It's Not Over Until Someone Signs! Announcement of 2012 Medicare Advantage Final Call Letter

On 04/04/2011 CMS announced the final MA capitation rates and to our industry’s surprise the final rates were quite different from those projected in the initial February notice. The highlights from the final call letter are as follows:

1. 2012 MA capitation rates will increase a mere 0.4%, a staggering1.2 % less than projected 45 days ago. Health plan CFOs are already working on strategies to trim benefits and remain competitive with market competitors, this will enable plans to either reduce or eliminate the impact on their earnings.  
2. Please note that the above rate increase does not include any Risk Adjusted premium increases perceived by plans, so those of you who have been working hard will begin to reap tremendous competitive advantages in 2012.  
3. The Final Call projects a negative growth factor for MA of -0.16%. A far cry from the well-received growth projection of 0.7% given 45 days ago. This based on lower physician rates that are also announced in the Call Letter. After all it’s the providers who truly market MA products based on their overall satisfaction with plan benefits and compensation.  
4. CMS will conduct Integrity Audits on plans with members’ share of cost at or above 10% after 7/1/2011. Expect to see plans try to stay below the 10% to avoid CMS audits 
5. RADV Audit Methodology has remained unchanged.  While CMS received a tremendous response rate from the letter sent out in December 2010, it has decided not to implement method changes for the time being.  Expect the method announcements later this year.  
6. STARS – CMS will be paying Quality bonuses for plans with higher than 3 Stars in 2012; these plans will also be given competitive advantages during enrollment periods in an attempt to increase highly rated plans’ growth year round. The key here will be plans’ ability to work with providers, since a large number of the STAR measures are directly dependent on the Provider offices.   

   In short this ride of ups and downs continues; the survival skills for MA remain constant: excellence in HCC, and your plan’s ability to develop long term partnerships with providers to yield the high quality equitable healthcare delivery experience we all want for ourselves in the not too distant future!

    

   Kenneth Persaud CEO, Precision Healthcare Systems