The Trump administration has proposed keeping Medicare payments to private insurers effectively flat next year, with an average rate increase of just 0.09%, according to a media report. The Centers for Medicare and Medicaid Services (CMS) is scheduled to make the proposal public on Monday.
In addition to the minimal average rate adjustment, the agency is expected to recommend eliminating a billing practice used by the industry that government watchdogs have criticized as lucrative. CMS officials say the dual goals of the measure are to improve payment accuracy and to ensure Medicare insurers receive appropriate reimbursement for the plans they administer.
Officials at the department that oversees CMS did not immediately respond to requests for comment on the proposal. A Medicare official, cited in the report, described the plan as an effort to simplify the existing billing system and to strengthen competition among plan operators.
Private Medicare plans, commonly known as Medicare Advantage, represent a significant line of business for health insurers. Federal decisions on payment rates are therefore a key component of those insurers' financial outlooks. The proposed 0.09% average increase in payments has been calculated at roughly $700 million in aggregate for the industry.
The package that CMS plans to present combines a near-zero average increase in rates with a regulatory change aimed at removing a billing technique viewed as particularly profitable by the industry. The report notes that the billing practice has attracted scrutiny from federal watchdogs, and that CMS intends to include its elimination as part of the proposal it will release.
CMS says the overall purpose of the proposed actions is to refine payment accuracy and to make billing processes less complex, which the agency believes will help foster greater competition among Medicare Advantage plan providers. How individual insurers will be affected will depend on their specific enrollment mixes and reliance on the disputed billing practice. The modest rate change and the policy tweak together form the core of the administration's approach to next year's Medicare insurer payments.