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Medicare To Make Coding Pattern Differences Adjustment

Armen Hareyan's picture
Medicare Payments

The Centers for Medicare & Medicaid Services (CMS) today announced calendar year 2010 Medicare Advantage payment rates and Medicare Advantage and Part D prescription drug benefit payment policies.

“The announcement provides Medicare Advantage and prescription drug plans the information they need to structure their benefits and beneficiary cost sharing and prepare their bids for the 2010 plan year,” said Jonathan Blum, Acting Director of CMS’ Center for Drug and Health Plan Choice.

By law, CMS annually updates the Medicare Advantage capitation rates by a growth percentage that reflects growth in all Medicare expenditures, including expenditures under Part A and Part B payment rules. This growth percentage thus reflects the projected reduction in 2010 physician payments provided for under Part B payment rules. CMS announced today that this amount for 2010 will be 0.81 percent.

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For prescription drug program enrollees, the Announcement includes important information about the 2010 Part D deductible, initial coverage limit, out-of-pocket threshold, and related parameters for the standard benefit. The annual percentage increase in average per capita Part D spending – used to update the deductible, initial coverage limit, and out-of-pocket threshold for the defined standard benefit for 2010 – is 4.66 percent.

For the first time, for plan year 2010, CMS will make a “coding pattern differences adjustment” to Medicare Advantage risk scores, reducing Medicare Advantage payment rates to account for differences in disease coding patterns between Medicare Advantage organizations under Part C and the Original Medicare program (Parts A and B). CMS is required by law to adjust Medicare Advantage rates where it finds differences in coding patterns between Medicare Advantage plans and Part A and Part B providers. The adjustment will be applied as a uniform 3.41 percentage reduction to all Medicare Advantage plans’ Part C risk scores in 2010.

In addition, the 2010 rates announced today reflect a provision in recently enacted legislation requiring a multi-year phase-out of the inclusion of costs of indirect medical education in Medicare Advantage rates. The maximum reduction as part of this phase-out is approximately 0.60 percent per year.

The changes announced today update and make final provisions of the Advance Notice that CMS released on February 20, 2009.

A fact sheet on today’s announcement may be viewed at http://www.cms.hhs.gov/apps/media/fact_sheets.asp