Musings on the Way to a Bids Deadline: Does It Only Seem Quieter This Time Around?

By James Gutman - May 27, 2015

If there is one time of year when Medicare Advantage (MA) and Part D executives are sure to be burning the midnight oil, it is now: a few days before the deadline for submission to CMS of their bids for the following year. But while the pre-bid period this time around still is hectic, the impression I’m getting from some industry actuaries and consultants is that it’s a little less so than in the past few years despite an unusually short period between the final 2016 pay-rate notice (April 6) and the bids deadline (June 1).

There may be a few reasons for the relative tranquility this time. One is that the phase-in of the new MA rate methodology to that called for in the Affordable Care Act is virtually done, meaning those plans that can keep their year-to-year spending growth a little below the national Medicare fee-for-service trends can achieve higher profit margins in the future, notes consultant Bill MacBain, senior vice president, strategy at Gorman Health Group, LLC. A second is that the overall pay-rate change for many MA plans next year is slightly positive, compared with considerably negative the past couple of years. And perhaps a third may be that MA sponsors are getting accustomed to working with CMS’s new yardsticks, such as the continued $32 per-member per-month limit in most situations on the increase in enrollee cost from year to year.

To be sure, there are lots of countervailing factors that make MA bid preparation for 2016 less than a walk in the park. The complete phase-in of the new CMS risk-adjustment methodology, for instance, figures to cost many MA insurers plenty in 2016, and they are looking for ways to offset this. Moreover, the Part D standard benefit is getting richer next year as the Initial Coverage Limit goes up, and this has to be figured into the bids. So do the many new risk-sharing arrangements that plan sponsors are working out with providers for next year.

How has the bid period so far gone for you? How will the size industrywide of premium hikes and benefit cuts (including for ancillary benefits such as dental) compare with those changes a year ago? What about the prevalence of service-area expansions and contractions? Are we indeed entering a quieter era for MA bids, or is this just the calm before the storm?

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