The federal Centers for Medicare & Medicaid Services (CMS) says it will let the Medicare Advantage health plan "growth rate," or cost trend, increase to 3.07% in 2013, from 0.7% this year.
CMS also is making good on earlier announcements indicating that it would try to put more teeth in its 5-star plan quality rating system.
CMS has released a Medicare program final rule that is set to appear in the Federal Register April 12. The agency also has released key 2013 Medicare Advantage and Medicare Part D program bidding documents: The rate announcement and the "final call letter."
The Medicare Advantage program and the Medicare Part D program give private carriers an opportunity to sell insurance to Medicare enrollees.
Provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) and other new federal laws have encouraged CMS to do more to encourage Medicare enrollees to use higher-performing plans.
In 2012, CMS rewarded plans that had 4-star or 5-star quality ratings by paying them more than it paid lower-rated plans.
In 2013, CMS will give itself the authority to terminate a Medicare Advantage plan or Medicare Part D prescription drug plan contract if the sponsor gets ratings lower than 3 stars for 3 consecutive years.
"The data used to calculate the plan ratings is plan performance data that serves as evidence that the sponsor has reached the substantial failure standard that CMS must use...to make a contract termination decision," officials say in a preamble to the final rule.
CMS officials say in the final call letter say they will write to consumers in the low-rated plans and help them switch to higher-rated plans, even if that means the consumers must switch outside the normal enrollment period.
Comments on the final rule will be due 60 days after the official Federal Register publication date, officials say.
The final rule is set to take effect Jan. 1, 2013.
CMS officials said in October 2011 that it wanted to give itself the authority to kick out low-scoring plan sponsors.
CMS Acting Administrator Marilyn Tavenner says the new rule should help Medicare plans offer solid value in 2013.
"The changes we're implementing today will lower costs for people with Medicare," Tavenner says in a statement.
Bids are due June 4.
Information about agent and broker compensation structures will be due in late July.
CMS periodically takes a hard look at Medicare plans with few enrollment.
This year, officials say in the final call letter, CMS will begin to collect plan performance data for plans that had fewer than 1,000 enrollees in 2012.
"Currently, there is very little information available on the quality of care provided by low-enrollment contracts," officials say. "We are currently working on a strategy to create plan ratings scores for contracts with low enrollment."