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April 4, 2017

Medicare Advantage plans to receive a larger-than-expected payment bump in 2018

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    CMS on Monday released a final notice detailing changes to how it calculates Medicare Advantage (MA) plan payments, as well as bigger-than-expected payment rate increases for 2018.

    Learn why HCCs make the EHR critical to MA success

    In addition to the final notice, CMS is requesting public comment through April 24 on MA and Medicare Part D policy, practice, and procedural changes to simplify the program and spur innovation. CMS officials said, "With the new administration, there is an interest in collecting ideas from the public about how we can foster additional innovation."

    Final rule details

    CMS in the final notice said it will increase 2018 payment rates for Medicare Advantage by an average of 0.45 percent, up from the agency's initial proposed increase of 0.25 percent. Overall, the agency said MA plans could expect to see revenue increase by roughly 2.95 percent as they provide more intense services, up from a 2.75 percent estimate in February's proposal.

    CMS officials said the projected revenue increase is due to "expected growth in coding acuity," which reflects demographic-related risk adjustment payment increases and more chronic conditions being reported to CMS using diagnosis codes, Healthcare Finance News reports.

    In another shift from February's proposal, CMS said it will slow the planned phase-in of encounter data used to set MA payments. CMS historically has relied on data from the Risk Adjustment Processing System (RAPS) to calculate payments for MA plans, but in 2016, the agency began using a blend of encounter data from MA organizations and patient records submitted to RAPS. The percentage of encounter data for 2017 was set at 25 percent, and the Obama administration had proposed raising the threshold to 50 percent in 2018.

    In the final notice, CMS said it will use a risk score blend of 85 percent of fee-for-service data and 15 percent of encounter data in 2018.

    Medicare Part D

    CMS also finalized process updates designed to address the U.S. opioid misuse epidemic. To better address drug use concerns within the Part D program, CMS for 2018 said it will:

    • Revise its Overutilization Monitoring System to better align with CMS guidelines on opioid prescribing; and
    • Recommend that Part D sponsors impose "cumulative morphine equivalent dose point of sale edits to prospectively identify potential opioid overutilization."

    CMS said the agency "believes that MA organizations and Part D sponsors, working with prescribing physicians, are in the best position to identify and employ best practices and the most appropriate care management interventions for enrollees using high-dosage opioids."


    Chet Speed, VP of public policy at American Medical Group Association, said his organization was pleased by the Trump administration's decision to slow encounter data use. "It is important that any risk adjustment in MA is fair and accurate," adding, "With the flaws in the current Encounter Data System, CMS made the right choice in dropping the weight to 15 percent.

    According to Politico Pro, America's Health Insurance Plans applauded CMS' request for information.

    Ceci Connolly, CEO of the Alliance of Community Health Plans, praised the MA payment rate increase. Connolly added, "We are disappointed, however, that CMS did not take steps to restore quality payments that have reduced benefits for 2.5 million seniors under the benchmark cap" (Livingston/Dickson, Modern Healthcare, 4/3; Morse, Healthcare Finance News, 4/3; Small, FierceHealthcare, 4/3; Humer, Reuters, 4/3; Demko, Politico Pro, 4/4 [subscription required]; CMS factsheet, 4/4).

    Learn the important lessons from Aurora Health Care's experience with a mandatory bundle

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