CMS Finalizes 2017 Updates for Medicare Health and Drug Plans

WASHINGTON, D.C. (April 5, 2016)—The Centers for Medicare & Medicaid Services (CMS) released the final Medicare Advantage and Part D Prescription Drug Program changes for 2017 that seek to provide stable payments to plans, and make improvements to the program for plans that provide high quality care to the most vulnerable enrollees.

“We continue to strengthen Medicare Advantage and Medicare Part D, in particular for enrollees who need additional investments in their health, such as dually Medicare-Medicaid eligible individuals and those with complex socioeconomic needs,” said acting administrator Andy Slavitt. “With these policies, we will continue to see improvements in growth, affordability, benefits and quality for millions of seniors and people living with disabilities.”

The final policies are similar to those proposed in February but incorporate several changes in response to feedback received during the public comment period. On average, the expected revenue change is 0.85 percent without accounting for the expected growth in coding acuity that has typically added another 2.2 percent. The final revenue increase is somewhat smaller than the increase estimated in the February Advance Notice due primarily to technical updates in the risk adjustment normalization factor.

This growth is consistent with last year’s update and reflects a similar pattern in Medicare fee-for-service. Plans that improve the quality of care they deliver to enrollees can receive higher updates to enhance the benefits they offer to enrollees.

New policies will improve the accuracy of payments to Medicare Advantage plans that serve vulnerable populations, such as dually eligible or low-income beneficiaries. Specifically, a revised methodology used to risk adjust payments to plans will more accurately reflect the cost of care for dually eligible beneficiaries. CMS will also implement an interim adjustment to the Star Ratings to reflect the socioeconomic and disability status of a plan’s enrollees. Additionally, CMS’s finalized policies will provide much needed stability to the Medicare Advantage program in Puerto Rico.

CMS is also finalizing policies that will further combat opioid overutilization by encouraging safeguards before an opioid prescription is dispensed at the pharmacy and maintaining access to needed medications.

The announcement drives improvements to payment for Medicare Advantage plans and continues to promote improvements in quality of care for beneficiaries. Together, these changes will ensure the Medicare program remains strong and stable for current and future enrollees.

Rate Announcement and Call Letter
For a general fact sheet on the 2017 Rate Announcement and Call Letter, visit the CMS website.