CMS Issues Preliminary 2011 Payment Policies

The Centers for Medicare & Medicaid Services (CMS) issued an “Advance Notice” Feb. 19, notifying health plans of its intention to calculate health care capitation rates for 2011 payments to Medicare Advantage organizations using a changed methodology. The Advance Notice also addresses policy and technical changes to payment methodologies for Medicare Advantage (Part C) and Medicare prescription drug (Part D) plans.
The Advance Notice is being sent out with the annual “Call Letter” to health plans, which outlines non-payment changes for the upcoming calendar year.

Highlights of the Advance Notice and Call Letter include:

A preliminary estimate of a 1.38 percent change in the National Per Capital Medicare Advantage Growth Percentage.
Changes in the methodologies for risk adjusting payments to Medicare Advantage and Medicare prescription drug plans.
Preliminary estimates of normalization factors used to maintain average Part C (1.031) and Part D (1.029) risk scores at 1.0 in the payment year.
A proposal to continue making adjustments for differences in coding patterns between Medicare Advantage and Medicare’s Part A and Part B providers. The proposed adjustment of 3.41 percent would be applied as a uniform percentage reduction to all plans’ Part C risk scores in 2011.
Announcements of the annual updates to the Medicare Part D benefit parameters, which are virtually unchanged from 2010, with the exception of a small increase ($10) in the Initial Coverage Limit.

You can view the Advance Notice and draft Call Letter on the CMS website.