CQ Healthbeat: Administration Urged to Spare Medicare Advantage from Deep Cuts

Employers and insurers are lobbying Medicare officials not to impose deeper cuts in the rates for private Medicare Advantage plans when they are released on Friday.

The Centers for Medicare and Medicaid Services is expected to release a draft payment proposal for 2016 on Friday that is supposed to be finalized on April 6.

Medicare Advantage plans have become increasingly popular, with almost 17 million people currently enrolled. Last year, about 16 million Medicare beneficiaries received benefits through the health plans – more than 6 million than the Congressional Budget Office projected for 2014 in estimates released soon after the 2010 health care law passed.

The health care law (PL 111-148, PL 111-152) called for slower growth in the rates for the plans because at that time, Medicare spent about 14 percent more for people in Medicare Advantage plans than for people in traditional fee-for-service Medicare.

In the past few years, Medicare Advantage rates have been growing at a rate that is slower than in the past, due in part to cuts in the health care law, across-the-board sequestration cuts, and other policies.

Medicare Advantage spending per beneficiary is still about 5 percent more than the costs of traditional Medicare.

The leader of a new advocacy group to protect the private health plans that is funded largely by insurers said that the plans are providing better care than the traditional system.

“From prevention to coordinated care to management of chronic disease, Medicare Advantage is making a real difference in the lives of beneficiaries,” said Krista Drobac, interim executive director of the group, the Better Medicare Alliance. “The added value Medicare Advantage is providing to seniors has to be taken into account when comparing it to fee-for-service Medicare.”

The advocacy group released a study early Wednesday showing that those payment cuts are reducing the value of extra benefits that patients in Medicare Advantage plans get. The sickest patients who need the most care have seen their maximum annual out-of-pocket costs increase by as much as $761 since 2012, according to the study, which was conducted by the actuarial firm Milliman for the Better Medicare Alliance advocacy group. The value of extra benefits that the health plans provide fell by an national average of $180.24 from 2012 to 2015. The number of counties that do not have any Medicare Advantage plans rose from 55 counties in 2012 to 211 counties in 2015, according to the study.

Another coalition of 10 business groups including the U.S. Chamber of Commerce, the American Benefits Council and the National Retail Federation also sent a letter Wednesday to CMS Administrator Marilyn Tavenner asking her for “an end to the harm done to this much-needed program by refraining from additional MA [Medicare Advantage] cuts.”

The group said that “not only do MA cuts hurt millions of seniors through reduced benefits, narrower networks, and higher out-of-pocket costs, but employers who want to sustain group-sponsored Medicare retiree coverage are simultaneously pressured by rising health costs.”

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