MA Plan Payment Cuts Would Raise Premium Rates, AHIP Report Says

The payment cuts to Medicare Advantage plans included in proposed rates recently released by CMS would be larger than the agency's 1.9% projection and ultimately would be harmful to beneficiaries, according to a report commissioned by America's Health Insurance Plans, MedPage Today reports (Frieden, MedPage Today, 2/27).

The proposed cuts were unveiled last week 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 affect basic rates for MA plans, but consumers will see variance in how those rates are assimilated into their individual plans depending on plan quality and location (California Health Line, 2/24).

However, beyond the 1.9% cut to play payments, AHIP's report -- compiled by the consulting group Oliver Wyman -- detailed additional payment rate reduction factors, including:

• Quality benchmark changes under the Affordable Care Act, which could cut payments by another 2.4%;
• Removal of bonuses for certain star-rated MA plans, which could cut payments by another 1.9%; and
• Diagnostic code removal from MA plans' home-risk analyses, which could cut payments by another 2% (MedPage Today, 2/27).

According to National Journal, those additional cuts could raise beneficiaries' premiums by between $420 and $900 per year (Ritger, National Journal, 2/27).

AHIP President and CEO Karen Ignagni said the extra cost could have a significant effect because 41% of MA plan beneficiaries have annual incomes below $20,000 (MedPage Today, 2/27).