Insurance industry spends millions fighting cuts to Medicare Advantage

WASHINGTON – The ad features a picture of an elderly man peering through a pair of binoculars.

It comes with a warning: "Seniors are watching," the headline says.

Paid for by the nation's health insurance industry, this ad and other industry-sponsored publicity have appeared across the country in recent weeks as part of a multimillion-dollar lobbying strategy designed to curtail proposed cuts to Medicare Advantage, the private health plans sold as alternatives to traditional Medicare.

The issue weighs heavily in Minnesota. Half of the state's Medicare-eligible residents are covered by private insurance, the highest rate in the country. At the same time, Minnetonka-based UnitedHealth Group covers 3 million Medicare Advantage participants in 44 states, more than any other insurance provider.

Health insurance companies characterize their lobbying blitz as a wake-up call to 16 million elderly Americans who could lose easy access to care, be forced to change doctors or face higher premiums as national health reform requires government reimbursements to Medicare Advantage to come more in line with traditional Medicare payments.

"Last year, we saw a 6 percent cut to payments," said Robert Zirkelbach, spokesman for America's Health Insurance Plans, the industry trade group directing the lobbying effort. "Seniors have faced disruption in their coverage because of last year's cuts." Adding to them this year will create more serious disruptions, Zirkelbach charged.

But researchers at the nonpartisan Kaiser Family Foundation say that, for now, grim predictions "are not panning out." Despite last year's cuts, Medicare Advantage enrollment is still growing rapidly; health insurance companies are not abandoning the market in significant numbers, and premiums have risen slightly but remain relatively stable.

Critics of the insurance industry's strategy call the new ad campaign and associated political pressure a scare tactic by companies that are currently overpaid with public dollars. In 2013, Medicare Advantage cost the government roughly 10 percent more per patient than traditional Medicare, according to the Medicare Payment Advisory Commission.

"They've been overpaid the last few years and that's being corrected," said Joe Baker, president of the Medicare Rights Center, a nonprofit that helps seniors get coverage. "These dire predictions are a case of Chicken Little saying 'The sky is falling.' "

With final rules on 2015 Medicare Advantage payments due from the government on Monday, Minnesota customers are vexed.

Medicare Advantage "is a customer-friendly program," said Malcolm McCutcheon, a 78-year-old retired physician living in Duluth. "I don't ever see a bill."

Instead, as it does for almost all Medicare Advantage recipients, the government pays his insurance company a set fee to provide his health care.

"I would like to see Medicare provided in the least expensive way," McCutcheon said.

Meanwhile, UnitedHealth Group continues to work against the cuts. The company's UnitedHealthcare subsidiary reacted to last year's Medicare Advantage reimbursement reductions by reducing the number of doctors in provider networks in 10 states.

The company has not canceled any Medicare Advantage plans because of the reimbursement cuts, spokesman Terry O'Hara said, but by the end of 2014 its provider network will be 10 to 15 percent smaller than it was in January 2013.

United's reported removal of 2,200 physicians in its Connecticut network sparked the most controversy. Several hundred of those doctors sued, and a federal judge temporarily stopped their exclusion to give arbitrators a chance to rule on their status.

Patients whose regular physicians were forced out have complained. But their gripes have been as much with United as the government.

Insurance industry officials maintain that Medicare Advantage cuts of $200 billion from 2011 to 2017 built into the health care law will cause providers to abandon the program, leaving seniors with fewer choices unless regulators offset the cuts.

The Centers for Medicare and Medicaid Services — known as CMS — "have broad discretion," Zirkelbach said. They can neutralize Medicare Advantage cuts administratively by doing such things as not canceling payment incentives for high quality plans, nixing announced changes in medical coding that would lower payments and continuing to allow in-home diagnoses of patients that can raise reimbursements to companies insuring those with major health problems.

CMS says its proposed changes will not hurt seniors or insurance companies.

"The proposed changes for 2015 for Medicare Advantage are smaller than those implemented in 2014," a spokesman said. "We believe that beneficiaries will have a wide array of high-quality, low-cost options in 2015 while we make certain that plans are providing value to Medicare and taxpayers."

As the lobbying continues, politicians in Minnesota have said they don't want any cuts to hurt seniors. Both of the state's U.S. senators — Democrats Amy Klobuchar and Al Franken — and five of its eight representatives — Republicans Erik Paulsen and John Kline and Democrats Keith Ellison, Betty McCollum and Collin Peterson — have signed letters to federal officials.

Klobuchar pointed to a 30 percent growth in enrollment since 2011 as a sign that the program has not been hurt by health reform.