Medicare Advantage Gets Smaller Pay Bump Than First Proposed

Medicare Advantage plans will receive a smaller rate increase than initially proposed, but changes still will be made to better account for plans that serve seniors with complex health needs, the Centers for Medicare & Medicaid Services (CMS) recently announced.

The final 2017 update for Medicare Advantage plans is likely to increase revenue by an average of 0.85%, CMS stated in announcing the final update on Monday. That’s below the 1.35% increase proposed in February. Factoring in other adjustments, the expected average change in revenue is 3.05%, compared with 3.55% floated in the advance notice.

The smaller increase is due mainly to technical updates related to risk adjustment.


The agency is moving forward with a new system meant to more accurately account for the cost of care for dually eligible beneficiaries. These people who are eligible both for Medicare and Medicaid benefits typically have more complex care needs and fewer resources. Some home health companies see dual eligible care as a strategy, given that enrollment in managed care plans such as Medicare Advantage have rapidly expanded in recent years. Being able to help control costs for some of the most expensive beneficiaries could make providers valuable partners for these managed care payors.

“These changes will improve the precision of the payments made to plans, including increases in payments for plans serving full benefit dually eligible beneficiaries, and will support health equity and payment accuracy,” CMS stated in its announcement.

Written by Tim Mullaney


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