Surprise – Obama Administration Reverses Cuts To Medicare Plans
Medicare has reversed proposed payment cuts to private heath plans in the popular Medicare Advantage program for the second straight year amid strong pushback from health insurers and Capitol Hill.
The Centers for Medicare and Medicaid Services on Monday, after proposing in February a 1.9 percent cut to private plans, said government payments to insurers in the Medicare Advantage program will increase .4 percent on average in 2015. The increase, CMS said, is slightly higher than what insurers had requested.
“That gives us great confidence with this final rate structure we’ll continue to see a strong program,” said CMS principal deputy administrator Jonathan Blum.
The reversal comes after a major lobbying effort from the health insurance industry and signals that Republicans would use the cuts to attack Democrats in this year’s midterm elections. The Medicare Advantage program, according to the Avalere Health consulting firm, now covers about 16 million seniors, or 30 percent of all Medicare beneficiaries, through private health plans that can offer extra benefits, like wellness plans.
CMS says it reversed the proposed cuts after reconsidering several factors. The agency had initially assumed Medicare’s growth rate would be -1.9 percent. Now it says that rate would be -3.4 percent, which actually would have lowered payments to health plans.
But because of various changes to how Medicare assesses risk, health plans will instead see higher payments, the agency says.
Medicare pays private insurers more per enrollee than the program pays for seniors under its traditional structure — a gap that the Affordable Care Act aims to eventually close. The president’s health-care law is expected to reduce Medicare Advantage funding by about $156 billion over a decade, according to a 2012 Congressional Budget Office projection. The health insurance industry has sharply criticized program cuts, contending that seniors will see reduced benefits and fewer health care choices as a result.
Medicare Advantage cuts required by the ACA started in 2012, and despite some dire predictions, enrollment in the program increased every year since the ACA was signed in 2010. The ACA’s final cuts to the program are supposed to continue each year until 2017. The average monthly premium in 2014 plans were expected to increase $1.64 to $32.60, the Department of Health and Human Services announced last September.
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