Government Payments to Medicare Advantage Insurers Will Increase in 2018

Each year, the U.S. government defines a target payment rate for health insurers, which insurers then use to determine coverage areas and costs. Although the government had proposed in February an increase of 0.25 percent for 2018, it revised that figure earlier this month to 0.45 percent.

The higher rate reflects the government’s assessment that effective spending growth in 2018 will be slightly lower than expected.

These rates will only affect insurers who offer Medicare Advantage plans – an alternative to the standard fee-for-service Medicare – in which private insurers manage health benefits. Medicare Advantage is the fastest growing form of government health care, with enrollment of 18 million people last year.

The government’s announcement included a request for public comments on other changes it could make to improve the Medicare and Medicare Part D programs. The U.S. Centers for Medicare & Medicaid Services also said that it would provide incentives to encourage organizations to develop new plans with “innovative” provider-network arrangements.

Source: Reuters, April 3, 2017.