providers," said Andy Slavitt, CMS Principal Deputy Administrator. "The policies in the Notice and Call Letter will continue the movement to reward providers of high quality, consumer-friendly care for the Medicare Advantage and Part D programs."

The Medicare Advantage and the Part D Prescription Drug programs’ enrollments and quality continue to grow and improve since the Affordable Care Act. Medicare Advantage has reached record high enrollment each year since 2010, a trend continuing in 2015 with a total increase of more than 40 percent since passage of the Affordable Care Act, and premiums have fallen by nearly 6 percent from 2010 to 2015. And, more than 90 percent of Medicare beneficiaries have access to a $0 premium Medicare Advantage plan.

This continued popularity of the program reflects a clear signal that Medicare Advantage and the Prescription Drug Program are attractive to health plans and beneficiaries alike. Today’s proposal will continue this trend by providing fair payments to plans, rewarding high-quality care, and spending our health care dollars wisely. We believe these policies will minimize disruption and continue our commitment to high-quality plans, and create a stable and consistent policy environment.

The proposed changes reflect the commitment to a Medicare program that delivers better care, spends health care dollars more wisely and results in healthier people.  In 2015, CMS estimates that 60 percent of Medicare Advantage enrollees will be in 4 or 5 star plans – an increase of 43 percent since 2009.  In the Draft Call Letter, CMS is proposing to continue to refine the star rating system to so as to continue to encourage improved quality, including a proposal to modify the system to ensure plans are not unfairly penalized for enrolling dual eligible or low-income beneficiaries.  In addition, the proposal enhances the value of in-home assessments so they are used to support care planning and care coordination and improve enrollee health outcomes.

The Advance Rate Notice proposes changes in payments that will affect plans differently depending on a variety of factors. On average, when combined with expected growth in plan risk scores due to coding, the expected revenue change would be positive growth of 1.05 percent. Plans that have shown quality improvement and have demonstrated a focus on customer satisfaction would see additional growth. Plan payment levels will continue to be somewhat higher than the equivalent payments in fee for service.

Finally, the proposed policies promise to provide enrollees with greater information to make informed decisions about their care and their coverage. The 2016 Draft Call Letter proposes steps to ensure that plans maintain accurate provider directories and make those directories widely available, helping enrollees better understand the providers available to them. In addition, CMS proposes to work with Part D sponsors that offer limited access to preferred cost sharing pharmacies in their networks to ensure all beneficiaries have access to affordable coverage.   

The Advance Notice and draft Call Letter may be viewed through: and selecting “Announcements and Documents.” Comments on the proposed Advance Notice and Draft Call Letter are invited from the industry and the public and must be submitted by March 6, 2015. The 2016 Final Rate Announcement and Call Letter will be published on Monday, April 6, 2015.