Medicare Advantage Plans Will See 2.8% Pay Boost in 2022, CMS Projects

by Lauren Flynn Kelly

Following up on its promise to advance the timeline for releasing rates and other information relevant to the 2022 bid cycle, CMS on Oct. 30 posted Part 2 of the 2022 Advance Notice. Combined with other factors such as an effective growth rate of 4.55% for fee-for-service Medicare and a negative FFS normalization factor of 1.64%, the expected average change in revenue for plans in 2022 is 2.82%.

To Brad Piper, a principal and consulting actuary at Milliman, the only thing surprising about the document was its early release, which usually posts in early February. "It either maintained prior provisions or reinforced changes that CMS had already mentioned were in the pipeline, so there were no real changes there," he says. Piper adds that the 2.82% increase is "relatively average."

Pointing out that the preliminary rates are usually subject to change, Citi analyst Ralph Giacobbe on Nov. 2 observed that the 2.82% change represents the biggest increase since 2019’s final rate boost of 3.4%. It is worth considering, however, "that the relatively higher rate backdrop comes amid COVID-19, when the impact of shelter-in-place orders, bans on elective procedures, and the behavioral consequences of healthcare utilization amid a pandemic could result in greater higher acuity and subsequently higher healthcare spending for the elderly population," he wrote. "Nevertheless, we see the healthy rate backdrop as favorable for the MCOs."

In addition, CMS in Part 2 of the Advance Notice sought feedback on several potential modifications to the Parts C and D star ratings, including two new Part C measures: (1) Provider Directory Accuracy, which could consider what percent of plan information is inaccurate, and (2) COVID-19 Vaccination, which would be added to the Consumer Assessment of Healthcare Providers & Systems survey.

The addition of the latter was a "little bit interesting," says Piper. "It's very timely and I think CMS's approach here is, 'Look, we want to make sure that the COVID vaccine is provided to seniors as soon as possible,' and so one of the ways that CMS can put some incentive around that is to create a star measure that would reward or penalize plans for either being prompt or late with that vaccine administration."

From RADAR on Medicare Advantage