NEW YORK (Reuters)—U.S. health insurers that provide Medicare Advantage plans to elderly and disabled Americans will receive government payments in 2017 that are 0.85 percent higher on average than in 2016, reflecting small anticipated growth in medical costs, the U.S. Department of Health and Human Services said on Monday.
Health and Human Services’ final plan to raise payments is a bit lower than the 1.35% increase the agency had proposed in February. It said the lower figure reflects revisions to medical services cost calculations.
In addition, the agency said it planned to introduce a two-year transition period to implement reductions in payments to insurers that offer employer-sponsored prescription drug plans for retirees. After it proposed the cuts to 2017 payments in February, insurers and other lobbying groups said the agency was too aggressive.
Insurers including UnitedHealth Group Inc., Aetna Inc. and Anthem Inc. manage health benefits for more than 17 million Americans enrolled in Medicare Advantage plans.
The other more than 30 million people eligible for Medicare coverage are part of the government-run fee-for-service program.
Each year the government sets out how it will reimburse insurers for the healthcare services their members use. Payments vary by region, the quality rating earned by the plan, and the relative health of the members.