CMS proposes slight decrease in Medicare Advantage payments

Health insurers offering Medicare Advantage plans will see their rates cut by approximately 0.95 percent in 2016, according to a recent proposal from CMS.

Since Medicare adjusts payments to insurers based on health risks of their customers, the changes will affect plans differently. When combined with expected growth in plan risk scores due to coding, the yearly adjustments could mean that some plans would experience revenue growth of 1.05 percent, according to CMS.

For health insurers who rely significantly on Medicare for their earnings, the proposed cuts can have serious implications. Humana said due to its geographic and member diagnosis mix the CMS proposal would mean a 1.25 to 1.75 percent cut for its managed care company in 2016, according to a Reuters report.

The proposed payment cut for next year is more modest than last year's proposed rate reductions of 1.9 percent. However, due to aggressive lobbying by the medical industry, the full cuts never went into effect, according to a report from The Hill.

The finalized payment rates are expected to become final April 6.

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