The federal Centers for Medicare & Medicaid Services (CMS) says preliminary 2012 payment policies for Medicare drug and health plans should maintain beneficiary choice.

The national per capita Medicare Advantage health plan “growth percentage” change, or cost trend, will be just 0.7%, but quality rating bonus should increase the average actual Medicare Advantage per-capita payment 1.6%, officials said today during a press conference.

The officials held the press conference to announce the posting of the 153-page advance notice and call letter for the 2012 Medicare Advantage and Medicare Part D prescription drug plan bidding process.

THE PROCESS

Potential bidders and other stakeholders have until March 4 to comment on the advance 2012 notice and the draft 2012 call letter.

The final 2012 rate notice and call letter will be available April 4, and bids will be due June 6.

Information about agent and broker compensation structures will be due July 25.

COMPENSATION DESIGN

In 2012, plans that have 4-star or 5-star quality ratings on a 5-star scale will get higher payments than other plans, and plans in some counties will get higher payments than in other counties, officials said.

CMS will offer a special enrollment period in 2012 to help Medicare Advantage enrollee switch to a plan with a 5-star rating at any time during the year.

CMS is not planning to change coding intensity or risk adjustment factors.

CMS will put bids that call for total premium and out-of-pocket cost increases of 10% or more through a more intensive level of review, officials said.

CMS is including the rate review threshold in the bidding process because of complaints that it applied a threshold during the 2011 bidding process without warning the bidders, officials said.

TOO SMALL MAY NOT BE BEAUTIFUL

In the draft call letter, CMS officials note that they may eliminate some

ordinary Medicare Advantage plans that have been in existence for 3 or more years but have fewer than 500 enrollees.

CMS may also eliminate some “special needs plans” for people with serious health problems that have fewer than 100 enrollees.

To keep a low-enrollment plan going, a Medicare Advantage organization “must provide justification for low enrollment under the standards in the final rule or confirm through return email that the plan will be eliminated or consolidated with another of the organization’s plans for [Calendar Year] 2012,” officials say.

CMS will consider renewing a low-enrollment plan if reasonable factors, such as geographic location, are responsible for the low enrollment level, officials say.