On April 6, 2009, the Centers for Medicare and Medicaid Services (CMS) released the Announcement of CY 2010 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies (Announcement). CMS’s final estimate of the National Per Capita MA Growth Percentage, which will be used to update CY 2010 payment rates, is 0.81 percent. This figure reflects a 0.31 percent increase above the initial estimate announced in February’s Advance Notice, “reflecting a different set of economic assumptions,” but remains significantly lower than the average increases of prior years because of the estimated 21 percent physician fee reduction for 2010 contained in current law.

CMS also indicates that it will implement a uniform coding difference reduction of 3.41 percent to all Medicare Advantage (MA) Plans’ risk scores to reflect the effect on CY 2010 rates of different growth rates in MA and traditional Medicare fee-for-service (FFS). CMS provides a detailed review of its approach to implementing this coding adjustment in its response to public comments to the Advance Notice. Notably, CMS considered including 2007-08 data in its calculation of the coding intensity adjustment, but because the difference between MA and FFS growth rates “accelerates” significantly with inclusion of 2008 data, CMS elected to take a “conservative” approach in the inaugural year of this adjustment and only relied upon data from the 2004-05, 2005-06 and 2006-07 data cohorts.

In addition to identifying the Medicare Part D benefit parameters for the defined Part D standard benefit, CMS also addresses other issues in the Announcement, such as collection and use of MA encounter data, phase-out of the Indirect Medical Education payment and location of network areas for CY 2011 private fee-for-service plans.

The Announcement can be found on CMS’s website at http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2010.pdf.