CMS sweetens managed Medicare pot

Sunday, March 30, 2003

March 31, 2003

WASHINGTON - CMS is raising reimbursement for managed Medicare health plans beyond the 2% increase mandated by law and phasing in new adjustment methodology to help Medicare managed care plans that enroll the sickest beneficiaries.

The payment increases and the new methodology, which CMS claims is more accurate, are consistent with the Bush administration’s pledge to sweeten the pot for health plans that manage Medicare beneficiaries.

The new risk adjustment methodology may induce more managed health plans to keep sicker Medicare beneficiaries. In 2004, for the first time, those adjustments will be based on both diagnoses from inpatient hospitalizations and outpatient and physician settings.

The new methodology, called the CMS-HCC model, is expected to increase payments to plans that care for the sickest beneficiaries - those patients who stand to gain the most from managed care's focus on coordinating care.

Risk adjustment looks at a person's diagnosis in one year and predicts how much, if any, additional cost there will be for that person the next year.