By Caroline Humer
NEW YORK (Reuters) - The U.S. government on Monday slightly improved its final payment rate for health insurers who offer Medicare Advantage plans for older people and the disabled, settling on an increase of 0.45 percent on average for 2018.
Medicare Advantage, an alternative to the standard fee-for-service Medicare in which private insurers manage health benefits, is the fastest growing form of government healthcare, with enrollment of 18 million people last year.
While the outlook for other forms of U.S. government healthcare uncertain under President Donald Trump, health insurers are banking on Republicans embracing the use of Medicare Advantage.
Each year the government sets out a target rate that it will pay insurers, which then use the data to decide on coverage areas and costs.
On Feb. 1, the government proposed an increase of 0.25 percent. The change in Monday's final rate reflects the government's assessment that effective spending growth will be slightly lower than it had originally targeted.
Insurers who provide these plans include WellCare Health Plans Inc, Anthem Inc, Humana Inc, UnitedHealth Group Inc and Aetna Inc. Shares in the companies were little changed in extended trading.
The Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services, also said that it would be providing incentives to encourage organizations to develop new plans with "innovative" provider network arrangements.
The government announcement included a request from the public on other changes it could make to improve the Medicare and Medicare Part D programs.
Ipsita Smolinski, managing director at research firm Capitol Street in Washington, said that the Trump administration wants to simplify Medicare Advantage so that insurers do not have to "jump through so many hoops."
That could mean changing the system of measurements used by the government to pay insurers more or less depending on how they are rated as well as other certification and audit programs, she said.
Insurers still face uncertainty for 2018 over the health insurance tax, she said. The Republican health plan that was proposed by Congress would have eliminated the tax, currently on hiatus, but the bill’s failure has put the tax back on the table for 2018.
(Reporting by Caroline Humer; Editing by Marguerita Choy and Lisa Shumaker)