CMS To Rescind MA Plan Payment Cut; Will Boost Payments Instead
On Monday, the Obama administration announced that it is rescinding a proposed 2.2% cut in federal payments to Medicare Advantage plans and instead will revise its reimbursement calculation method to increase payments by 3.3%, the Washington Post reports (Somashekhar, Washington Post, 4/1).
In February, CMS proposed several rules, including the 2.2% payment cut to MA plans in 2014. Lawmakers and health care stakeholders immediately criticized the proposal. Officials from America's Health Insurance Plans said the cut would have reduced payments by about $11 billion, while insurers suggested that MA plans would have to make $50 to $90 worth of benefit cuts or premium hikes to offset the difference in payments (California Healthline, 3/29).
Insurers launched a "vigorous campaign" against the cuts, including television advertisements and phone banks, according to the Post.
Details of MA Payment Changes
CMS changed the 2.2% cut to a 3.3% increase after factoring in the assumption that Congress will prevent a 25% cut to Medicare physician reimbursements that is scheduled to take effect next year. Congress routinely has blocked such payment cuts by issuing a temporary patch, known as a "doc fix" (Howell, Washington Times, 4/1). A group of six House Democrats had previously suggested that CMS factor in the expected doc fix.
Jonathan Blum, CMS' acting principal deputy administrator, said, "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" (Washington Post, 4/1).
Independent actuaries for CMS opposed the change, saying that the agency should not base calculations on potential congressional actions, the Times reports.
However, the National Center for Public Policy Research said CMS made the "right decision" (Washington Times, 4/1).
Sen. Orrin Hatch (R-Utah), who opposed the cuts, said, "While this action alone isn't a silver bullet to guarantee the sustainability of the Medicare Advantage program, it does reflect the strong bipartisan support for preventing such devastating cuts from occurring" (Baker, "Healthwatch," The Hill, 4/1).In a statement, AHIP President Karen Ignagni lauded the administration for 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," adding that CMS' move has helped "stabilize Medicare Advantage at a time when the program is facing significant challenges" (Washington Post, 4/1). 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.