The federal agency that runs Medicare has reversed at least some proposed cuts to private Medicare Advantage plans — the second time in two years that insurers have persuaded the agency to abandon cuts.
The Centers for Medicare and Medicaid Services said Monday it would turn a roughly 2 percent cut first proposed in February into a 0.4 percent payment increase for Medicare Advantage plans.
Insurers, however, have said the proposed cut was much bigger — closer to 6 percent. They argued that payment reductions would cause plans to either cut benefits or raise premiums.
The insurance industry lobbied hard to reverse the proposed cuts, corralling supportive statements from more than 270 members of Congress including a slew of Democrats.
Insurers successfully turned last year’s proposed cut into a payment increase, and were hoping to repeat that lobbying win this year.
Roughly 30 percent of Medicare beneficiaries — about 16 million seniors — use the privately administered Medicare Advantage plans. The program continues to grow, despite the Affordable Care Act’s cuts. Enrollment rose in 2014 to 15.9 million — roughly a 9 percent increase from the year before, according to a new analysis from the consulting firm Avalere Health.
Critics say Medicare Advantage has long been a wasteful subsidy to insurance companies, citing average per-person spending that’s significantly higher than traditional Medicare. Insurers and their allies, however, note that Medicare Advantage plans often include services traditional Medicare doesn’t cover, helping seniors consolidate their coverage in one plan.
CMS said it reversed course on the proposed cut after adjusting its expecations about the growth in Medicare’s costs and the health of new beneficiaries, along with other technical changes.
Medicare Advantage will continue to face cuts that were imposed by the Affordable Care Act — roughly $150 billion over 10 years — in an effort to bring the amount spent on Medicare Advantage plans closer to the amount the government spends on traditional Medicare. In recent years the government had spent some 14 percent more on Medicare Advantage.
“What is tremendously exciting about the MA program today is that we have dramatically reduced that premium payment and we have seen no change in quality of care,” said Jonathan Blum, CMS principal deputy administrator. “We are confident that those trends will continue.”
Premium payments to Medicare Advantage have fallen 10 percent since the Affordable Care Act passed in 2010, according to CMS figures.
What We're Following See More »
"White House Chief of Staff John F. Kelly told Democratic lawmakers Wednesday that the United States will never construct a physical wall along the entire stretch of the U.S.-Mexico border and that some of President Trump’s campaign promises on immigration were 'uninformed.'”
"Steve Bannon’s attorney relayed questions, in real time, to the White House during a House Intelligence Committee interview of the former Trump chief strategist" on Tuesday. "Bannon’s attorney Bill Burck was asking the White House counsel’s office by phone whether his client could answer the questions. He was told by that office not to discuss his work on the transition or in the White House."
"The top lobbyist for the U.S. oil-and-gas industry is stepping down after 10 years on the job. Jack Gerard, the president and CEO of the American Petroleum Institute, sent an email to his staff on Wednesday morning saying that he decided not to seek another five-year contract with the nation’s largest oil-and-gas industry trade association."