CMS finalizes 2016 Medicare Advantage payment rates: 10 things to know

CMS announced Monday that Medicare Advantage payment rates will increase by 1.25 percent on average in 2016.

Here are 10 things to know about next year's payment rates.

1. The announcement was unexpected given CMS' February proposal that suggested health insurers offering Medicare Advantage plans would see their rates cut by approximately 0.95 percent in 2016.

2. Under the finalized payment rates, health insurers will see Medicare Advantage payment rates go up 3.25 percent on average after expected growth in plan risk scores due to coding are factored in, according to CMS.

3. The rate increase was based on a higher estimate of traditional Medicare spending and does not stem from a change in policy, according to CMS.

4. UnitedHealth — the top provider of Medicare Advantage plans last year — stands to get the biggest revenue boost from the increased rates, according to Bloomberg.

5. Along with the payment rate increases, CMS announced the star rating system used to assess the quality performance of plans will be updated in 2016 to "strengthen the accuracy of the evaluation system."

6. Insurers will also be required to take steps to ensure their physician and provider directories are up-to-date, according to CMS.

7. CMS will also begin working with insurers offering Medicare Advantage plans to collect information on their adoption of value-based payment models.

8. Medicare Advantage enrollment has increased by 42 percent since the passage of the Patient Protection and Affordable Care Act in 2010. Nearly 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan.

9. "The finalized policies will continue to strengthen the growing Medicare Advantage program, and continue the successful implementation of the Affordable Care Act's reforms that improve quality and provide greater protections for beneficiaries and value for taxpayers," CMS said in the announcement.

10. CMS said the changes will help align the Medicare Advantage program with the goal HHS announced earlier this year of having 30 percent of Medicare payments based on how well patients are cared for in 2016 with that number increasing to 50 percent by 2018.

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