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.
- 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.
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.