CMS Announces 2015 Rate Cut for Medicare Advantage Plans

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On February 21, 2014, CMS released an Advance Notice estimating a decline of 1.9% in 2015 payments for Medicare Advantage (MA) plans.  The preliminary estimate of the decline is based on the per capita MA growth percentage, estimated at -3.55%, combined with the per capita fee-for-service growth percentage, estimated at -1.65%, which CMS noted represents “historically low growth” in Medicare spending.  Nearly 30% of Medicare beneficiaries are covered by MA plans. 

In addition to announcing the decline in capitated MA payments, the Advance Notice also modifies the quality bonus payment (QBP) to MA organizations.  Between 2012 and 2014, the QBP was based on a sliding scale model associated with a MA organization’s star rating.  In calendar year (CY) 2015, the QBP percentage will be a flat rate of 5%, issued only to MA organizations with a quality ranking of four or more stars.  The final announcement of the CY 2015 Medicare Advantage capitation rates, together with Medicare Advantage and Part D payment policies, is expected to be released on April 7.  Comments must be received no later than 6:00 PM EST on March 7 and may be emailed to AdvanceNotice2015@cms.hhs.gov.

Reporter, Paige Fillingame, Houston, +1 713 615 7632, pfillingame@kslaw.com.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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