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Medicare Advantage Payments Will Increase in 2016

In good news for members of Medicare Advantage plans, the Centers for Medicare and Medicaid Services announced earlier this month that Medicare Advantage payments will increase next year. See what this means for plan members in our blog.

Medicare Advantage Payments Increase

CMS said payments to insurers offering Medicare Advantage plans will increase by 1.25% next year. In addition, “the agency said insurers likely will see their overall revenue increase about 3.25% as they deliver, and bill for, more intensive services,” according to the Wall Street Journal.

This news is especially welcoming considering the fact that CMS had actually estimated in February that Medicare Advantage payments for 2016 would decrease by 0.95%. While the overall revenue increase would have been about 1.05% (as a result of billing for more intensive services), the significant reversal between February and April was welcomed by insurers and beneficiaries alike.

So what brought about the increase? According to CMS, the shift was “largely tied to tweaks in estimates by the Medicare agency’s actuaries of how fast spending has been growing in the program, rather than changes in policy compared with the earlier proposal.” Advocates for Medicare Advantage also made their voices heard between February and April, when the the final payment proposal was announced.

What does this mean for beneficiaries?

Medicare Advantage enrollment “has grown by about 8% annually since 2010,” according to Modern Healthcare. As the program’s size increases, so must its financial requirements, so that it may best serve the needs of its members. The increase in payments is consistent with increases over the past several years, and will enable Medicare Advantage plans to continue to offer benefits such as vision, dental and hearing. In addition, “More than 90% of Advantage members also have access to a plan with no monthly premium.”

In short, this is a great thing for beneficiaries. The reversal of a 0.95% decrease to a 1.25% increase shows that CMS listened to the voices of Medicare Advantage advocates and understands the needs of Medicare Advantage plan members, who now make up 1/3rd of total Medicare coverage.

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