The Centers for Medicare and Medicaid Services (CMS) announced its 2018 Medicare Advantage (MA) capitation rates, with an expected increase of .45 percent, slightly higher than proposed in the advance notice. CMS estimates that MA health plans will realize an increase in revenue of 2.95 percent, reflecting increases in coding acuity and risk adjustment payments. CMS emphasized that the policies behind the rate determination are to support flexibility and efficiency and to encourage innovative network arrangements. Almost one-third of Medicare beneficiaries, 18.3 million Americans, receive their Medicare benefits through a Medicare Advantage managed care health plan. Items of note include:

In response to comments, CMS extended the phase-in of the use of encounter data, basing 15 percent of the enrollee risk scores for 2018 on encounter data rather than the 25 percent proposed. Physician groups have been critical of the flaws in the encounter data system that affect the reliability of risk adjustments.

For 2018, indirect medical education (IME) amounts continue to be phased out from the MA capitation rates. CMS also announced that clinical trial items and services provided to MA plan members will continue to be reimbursed on a fee-for-service basis in accordance with the Medicare National Coverage Determination.

As part of the rate announcement, CMS also included a request for information from the public on changes to regulations that would encourage innovation, expand beneficiary choice, and simplify the MA program. CMS requested suggestions for the Star Ratings methodology for MA health plans in order to incentivize plans and provide a more “true” reflection of plan performance and enrollee experience.

The Alliance of Community Health Plans expressed approval of both the rate increase over the proposal and CMS’ response to technical suggestions related to the payment policy, but urged CMS to reconsider restoring quality payments.

America’s Health Insurance Plans (AHIP) approved of the CMS adjustments in finalizing 2018 rates and welcomed the request for information, noting the need for structural changes “to provide better care, better outcomes and lower costs for Medicare beneficiaries.”

The MA capitation rate tables and supporting data are posted here.