On February 20, 2009, Centers for Medicare & Medicaid Services (CMS) released its Advance Notice of Methodological Changes for Calendar Year (CY) 2010 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies. The Advance Notice includes proposed changes to Medicare Advantage capitation rates, risk adjustment of payments for Medicare Advantage and Medicare prescription drug plans, and updates to the Medicare Part D benefit. As required by statute, the Advance Notice was released 45 days prior to announcement of the final rates on April 6, 2009.

The Advance Notice includes a preliminary estimate of a 0.5 percent increase in the National Per Capita Medicare Advantage Growth percentage, which is applied to county-specific capitation rates. The county capitation rates define the upper limit for CMS payments to Medicare Advantage plans. The Advance Notice also announces proposed normalization factors for Part C and Part D risk scores, which are used to maintain average Part C and Part D risk scores at 1.0 for each payment year. The preliminary normalization factor for Part C risk scores is 1.041, and for Part D risk scores is 1.146.

In addition, CMS announced the annual updates to Medicare Part D benefit parameters for 2010, increasing the deductible, initial coverage limit and out-of-pocket threshold for the defined standard benefit for 2010 by 3.13 percent.

The Advance Notice addresses other topics, including further adjustments to the calculation of Part C and Part D risk scores, calculation of the Medicare Secondary Payer adjustment for Medicare Advantage plans, access standards for Medicare Advantage private fee-for-service plans operating in a network area for 2011 and changes to Medicare Part D drug cost reporting by Part D sponsors.

You may read the full text of the Advance Notice here, and the CMS Fact Sheet regarding the Advance Notice.