CMS Announces Medicare Advantage Payment Rate Cuts of 4% to 4.5% in 2010CMS on Monday announced cuts to Medicare Advantage payment rates in 2010 of as much as 4% to 4.5%, the Wall Street Journal reports. The agency had estimated a 5% rate cut in February (Fuhrmans/Zhang, Wall Street Journal, 4/7). According to CQ HealthBeat, the reductions include the elimination of costs related to funding teaching hospitals and differences in coding between private health plans and traditional Medicare (CQ HealthBeat, 4/6).
CMS said the baseline rate for MA plans would be raised by .81%, which is more than the .5% previously estimated, but less than the 4% insurers typically see each year. In addition, the rates include a 3.41% reduction resulting from a change in the federal reimbursement scale that is based on beneficiaries' health (Wall Street Journal, 4/7). According to the AP/Austin American-Statesman, the low baseline rate results from a scheduled 21% cut in Medicare physician reimbursements for 2010. However, many analysts expect Congress to eliminate that cut.
America's Health Insurance Plans spokesperson Robert Zirkelbach said the reductions could lead to higher premiums and benefit cuts for more than 10 million MA plan beneficiaries (Murphy, AP/Austin American-Statesman, 4/7). He said that CMS "should develop a one-time solution to this unique circumstance in order to mitigate the potential impact on millions of seniors" (CQ HealthBeat, 4/6).
President Obama has said that the federal government overpays MA plans and that he wants to reduce their subsidies to help fund health reform, the Journal reports (Wall Street Journal, 4/7). This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.