HUM Humana Inc

By Stephanie Armour 

Federal regulators will give a larger-than-expected average payment increase to insurers that offer private Medicare plans.

The boost will aid companies that offer the plans under Medicare Advantage, the program in which beneficiaries can get Medicare policies from private companies. The insurers are then paid by the federal government.

Insurers selling the plans will see their payment rates go up by 0.45% on average next year, according to the Centers for Medicare and Medicaid Services. That is higher than the 0.25% increase the government had floated earlier this year.

"These programs have been successful in allowing innovative approaches that give Medicare enrollees options that best fit their individual health needs," CMS Administrator Seema Verma said in a statement.

Beneficiaries of Medicare, the federal health-insurance program for people aged 65 and over and the disabled, can choose to opt for these private alternatives to traditional government-run coverage. The payments are closely watched by insurers, which lobby to keep them from dropping as the plans are a major line of business for many health insurers.

America's Health Insurance Plans, the largest industry trade group, said more must be done by the Trump administration to bolster Medicare Advantage. Nearly one third of Medicare beneficiaries, or about 18.5 million Americans, are in the plans, according to AHIP.

The organization said steps need to be taken to reduce regulatory burdens on insurers and change the way providers are paid. They also called for more flexibility in the program.

"We believe more must be done to ensure beneficiaries are well supported in achieving their best health," Marilyn Tavenner, chief executive of AHIP, said in a statement.

Humana Inc. and UnitedHealth Group Inc. are major players in the Advantage program. The impact of payments on individual insurers varies depending on their mix of business.

Medicare Advantage enrollment has grown significantly in recent years, according to a May 2016 report by Avalere Health LLC. Still, 38 million people -- or almost 70% of all Medicare beneficiaries -- still choose to get their benefits from traditional fee-for-service Medicare.

The payment bump means Medicare Advantage plans will see a total change of 2.95% in revenue when adjustments to the way medical conditions are reported are taken into account, according to CMS.

Write to Stephanie Armour at stephanie.armour@wsj.com

(END) Dow Jones Newswires

April 04, 2017 13:01 ET (17:01 GMT)

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