Medicare Advantage plans dodge U.S. cuts

  • Article by: JIM SPENCER , Star Tribune
  • Updated: April 7, 2014 - 9:46 PM

The health insurance industry spent heavily to fight cuts in the private alternative to Medicare.

– Federal officials said Monday that they have made a series of administrative adjustments to offset cuts to the Medicare Advantage program that will be required under national health care reform.

The health insurance industry spent millions of dollars on lobbying and advertising to fight the cuts to Medicare Advantage, which is the private alternative to Medicare. Medicare Advantage costs the government more per patient than traditional Medicare, and the disputed cuts are designed to bring those payments closer together.

The government’s original estimate of 2015 Medicare Advantage cuts was 1.9 percent, roughly a third of the 5.9 percent cut that an industry-paid consultant claimed. The adjustments announced Monday would offset the lower number and leave Medicare Advantage payments higher in fiscal year 2015 than in fiscal 2014, the government insisted.

That would happen, said Jonathan Blum, deputy administrator of the Centers for Medicare & Medicaid Services (CMS), despite his agency’s newly projected decline in overall Medicare spending.

The insurance industry had lobbied to keep spending projections neutral or growing because that would have increased payments to Medicare Advantage providers.

While that did not happen, the government acceded to industry requests to delay changes in diagnostic rules and risk adjustments that could have lowered the amounts Medicare Advantage plans receive.

The government generally pays plans a set amount per patient to provide care. The amount depends, in part, on an individual’s condition.

However you do the calculations, CMS officials maintained that the 15 million seniors currently using Medicare Advantage will continue to have easy and affordable access to private plans. That promise is particularly important in Minnesota where Medicare Advantage is very popular.

The insurance industry waged a multimillion-dollar, multimedia war trying to convince seniors that they would lose access to their doctors and face higher premiums as a result of the federal cuts.

The industry’s main trade group, America’s Health Insurance Plans, coordinated the lobbying and ad campaigns against the cuts.

“The changes CMS included in the final rate notice will help mitigate the impact on seniors, but the Medicare Advantage program is still facing a reduction in payment rates next year on top of the 6 percent cut to payments in 2014,” the group’s president, Karen Ignagni, said in a statement Monday night. “We remain concerned about the impact [that] year-over-year cuts to Medicare Advantage would have on the high-quality, affordable coverage millions of seniors like and rely on today.”

Minnetonka-based UnitedHealthcare, which is the country’s largest Medicare Advantage insurer with 3 million patients in 44 states, deferred to the trade group for reaction.

In a news release Monday, CMS said that nationally, Medicare Advantage enrollment has grown 30 percent since the 2010 passage of the Affordable Care Act and that “premiums have gone down 10 percent,”

“Enrollment should continue to grow and benefits should remain stable,” Blum said Monday.

“CMS has a very good track record at projecting plan payments and enrollments,” he said.

Kaiser Family Foundation, a leading health research group, reported a $5-per-month average increase in premiums for Medicare Advantage plans that offer prescription drug coverage from 2013 to 2014.

An industry-funded study charged that the originally proposed 2015 cuts would increase patient premiums monthly by $25-$35 a month in Minnesota.

In Lakeville, 77-year-old Pat Dressel said her experience this year fell somewhere in between. Premiums for her and her husband’s Medicare Advantage plan rose $15 per month from $146 in 2013 to $161 per month this year.

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