Sunday, March 24, 2013

Will CMS Reconsider 2014 Payment Cuts to Medicare Advantage?

In a bipartisan effort, lawmakers are pushing the Centers for Medicare and Medicaid Services (CMS) to reverse proposed 2014 payment cuts for Medicare Advantage (MA) and Medicare Part D Prescription Drug Plans.  The proposed cuts would have a crippling effect on 2014 MA plan offerings and the more than 14 million Medicare beneficiaries on MA plans.

MA plans constitute the part of Medicare through which private health plans provide comprehensive medical and drug coverage to seniors and other Medicare beneficiaries.  CMS recently proposed a 2.3 percent reduction in MA payments for 2014 at a time when medical costs are projected to increase by three percent.  This is the lowest growth rate in the history of the MA program, and it is far below the 2.8 percent increase in payment rates for 2013.

Karen Ignagni, America's Health Insurance Plans (AHIP) President and CEO, recently stated, "The proposed changes to Medicare Advantage payments are a crushing blow to the millions of seniors and people with disabilities who count on this critically important part of Medicare."

The new proposed payment cuts are in addition to the MA cuts and new health insurance tax included in the Patient Protection and Affordable Care Act (PPACA).  AHIP hired actuaries at Oliver Wyman to assess the cumulative impact of all these changes; and Oliver Wyman estimated in its February 2013 report that the combined effect will be a 6.9 to 7.8 percent cut to MA plans in 2014, causing benefit reductions and premium increases of $50 to $90 per member per month.

Nearly 100 Members of the U.S. House of Representatives have urged CMS to reconsider the payment cuts.  In a letter to CMS earlier this month, lawmakers wrote that the payment cuts "will leave many vulnerable seniors with fewer benefits, higher out-of-pocket costs, and in some cases the loss of their current MA coverage."

Just the other day, I received the following communication from Congressman C.W. Bill Young, U.S. Representative for Florida's 13th district:

March 22, 2013

Because of your earlier support for private Medicare Advantage (MA) plans, I thought you might be interested to learn of recent events in this regard.
As a Representative of one of the largest number of Medicare beneficiaries in the Congress, you can be sure that I am greatly opposed to any reduction in service for our nation's seniors, particularly those with multiple chronic conditions as MA plans have a proven track record when it comes to coordinating care for chronically ill individuals. 

That is why I agreed to sign a letter along with more than 90 of my House colleagues that was sent March 15th to Centers for Medicare and Medicaid Services (CMS) Acting Administrator Marilyn Tavenner expressing serious concerns with the calculations that brought forth a February proposal by CMS to reduce MA payments by 2.3 percent for next year.  Combined with the huge reductions in MA payments that are planned over the next several years to help pay for the controversial 2010 Patient Protection and Affordable Care Act, this additional cut could very well lead to significant disruption for the 14 million beneficiaries enrolled in MA plans.  Specifically, it is estimated the cumulative impact of these changes will reduce MA payments by more than 8 percent in 2014.
This is a clear example of our efforts to prevent any further reduction in MA plans from taking place.  Of course, the solvency of the Medicare program is an issue that will remain under careful scrutiny by the Congress and you can be sure that I will continue to closely monitor the situation and will follow up with you on any new developments that occur.
As always, I greatly appreciate knowing of your support for my efforts on this important matter of mutual concern.  With best wishes and warmest personal regards, I am

Bill Young
Member of Congress

Andrew again.  This time, I'm 100% in agreement with Congressman Young!  Of course, that's not always been the case during the 15 years I've resided in Pinellas County.

Until next time,

Andrew Herman
AH Insurance Services, Inc.


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