2027 Final Rates Out! A Modest Increase Added
The Centers for Medicare and Medicaid Services (CMS) released its Final Announcement for calendar year (CY) 2027 rates for Medicare Advantage (MA). I had predicted that rates would end up between 2% and 3% as the Effective Growth Rate (EGR) would increase markedly between the advance and final notices. The EGR rate actually did not increase much — 0.36%. But rates before risk score trends will go up by 2.48% (vs. 0.09%) because CMS will not implement further changes to the v28 risk model for CY 2027.
In its advance notice, CMS proposed to update the Part C risk adjustment model using more recent underlying original Medicare data (updated from 2018 diagnoses and 2019 expenditures to 2023 diagnoses and 2024 expenditures). This would recognize more current costs. Instead, for CY 2027, CMS will continue to use the 2024 MA risk adjustment model which was calibrated with original Medicare 2018 diagnoses and 2019 expenditures data that was fully implemented in CY 2026.
The nearly 2.5% hike will mean about $13 billion in additional payments to plans in 2027. CMS fairly noted that MA plans were hit by the impacts of the v28 model from 2024 to 2026. It is a small recognition of the churn and volatility in the industry right now. CMS officials say that the rule aims to balance immediate challenges in the program with the agency’s goals of promoting long-term stability for MA. CMS said the decision on updating the v28 model is indefinite and it is monitoring plans. The agency said it is still focused on addressing insurer behaviors on risk adjustment upcoding and overpayments.
For risk score calculation for CY 2027, CMS is finalizing the exclusion of diagnoses from audio-only encounters and diagnoses from chart reviews not linked to actual encounters, with an exception to include diagnoses from unlinked chart reviews for beneficiaries who switch from one MA organization to another. Insurers lobbied hard for this.
The industry is not totally happy as the hike is still very low in a very high utilization environment. But roughly 2.5% is better than an approximate zero. And the chart changes do not impact the industry equally, pushing the hike for some to about 4%.
Expect my full analysis next week in a blog.
Additional articles: https://www.fiercehealthcare.com/regulatory/cms-gives-medicare-advantage-rates-248-bump-2027-plan-year-final-rule andhttps://www.modernhealthcare.com/politics-regulation/mh-cms-medicare-advantage-payments-2027/ and https://www.cms.gov/newsroom/press-releases/cms-finalizes-2027-medicare-advantage-part-d-payment-policies-strengthen-accountability-long-term and https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-rate-announcement
#medicareadvantage #rates #margins #cms
CMS Defends Star Changes In Final Rule
The Centers for Medicare and Medicaid Services (CMS) is defending its radical overhaul of the Medicare Advantage (MA) Stars program, which eliminate easy to hit measures. Many in the industry complain that many contracts will see major rating declines and lower average ratings. Actuarial and other analyses seem to back this up, predicting 30 to 41% of contracts will see reductions of one half Star. Even CMS admitted one quarter of contracts will drop one half Star.
In a new analysis, CMS tries to argue the move is not as drastic and somehow helps fast-growing Special Needs Plans (SNPs) vs. standard ones. In its final rule, CMS projects that no special needs plan contracts will gain bonus payments, with 4% of contracts will lose bonuses. That compares with 7% of standard plans earning bonuses, and 3% that will lose payments.
See my blog from today for a deeper look: https://www.healthcarelabyrinth.com/cms-finalizes-2027-ma-and-part-d-rule/
#medicareadvantage #stars #quality #cms
https://www.modernhealthcare.com/insurance/mh-cms-medicare-advantage-star-ratings-insurers
KFF Examines CA Work Requirements Plan
Healthcare policy group KFF issued a new briefer that examines California’s plans to implement work requirements while facing major budget shortfalls due to falling federal dollars.
#medicaid #workrequirements #ca
— Marc S. Ryan
