Administration scraps proposed Medicare Advantage cutsNews added by Benefits Pro on April 2, 2013

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By Kathryn Mayer

The insurance industry’s lobbying efforts paid off Monday, as the Centers for Medicare & Medicaid Services announced they scrapped a proposed cut to Medicare Advantage plans.

The Medicare agency in February proposed a 2.2 percent cut in Medicare Advantage payments, a move that America’s Health Insurance Plans immediately slammed before launching a fierce lobbying campaign against it.

The insurance trade organization’s campaign included reports and studies defending Medicare Advantage, television ads and a letter-writing campaign among members of Congress.

They argued seniors and people with disabilities enrolled in Medicare Advantage plans would face higher premiums, reduced benefits, and loss of coverage options if the proposed cuts took effect.

AHIP also slammed the timing, arguing an additional cut to Medicare Advantage payments next year would be especially harmful when the program is already facing “significant payment cuts and a new health insurance tax included in the health care reform law.”

On Monday the Medicare agency said it had scrapped the debated cut and would instead offer a 3 percent payment increase next year.

“The policies announced today further the agency’s goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice,” said Jonathan Blum, CMS acting principal deputy administrator.

The reversal was for good news for AHIP, who praised the agency for avoiding what the organization said would have been a “crushing blow” to Medicare Advantage patients.

“By being responsive to the more than 160 members of Congress from both parties who raised concerns about the impact of the proposed payment rate on seniors, CMS has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges,” AHIP President and CEO Karen Ignagni said in a statement.

Ignagni also said that AHIP will continue to work with policymakers in both parties “to strengthen this critically important part of Medicare that provides high-quality, affordable coverage to more than 14 million seniors and people with disabilities.”

Analysis by Oliver Wyman prepared for AHIP in February found that the combined effect of the changes included in the PPACA and the new payment cuts proposed by CMS would result in an estimated 6.9 to 7.8 percent cut to Medicare Advantage plans in 2014.

Another survey commissioned by AHIP found that nine out of 10 seniors are satisfied with their Medicare Advantage coverage.

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