KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Feds Propose Medicare Advantage Payment Cuts, Could Have Election Impact

Medicare Advantage is the managed care program, run by private insurance companies, for seniors and disabled people.

Politico: Major Spending Cut Proposed For Medicare Advantage
An annual notice released Friday after the markets closed would reduce Medicare Advantage spending by 3.55 percent. The figure is based on trends in health care spending, which has grown at a historically low pace in recent years. The annual rate adjustment — which is only one of the payment changes — is calculated through a complicated set of formulas, and analysts were still sorting out the 148-page proposal that CMS released late in the afternoon to assess the total impact on the increasingly popular program for seniors (Norman, 2/21)

Kaiser Health News: Obama Administration Proposes 1.9% Cut In Medicare Advantage Payments
According to a new analysis from consulting firm Avalere Health, enrollment in Medicare Advantage plans rose in 2014 by 8.9 percent to 15.9 million enrollees, up from 14.6 million in 2013. Approximately 30 percent of Medicare beneficiaries are enrolled in the plans, which are offered by private insurance companies. ... Last year, Medicare officials initially proposed reducing Medicare Advantage payments by 2.2 percent, but after another strong industry lobbying campaign, the administration switched gears and raised the rate by 3.3 percent (Carey, 2/21). 

Related, earlier KHN coverage: Bipartisan Group Of Senators Concerned About Medicare Advantage Cuts (Carey, 2/18)

The Associated Press: Medicare Advantage Plans May Face Cuts
Administration officials say the plans don't need to be paid as much to turn a profit, because the growth of health care spending has slowed dramatically. They see the cuts as a dividend for taxpayers. ... The plans have become a key source of revenue growth for insurers who sell and administer the subsidized coverage. They offer basic Medicare coverage topped with extras like vision or dental coverage or premiums lower than standard Medicare rates. There are hundreds of different plans around the country, each with its own set of variables like different deductibles, premiums and co-insurance (Alonso-Zaldivar, 2/22).

The New York  Times: U.S. Proposes Cuts to Rates in Medicare Payments
Karen M. Ignagni, the president of America’s Health Insurance Plans, a trade group, said, “The proposed Medicare Advantage cuts would cause seniors in the program to lose benefits and choices” and could lead to higher premiums and out-of-pocket costs for beneficiaries — arguments rejected by the administration. ... Before Congress passed the health care law,... Mr. Obama said private insurers were “overcharging massively” for the care they provided to Medicare beneficiaries. ... Budget blueprints developed in recent years by House Republicans, including Representative Paul D. Ryan of Wisconsin, retained Medicare savings enacted as part of the health care law (Pear, 2/21).

Reuters: U.S. Government Seeks To Cut Medicare Payments To Insurers
Friday's notice of proposed rates opens a window for negotiations on the final ruling, due April 7. ... The proposed payment rates are a key factor in how insurance companies plan their business for the coming year, including in which markets they will offer health plans, what their medical and administrative costs will be and at what level to set premiums and doctor visit co-payments. ... The Centers for Medicare and Medicaid Services said in a statement that the proposed changes for 2015 are smaller than those implemented in 2014. ... It said it would change a part of its risk payment formula to account for the increasing proportion of baby boomers entering Medicare, who tend to have better health (Caroline Humer, 2/21). 

The Hill: HHS Announces New Medicare Cuts
Cuts to Medicare Advantage always come with political heat for Democrats, just as premium-support proposals for Medicare have dragged down Republicans. ... thanks to GOP-backed policies, [the program] receives more funding per patient on average than traditional Medicare. Democrats have traditionally sought to rectify this imbalance by cutting what they consider "overpayments" to Medicare Advantage. ... Healthcare experts noted that while 2 percent represents an average cut across the board, each MA plan will experience a different reduction based on factors like quality and location (Viebeck, 2/21).

Modern Healthcare: CMS Proposes Medicare Advantage Cuts 
The CMS based its projections (PDF), which will differ across the country based on a variety of factors, on an expected 3.55% decline in the Medicare Advantage growth rate factor and an expected decline of 1.65% in per capita expenditures in the fee-for-service portion of the senior citizen healthcare program. ... “This historically low growth in Medicare per-capita spending is tied, in part, to successful initiatives undertaken to promote value over volume and help curb fraud, waste and abuse in the Medicare fee-for-service program in recent years,” the agency said in a press release (2/22).

Kaiser Health News: Impact Of Medicare Advantage Cuts On Seniors Sharply Disputed
And in many parts of the country, such as South Florida and New York, seniors can still choose health plans with no monthly premiums. ... These payment cuts are also helping to fund expanding coverage to millions of uninsured Americans, under the Affordable Care Act. ... David Lipschutz, policy attorney with the Center for Medicare Advocacy, said Medicare costs have been rising at their lowest levels in decades and Medicare Advantage plans “should not be insulated from those forces" (Galewitz, 2/23).

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