Photo: Kittiphan Teerawattanakul Eye Em/Getty Images
Medicare Advantage insurers get a 0.09% payment increase for 2027 should the Advance Notice released on Monday be finalized.
During an earnings call Tuesday morning, UnitedHealthcare CEO Tim Noel referred to the rate as "disappointing."
The Centers for Medicare and Medicaid Services CY 2027 Advance Notice is projected to result in a net average year-over-year payment increase of 0.09%, or over $700 million in MA payments.
"When considering estimated risk score trend in MA driven by coding practices and population changes, the expected average change in payments will be 2.54%," CMS said.
CMS said it is accepting comments on the CY 2027 Advance Notice Feb. 25, before publishing the final Rate Announcement on or before April 6.
WHY THIS MATTERS
CMS MA payment and technical updates are released annually in the Advance Notice and Rate Announcement.
The announcement includes a growth rate of underlying costs of 4.97%. This is offset by a -0.03% change in the Medicare Advantage Star Ratings for 2027 quality bonus payments, a -3.32% risk model revision and normalization of risk adjustment updates, plus a -1.53% change in sources of diagnoses.
Star rating updates include providing a list of eligible disasters for adjustment, nonsubstantive measure specification updates. It also means providing a list of measures included in the Part C and Part D improvement measures and Categorical Adjustment Index for the 2027 Star Ratings.
The proposals in the Advance Notice address coding differentials between Medicare Advantage and Original Medicare for CY 2027.
CMS said it is proposing to make updates to the MA risk adjustment model that reflect more current costs associated with various diseases, conditions and demographic characteristics. In addition, CMS is proposing to exclude diagnosis information from unlinked Chart Review Records, which is diagnosis information not associated with a specific beneficiary encounter, from risk score calculation starting in CY 2027.
Diagnoses that are not reported or associated with a service would not be considered for risk adjustment.
The agency said its policies will promote greater payment accuracy, maintain beneficiary choice, help ensure affordable coverage and enable an even more stable MA program, even as some insurers have cut back their MA footprint due to challenges in the market.
"These proposed payment policies are about making sure Medicare Advantage works better for the people it serves," said CMS Administrator Dr. Mehmet Oz. "By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs."
THE LARGER TREND
CMS said it is working toward an MA risk adjustment system guided by three principles: simplicity to reduce day-to-day administrative burden for both plans and providers; competition on creating value for patients where risk adjustment facilitates such competition equally for all varieties of plans irrespective of size or resources; and payments that accurately reflect beneficiary health risk and facilitate the efficient use of healthcare resources, enhanced program integrity and greater accountability.
CMS is also proposing updates to the Part D risk adjustment model that include accounting for Inflation Reduction Act changes to the Part D benefit for CY 2027.
Email the writer: SMorse@himss.org