Reflecting health care cost trends, the Centers for Medicare and Medicaid Services (CMS) has issued a final rule increasing payments to Medicare Advantage plans to 3.4% in 2019. The announcement was part of a larger one on changes that will affect Medicare Advantage plans starting in 2019, including more lax rules on what expenses can be covered for medical purposes.
The substantial increase is almost double the 1.84% hike the CMS had proposed in February. The 3.4% increase compares to the 2.95% payments were increased to in 2018, from the year prior. But because of other changes the CMS made in its final rule to how it uses certain data to calculate patient “risk-adjustment scores,” the effective increase could be closer to 6.5%, on average, according to the agency’s announcement of the changes.
The payments that are being increased are made to the health insurers that administer Medicare Advantage plans. Medicare Advantage health insurers are paid a set rate by the government to help cover members’ health care costs.
The rate also affects how much insurers charge for the policies. The increase should help offset part of any premium increases, and the increased level should temper some of the inflationary pressures that all payers are feeling in the health care sector.
Risk-adjustment scoring
Another factor that will affect premiums and how much CMS pays out to health plans is how “risk scores” are calculated.
Payments to Medicare Advantage plans are influenced by risk scores, which take into account differences in patients’ medical diagnoses and health outcomes. The sicker the patient, the higher the risk score assigned.
In its announcement, the CMS said it would increase the use of encounter data—detailed data generated by health care providers that document diagnosed conditions and services delivered to treat these conditions—to determine risk scores for plans.
Under the final rule:
- Traditional fee-for-service data will account for 75% of Medicare Advantage risk scores (it’s 85% for 2018), and
- Encounter data will account for the remaining 25% (compared to 15% in 2018).
The effect, experts say, will likely be a further increase in payments, perhaps by as much as another 2 percentage points.
Newly covered items
Starting in 2019, new benefits for Medicare Advantage plans may include coverage for items such as special air filters for air-conditioners for people with asthma and allergies, healthy groceries, rides to medical appointments and home-delivered meals.
The CMS expanded how it defines the “primarily health-related” benefits that can be included in Medicare Advantage policies.
Many Medicare Advantage plans already offer health benefits not covered by traditional Medicare, like eyeglasses, hearing aids and dental care. But the new rules will expand that significantly to items and services that may not be directly considered medical treatment.
Keep in mind there are a multitude of personal factors that impact your individual planning needs. With the Medicare Open Enrollment period approaching quickly, now is the time to have a conversation with your advisor or insurance professional about starting or making changes to your existing healthcare plan.
Source: Fringe Benefit Services, Sharon, PA
