What's Happening?
The Centers for Medicare & Medicaid Services (CMS) has proposed updates to Medicare payment policies that could significantly affect large Medicare Advantage insurers. The 2027 Medicare Advantage and Part D Advance Notice suggests changes in how extra
payments are calculated for insurers managing sicker enrollees. Currently, these payments are based on 'risk scores' derived from patient medical histories, with higher scores leading to increased payments. The proposal aims to exclude diagnoses from medical chart reviews unless they are linked to specific patient visits, potentially reducing payments to insurers who rely heavily on such data mining. This move addresses criticisms from federal officials and lawmakers regarding the calculation of risk scores, which have been used by insurers like Humana Inc., UnitedHealth Group Inc., and CVS Health Corp. to secure higher payments.
Why It's Important?
The proposed changes could lead to significant financial implications for Medicare Advantage insurers, particularly larger companies that utilize chart reviews extensively. By potentially reducing the payments these insurers receive, the CMS aims to address the disparity in costs between Medicare Advantage and traditional Medicare. Medicare Advantage plans currently cover over half of all Medicare-eligible individuals, costing the government significantly more than traditional Medicare. The proposal could result in $7.12 billion in net savings to the Medicare trust funds by 2027. Smaller insurers might benefit from the changes, potentially seeing an increase in payments, while larger insurers could face financial challenges.
What's Next?
The CMS proposal is likely to undergo further review and discussion among stakeholders, including insurers and policymakers. The Better Medicare Alliance, representing Medicare Advantage plans, has expressed its intent to work with CMS and Congress to ensure that payment policies accurately reflect the care provided to beneficiaries. The proposal's impact will vary across insurance companies, with some potentially needing to adjust their strategies to align with the new payment calculations. The CMS will continue to refine the proposal, considering feedback from industry stakeholders and policymakers.
