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DaVita HealthCare Partners expects Medicare Advantage rate loss for 2016
DaVita HealthCare Partners Inc. said that the Centers for Medicare & Medicaid Services' final Medicare Advantage benchmark payment rates, announced April 6, will lead to a reduction in Medicare Advantage rates to the company’s HealthCare Partners business of approximately 2%, or a net impact of approximately $50 million to 2016 operating income, the company said in an SEC filing April 8. Many health plans will see a rate increase of 1.25%, But DaVita will be negatively impacted by CMS' modification of the risk adjustment calculation, which CMS said will decline by 1.7%.
"For CY 2015, CMS used the 2013 CMS-HCC and 2014 CMS-HCC models, blending the resulting risk scores from each model at 67% and 33%, respectively," CMS said in an announcement of the newrates. "In the 2016 Rate Notice, CMS finalized the proposed policy to end the blend and calculate risk scores based entirely on the 2014 CMS-HCC model. This revised model comprises both an update to the data years used to recalibrate the model, and a clinical update to the disease categories to reflect more recent clinical experience. The advantages of using this model include reflecting more recent utilization and costs, being more clinically accurate, and including updates to accommodate ICD-10 codes. "