In surprise move, CMS announces Medicare Advantage pay increase
Friday, April 11, 2014
After proposing in February a 1.9 percent cut in reimbursement to insurers in the Medicare Advantage program, Medicare made a surprise announcement and said there would, instead, be a 0.4 percent increase.
This is the second year Medicare has reversed proposed cuts despite a provision in the Affordable Care Act to bring pay parity between traditional Medicare and Medicare Advantage, which have per enrollee payments more than 10 percent higher than traditional Medicare. The decision came as a surprise, especially to insurance industry leaders who were pushing for rates to remain unchanged.
Despite Medicare's explanation for the reversal, many analysts say there was one major thing driving the decision that Medicare didn't mention: election season. The proposed cuts had already become a point of criticism Republicans were throwing at Democrats. The criticism would have certainly intensified the closer it got to the fall elections.
"We had a situation where a number of members of Congress who supported the Affordable Care Act — including the Medicare Advantage payment reductions — came out for keeping the Medicare Advantage payment level, which goes against what the ACA was trying to do," said David Lipschutz, policy attorney for the Center for Medicare Advocacy.
"At the same time, you have some of the most vocal critics of the ACA, including the Medicare Advantage payment provisions, who, in turn, voted for the same Medicare Advantage payment reductions in the form of House budgets in the last few years."
The Centers for Medicare and Medicaid Services said its reversal on recommended cuts was due to recalculations that predicted a 3.4 percent drop in Medicare spending, compared with its initial estimate of a 1.9 percent drop. Also factored in were revised risk adjustments that accounted for relatively better health among baby boomers.
The Center for Medicare Advocacy has been pushing for parity between Medicare Advantage and traditional Medicare. The group says it's not fiscally sound or fair to taxpayers for per-enrollee spending on Medicare Advantage members to be so much higher than beneficiaries of traditional Medicare.
Despite promises made in the ACA to reduce Medicare Advantage spending, enrollment in these plans increased 8.9 percent in 2014 to nearly 16 million seniors, or 30 percent of all Medicare beneficiaries, according to the Avalere Health consulting firm.
Opponents of a cut to Medicare Advantage reimbursements, including Sen. Charles Schumer (D-N.Y.), argued that a cut would lead to seniors being forced to switch plans and doctors.
Now that the cut has been averted, it is unclear what — if anything — the rate increase will mean to physicians and hospitals that provide care to Medicare Advantage beneficiaries.
America's Health Insurance Plans (AHIP) said that although the increase will help mitigate the negative impact on seniors, the plans are still facing significant reductions. Cuts that went into place as a result of the sequester are still in place, and plans are also subject to ACA-related taxes and a loss of revenue due to the end of a quality bonus payment demonstration project.
"Plans will probably try to tell providers 'hey, we have less money to work with, so we can’t pay you as much,'" Lipschutz said. "But I don't necessarily think that that's absolutely true. Providers will still be in a position to try to negotiate rates with MA plans."
Unlike traditional Medicare that has a set price it pays physicians, Medicare Advantage plans receive a per-beneficiary amount from the government that they can use however they want. There is no set amount they have to pay physicians.
Physicians are unlikely to see an increase in pay as a result of Medicare's decision, but they may be less likely to be cut from Medicare Advantage networks. AHIP has argued that when plans face cuts, patients lose their doctors because plans narrow their networks by creating "high-value networks." They limit their contracts to include only physicians who have a track record of providing high-value care.
- 17 of the most specific, bizarre ICD-10 codes
- BSN or ADN? Nursing at a crossroads
- Nurses rally in DC to address staffing issues with Congress
- Why telemedicine is the future of healthcare
- Big winners in California’s new healthcare plan: Households and small businesses
- You cannot lead until you have their trust
- Nurses to rally in DC again to promote safe staffing
- Nurses plan DC rally to promote proper staffing
- Do ‘zero-tolerance’ policies in education really work?
- Prime space at board meetings
- Infographic: How to make your life easier with automation
- Pew report: Provider demand for accurate patient matching is high
- Dentists invited to donate services to veterans
See your work in future editions
Your content, Your Expertise,
Your Industry Needs YOUR Expert Voice & We've got the platform you needFind Out How