The Centers for Medicare & Medicaid Services (CMS) announced a 5.06% Medicare Advantage payment increase on Friday – more than double the rate suggested by the outgoing Biden administration.
The final rule is largely positive news for the home-based care community, Fred Bentley, managing director in ATI Advisory’s care continuum strategy and solutions practice, told Home Health Care News. Increases in MA rates will trickle down to providers, he said, softening the impact of MA’s overall low rates.
It also sheds light on the Trump administration’s stance on Medicare Advantage, a program whose rapid expansion has created significant challenges for in-home care providers.
“Compared to the advance notice released by the Biden administration in January, the steeper rate growth indicates the Trump administration’s support of the MA program despite overpayment concerns,” Tao Qiu, a senior healthcare equities research analyst at Macquarie, said in an analyst note. “The substantial increase in payment rates presents opportunities for enhanced MA plan profitability following several years of low growth and risk coding adjustments left rates behind utilization and the cost trend.”
Health care providers can indirectly benefit from improved contract rates, reduced prior-authorization and claims denials, Qiu said. It may also accelerate further growth of MA plans.
“We do anticipate that Medicare Advantage will continue to grow enrollment,” Bentley said. “Medicare Advantage plans definitely pay home health providers less than what they get through Medicare fee-for-service, through traditional Medicare. Then it is not uncommon for Medicare Advantage plans to try and pay home health providers less than Medicaid rates, which is a pretty low bar. … It will be a dominant payer of any sizable home health providers’ payer mix.”
The final rule was met with enthusiasm from Wall Street. Share prices of major health plans, including UnitedHealth Group (NYSE: UNH), Centene (NYSE: CNC) and CVS Health (NYSE: CVS) jumped between 5% and 10%, according to Reuters. Humana (NYSE: HUM) experienced a 16% gain.
Home-based care providers need to continue to track the standard rule-making process, Bentley said. He also encouraged providers to report any instances of MA plans failing to adhere to regulations, such as offenses relating to retrospective denials.
“Keep tabs on these things and report up to your association partners those instances, because I do think there’s receptivity in CMS,” he said. “I know there’s receptivity on the Hill.”
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