Medicare Advantage to Pay Issuers a Little More for 2021 Coverage

Medicare Advantage program managers say they’ll let their support for the issuers increase a little in 2021, but just a little.

The Centers for Medicare and Medicaid Services (CMS) posted 2021 Medicare Advantage plan and Medicare Part D prescription drug plan information Monday, in the final 2021 Medicare plan rate announcement.

CMS it expects average payments to Medicare Advantage plan issuers to increase 1.66% in 2021.

Resources

A copy of the 2021 Medicare Advantage rate framework announcement is available here.
An article about the final Medicare Advantage bidder package for 2020 is available here.

That’s up from a predicted 2021 increase of 0.93% that was included in the 2021 advance Medicare plan program rate notice, which was released in February.

But the increase is down from an average increase of 2.53% for 2020, and down from an average increase of 3.4% for 2019.

Medicare Plan Basics

The Medicare Advantage program gives insurers a way to offer coverage that serves as an alternative to “Original Medicare” coverage, and the Medicare drug plan program gives insurers a way to offer Medicare enrollees dental insurance.

Medicare Advantage plans now cover about 25 million of the 62 million Medicare enrollees, up from 23 million a year ago.

Funding for both the Medicare Advantage program and the Medicare drug plan program comes from a combination of government payments and enrollees’ own premium payments. Issuers can choose to keep the enrollees’ premium payments at or close to $0 or to charge more in exchange or providing richer benefits.

Risk Scores

CMS runs a risk-adjustment program that’s supposed to buffer Medicare plan issuers against assuming an unfair level of risk. The issuers in the program assign a risk score to each patient.

The patient risk scores have been going up. The issuers say that’s partly because the patients are getting riskier and partly because they’re getting better at assessing risk.

CMS has complained that some issuers are working too hard to find reasons to increase patients’ risk scores.

The 2021 federal Medicare Advantage plan payments include a 2.54% payment reduction to reflect the effects of “normalization,” or an effort to adjust the rates to eliminate the effects of what CMS thinks is unreasonable increases in risk scores.

Reactions

Allyson Schwartz, the president of the Better Medicare Alliance, a group for people and organizations with an interest in Medicare plan programs, said in a statement about the 2021 rate announcement that the final payment rates look better than what was in the advance notice.

But she noted that the issuers are now scrambling to do things like offering telemedicine visits with no out-of-pocket costs for the patients, and COVID-19 testing with no out-of-pocket costs for the patients.

“Further guidance from CMS is needed to better understand what costs are anticipated to be for COVID-19 treatment in 2021,” Schwartz said. “Stability and certainty are critical for patients and plans alike in order to maintain the quality, cost-effective care that is saving beneficiaries nearly $1,600 a year compared to traditional Medicare.”

CMS now lets people with end-stage kidney disease — who typically are getting dialysis, and who may be seeking kidney transplants — use Medicare Advantage plan coverage only if they end up with end-stage kidney disease while enrolled in a Medicare Advantage plan.

CMS wants to let all people with end-stage kidney disease enroll in Medicare Advantage plans starting in 2021. The agency has proposed compensating for the high cost of treating people with severe kidney disease by taking care of the cost of getting the kidneys used in transplants itself.

The Better Medicare Alliance and America’s Health Insurance Plans have argued in the past that CMS did not seem to be doing enough to respond to the impact of covering people with severe kidney disease on Medicare Advantage program costs.

Schwartz said, in response to the final 2021 rate notice, that CMS still has not made the changes needed to ensure that the payments for care for people with severe kidney disease will be adequate.

“Our advocacy work on behalf of this vulnerable patient community will continue,” Schwartz said.

She said Medicare Advantage plan issuers may also need program changes, such as risk-adjustment program formula changes, to respond to the COVID-19 pandemic.