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CMS Proposes Medicare Advantage Payment Cut of At Least 1.9 Percent

Christopher Cheney, for HealthLeaders Media, February 24, 2014

The proposed 2015 payment rate cut to Medicare Advantage health plans is less than expected and less than the reduction this year, but insurers and their allies in Congress are expressing displeasure with the prospect of a second consecutive haircut.

The Centers for Medicare & Medicaid Services is proposing a Medicare Advantage pay cut of at least 1.9 percent despite urging from lawmakers and insurers to maintain current payment rates in 2015.

The payment cut would affect Medicare Advantage health plans in 2015.


See Also: MA Payment Rates for 2015 Cloaked in Uncertainty


"Preliminary estimate of the combined effect of the Medicare Advantage growth percentage and the fee-for-service growth percentage is estimated to be -1.9 percent," CMS said Friday. The agency released a 148-page document detailing proposed MA payment and other changes in the fiscal year starting in October. "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."

Supporters of the MA program, including some of the country's leading insurers, say a second straight year of cuts would impede progress toward a value-based healthcare system and would lead to higher out-of-pocket expenses for seniors.

"The proposed funding cuts threaten the stability of the Medicare Advantage program, which has proven to provide high levels of satisfaction and quality of care for millions of beneficiaries," Aetna officials said in a statement provided to HealthLeaders Media Thursday. "Research shows that these plans outperform Medicare fee-for-service in 9 out of 11 clinical quality measures and have high levels of member satisfaction."

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3 comments on "CMS Proposes MA Payment Cut"


Dennis Byron (2/25/2014 at 3:11 PM)
Billy Bob The Murray-Ryan budget's continuation of Medicare sequestration cuts into 2023 and 2024 have nothing to do with 2015. This year's sequestration cuts come from a law passed in 2011 (or maybe it was 2012). But this year's sequestration cuts also have nothing directly to do with the Part C program; they only affect Part C in that they lower the estimated cost of a fee for service beneficiary in 2015, which is part of the formula that feeds into the Part C framework against which the insurance companies make their Part C bids to get to the resulting Part C premiums which will be announced in September. Most of the Part C cuts for 2015 come from the Patient Protection and Affordable Care Act of 2010 as amended. Does that clear it up for you ? :)

Dennis Byron (2/25/2014 at 3:05 PM)
I am not sure what numbers the author is are talking about with the lede. The final number for 2014 that is comparable to the proposed 2015 number of 'minus 1.9%' was 'plus 3.3%,' announced on April 1, 2013. So all other things being equal this means more than a 5% cut for 2015 vs. 2014, not less as Mr. Cheney writes. (But there are all kinds of other moving parts in the government's and insurance companies' calculations and it is impossible to do an "all things being equal" analysis.) It is not the author's fault that he doesn't understand this and the Obama administration is never going to explain it to him but "This historically low growth in Medicare PER CAPITA spending is tied" almost totally to all the relatively-healthy-for-the-Medicare-population people born in 1946-1950 and has nothing to do with "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." Further, not only "Supporters of the MA program... say a second straight year of cuts would impede progress toward a value-based healthcare system and would lead to higher out-of-pocket expenses for seniors." The Medicare actuaries say it. The cuts estimated by Oliver Wyman of $35 to $75 per month, or $420 to $900 annually will translate to premium increases and benefit losses. This will be reflected in even higher annual OOP limits as happened this year (but Original Medicare has no such catastrophic coverage so Part C will remain popular with anyone that truly wants insurance), tighter networks (as has started to happen this year in Connecticut), and even higher co-pays and deductibles and finally higher average premiums. It is simple common sense. I as one senior on Part C am prepared for those increases and have been since the MMA was passed in 2003; it has only been a matter of time. It is definitely not fair that I – as a middle-income senior citizen in the suburbs with Original Medicare plus a true HMO Part C plan – should take more out of the Medicare trust funds than my neighbor with Original Medicare and a Part D plan subsidy, who has to buy or chooses to buy private supplemental insurance from his former employer or individually. But that is not where the Part C cuts are really coming from. People making use of Part C the way most of us suburbanites do have never been big users of the Part C uplifts. Part C beneficiaries are disproportionately inner-city and rural poor people and they are the ones that are being cut.

Billy Bob (2/24/2014 at 9:15 AM)
Can anyone explain the relationship between the proposed 3.55 percent MA reduction and the mandate from Congress (in the Ryan-Murray budget act) for a 2 percent sequestration cut from Medicare in 2014? If Congress required the cuts, in part, are their tears about its impact of the crocodile variety?