CMS delays Medicare Advantage funding formula changes

CMS delays Medicare Advantage funding formula changes

At the agencies

The Centers for Medicare and Medicaid Services (CMS) has delayed a change to its Medicare Advantage (MA) funding formula, which insurers claimed would lead to lower payments. CMS has decided that the formula will not be changed to account for an increase in the encounter data used to determine payments. The proposed change, a 50 percent encounter data threshold for the formula, has been delayed, and the current 25 percent encounter data threshold will remain. The Obama Administration had proposed the increase to 50 percent for 2018. CMS has also decided to delay pay cuts to employer-group Medicare Advantage (MA) plans, proposing to maintain current levels of encounter data to risk adjusted MA plans pay for 2018.  

CMS has proposed an average 0.25 percent increase for Medicare Advantage plans. Over 18 million people are enrolled in Medicare Advantage, which makes up a third of the Medicare program’s beneficiaries in total. In the last year more than a million seniors have been added to MA plans. CMS will accept comments until March 3 and the final notice will be posted on April 3.  

At the White House

On Jan. 30, President Donald Trump signed an executive order directing agencies within the executive branch to cut two regulations for every one new regulation they introduce. The order follows a Jan. 20 memorandum from the White House which froze any new regulations for 60 days. The executive order[A1]  intends to cut regulations by up to 75 percent and any new regulatory costs must be offset by deregulatory actions, so that regulatory expenses for 2017 are zero-sum. The order provides little guidance regarding procedure and the possible implications for public health and safety regulations. The Office of Management and Budget (OMB) director is granted waiver authority in the order. 

On the Hill

Representative Tom Price (R-Ga.), President Donald Trump’s nominee for Secretary of Health and Human Services, advanced one step closer to confirmation after Senate Republicans voted his nomination out of the Senate Finance Committee 11-0.   

The Congressional Budget Office (CBO) has cut its projection of the number of individuals expected to participate in Affordable Care Act created individual exchanges by a third. The nonpartisan office now projects about 10 million people a month on average, with 9 million qualifying for subsidized premiums, will be on the exchanges in 2017. Last March it was forecasted that 15 million, 12 million of which would be subsidized, would participate in the exchanges. Additionally, the number of uninsured people under 65 is expected to be 27 or 28 million from 2017 to 2022. 

In the courts

A U.S. District judge has blocked the implementation of a Department of Health and Human Services’ (HHS) rule on third-party insurance payments, ruling that HHS did not follow proper rulemaking procedures. The rule had been finalized by the Obama Administration in December 2016 and was scheduled to go into effect on Jan. 13. The lawsuit filed by three dialysis companies, Fresenius Medical Care, DaVita and U.S. Renal Care, claimed the rule would hamper patient care. The rule came about after insurers complained that kidney care providers were steering Medicare or Medicaid eligible patients into private plans in order to receive higher payments. 

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.

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