Medicare Advantage fight rages onNews added by Benefits Pro on February 26, 2014

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Joined: September 07, 2011

By Kathryn Mayer

Some of the guesswork ended when the Obama administration last week announced its proposed Medicare Advantage rates for next year, but the fight against the rate cuts is far from over.

America’s Health Insurance Plans — the carrier group that has for months urged the administration to leave the program alone — slammed the move, citing the negative effects it will have on seniors who rely on the program.

“The new proposed Medicare Advantage cuts would cause seniors in the program to lose benefits and choices on which they depend,” AHIP president Karen Ignagni said after the administration’s announcement.

“Last year’s 6 percent cut to Medicare Advantage rates,” she continued, “resulted in higher premiums, reduced benefits, fewer coverage options, and loss of provider choices for seniors. Another round of payment cuts would be devastating to the more than 15 million seniors and people with disabilities that have chosen to enroll in Medicare Advantage for the better benefits and higher quality coverage these plans provide.”

The group said it will campaign against the administration’s move.

Carriers have predicted total cuts to the program, including additional adjustments, will be as much as 7 percent. Rates will be finalized in rules due out April 1.

Still to be resolved: Just how much will the rate cuts really be? Will the cut really be devastating to some? Or is the industry exaggerating?
Rates and fears

First, rates still appear uncertain at the moment because the CMS didn’t actually announce a specific figure, rather than a possible range. Its guidance ranged from 1.9 percent to 3.6 percent but private analysts say the 2015 cuts may be as much as 7 percent.

Although AHIP maintains any and all cuts are damaging to the program, the Centers for Medicare asserts that the changes will help safeguard the program — not hurt it.

“We are making certain that plans are providing value to Medicare and taxpayers,” CMS principal deputy administrator Jonathan Blum said in a statement.

Also on the administration’s side is research showing that enrollment in Medicare Advantage continues to rise despite both the Patient Protection and Affordable Care Act and proposed cuts.

In research out Friday, consulting firm Avalere Health found that MA plan enrollment rose by 8.9 percent for 2014, raising the program’s total share of Medicare beneficiaries to 30 percent.

“MA plans continue to increase enrollment by finding new ways to offer attractive benefits and value to beneficiaries,” said Dan Mendelson, CEO and founder of Avalere Health.

Kaiser Family Foundation this week reported that some health policy experts and advocates believe the “industry is scaring seniors unnecessarily,” as most Medicare plans have largely kept costs and benefits stable.

“We have really overall had a rather calm year so the ‘sky is falling’ predictions from the health insurance industry did not come true,” Joe Baker, president of the Medicare Rights Center, a consumer advocacy group, told Kaiser Family Foundation.

Fears also were eased when carrier stocks — led by Humana — rose Monday, the result of less-than-expected cuts.

Ignoring carriers

Many industry insiders’ concerns are anything but eased. And some say that, by ignoring their requests to leave Medicare Advantage alone, the administration is isolating a big ally — insurance companies.

“The administration is so focused on the survival and implementation of Obamacare right now that I think the warnings of potential disaster coming from the Medicare Advantage carriers are being simply overlooked or ignored,” said Danielle Kunkle, a Medicare advisor at Boomer Benefits in Fort Worth, Texas. “The fact that they funded part of the ACA law by stripping funding from Medicare Advantage indicates that they feel there is too much profit for insurance companies under the MA program.”
AHIP has hit the administration hard on proposed changes for months with its campaign. Carrier executives also have said the proposed cuts could mean passing on more costs to beneficiaries.

Focusing attention to the question is important, “because MA could very well be in danger,” Kunkle said.

“We already saw a few plans fold for 2014, and others had some increases in premiums,” Kunkle explained. “We had one here in Texas that went from a zero-dollar premium to $22 a month. This may not seem like much to you and me, but many seniors are on fixed incomes.”

An Aetna spokesperson said that while the carrier is still evaluating the full impact of the rate notice, it believes “that further cuts on top of last year’s 6 percent rate cut will disrupt the Medicare Advantage program and be harmful to seniors.”

Exacerbating the problem, the industry said, is PPACA, which includes more than $200 billion in Medicare Advantage payment cuts — most of which haven’t gone into effect yet. The law also imposes a new health insurance tax.

Additional proposed cuts “will require Medicare Advantage Organizations to increase premiums, reduce benefits, offer fewer plan choices for our seniors and exit certain geographic markets, resulting in further disruption to Medicare beneficiaries,” predicted Aetna spokesperson Kendall Marcocci.

Late last year, AHIP highlighted CMS data showing that seniors in Medicare Advantage will see, on average, a more than 5 percent increase in premiums this year. AHIP also said beneficiaries in more than 2,000 counties across the country in which more than 60 percent of all enrollees live will have fewer plan options compared to 2013 and many will face higher out-of-pocket costs for Medicare benefits.

Earlier this month, a bipartisan group of 40 senators sent a letter urging CMS to “maintain payment levels that will allow MA beneficiaries to be protected from disruptive changes in 2015.”

The cuts have given more ammunition to Republicans fighting PPACA.
“Nearly every week we hear about another group Americans harmed by Obamacare,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.

"Today, it is America’s seniors. … While some Senate Democrats may have second thoughts, these are the same Democrats who voted to impose these cuts on seniors in the first place."

Kunkle said “it remains to be seen whether Congress will step in to soften the blow with some new legislation, (but) you can be certain this will be a key issue for seniors during the 2016 elections.”

Looking ahead

Medicare Advantage plans are still an attractive option for many beneficiaries, Kunkle said, because premiums are still more affordable than a Medigap plan.

Carriers have found ways to manage amid previous cuts. For example, UnitedHealth, the nation’s largest provider, recently announced it was cutting thousands of doctors from its networks. UnitedHealth did not return a request for comment for this story.

But Kunkle said she’s not so sure how carriers will fare with the latest round of cuts.

“Many insurance carriers were also able to absorb some of the 2014 cuts yet still keep rates manageable by tightening up in other areas, such as reducing network size,” she said. “However, continued further cuts under the ACA could certainly cause many plans in the future to have continued premium increases and higher cost-sharing for beneficiaries. Similar cuts in the past have sometimes also resulted in plans exiting the market, leaving fewer choices for people on Medicare.”

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