CMS Eliminates Proposed Medicare Advantage Cuts for 2015
On Monday, CMS announced that payments to Medicare Advantage plans in 2015 will increase by 0.4%, reversing its earlier proposal that would have cut the reimbursements, the Washington Post's "Wonkblog" reports (Millman, "Wonkblog," Washington Post, 4/7).
The proposed cuts were unveiled in February in a 148-page assessment of cost factors for MA plans for 2015, which noted multiple variables moving in different directions. Analysts estimated the variables would translate to a 1.9% cut to MA plan payments. The proposed cuts would have affected basic rates for MA plans, but consumers would have seen variance in how those rates are assimilated into their individual plans depending on plan quality and location (California Healthline, 2/28). The reductions were called for under the Affordable Care Act as a way to bring MA payments more in line with those seen in traditional Medicare and reduce overall Medicare spending (California Healthline, 2/24).
CMS yesterday said it reversed course because of changes in various risk factor assessments for the plans, as well as a decrease in spending for Medicare health services and changes to the plans' payment formula (Humer/Morgan, Reuters, 4/7).
The reversal follows widespread backlash over the proposed cuts from both lawmakers and industry leaders ("Wonkblog," Washington Post, 4/7).
CMS Principal Deputy Administrator Jonathan Blum said critics "urged us to use whatever means we could to keep the [payment] rates close to parity to where they are today," adding that the 0.4% change is "a little higher than what the industry had recommended to us." He continued, "That gives us great confidence with this final rate structure we'll continue to see a strong program" (Reuters, 4/7).
Some stakeholders applauded the reversal, while others questioned CMS' figures or remained skeptical of future cuts to the program.
Rep. Ron Barber (D-Ariz.), who had spoken out about his opposition to the cuts, said, "It's a program people really like" and "they didn't want to see it messed with and neither did I." He added, "It appears the administration listened" (Wilde Mathews/Peterson, Wall Street Journal, 4/7). Sen. Chuck Schumer (D-N.Y.), who led an effort against the cuts, said, "We're glad the administration heeded our call and reversed the policy" ("Wonkblog," Washington Post, 4/7).
Analysts said Monday that after many other variables are considered, payments to MA insurers still will fall, but the cut will not be as large as initially expected (Murphy, AP/U-T San Diego, 4/7). A report commissioned by America's Health Insurance Plans in February estimated the cut to be about 5.9%. UBS analyst A.J. Rice said the reduction will now be about 3% (Wall Street Journal, 4/7).
Karen Ignagni -- president and CEO of AHIP, which launched a nationwide campaign against the cuts -- said in a statement, "We remain concerned about the impact year-over-year cuts to Medicare Advantage would have on the high-quality, affordable coverage millions of seniors like and rely on today."
Meanwhile, House Speaker John Boehner (R-Ohio) said the move "does little to address the concerns about [the ACA's] impact on the Medicare Advantage program," while the Republican National Committee dismissed the reversal as "political cover for vulnerable Democrats" in the upcoming mid-term elections ("Wonkblog," Washington Post, 4/7).
Other MA Changes
Meanwhile, CMS on Monday also announced several other changes to the MA program, including that it will discontinue a three-year quality bonus demonstration project that shielded some MA plans from the cuts required by the ACA ("Wonkblog," Washington Post, 4/7). Also, insurers will be limited on how much they can increase beneficiaries' premiums to pay for potential cuts in 2015. Under the proposal, insurers can increase premiums by $32 per month next year, down from $34 in 2014 (Wall Street Journal, 4/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.