Regulators Propose 1.9% Cut To Medicare Advantage Payments

Federal regulators late Friday proposed cutting payments to private Medicare plans by 1.9 percent after recent lower health care spending growth. Insurers worry the cut could be much deeper than that after health law fees and other payment changes take effect, however, and say another cut could affect benefits for seniors.

The Wall Street Journal: Government Proposes Cuts To Insurers' Medicare Payments
Federal regulators proposed cuts to payments for insurers that run private Medicare plans, with some analysts saying the reductions appeared steeper than they had projected. The stakes on such changes are high for many health insurers, which count on Medicare dollars for a substantial chunk of their earnings (Mathews, 2/21).

Kaiser Health News: Impact Of Medicare Advantage Cuts On Seniors Sharply Disputed
The health insurance industry points to these examples as some of the more extreme cases of beneficiaries feeling the sting of federal funding cuts to Medicare Advantage plans that cover nearly 16 million senior citizens. They say the Obama administration’s additional proposed 1.9 percent in cuts to the plans for 2015, which was announced Friday, will mean millions more will see reductions in benefits and higher out-of-pocket costs. But health policy experts and advocates for seniors say most Medicare health plans have largely kept costs and benefits stable and believe the industry is scaring seniors unnecessarily (Galewitz, 2/23).

Kaiser Health News: Obama Administration Proposes 1.9% Cut In Medicare Advantage Payments
Late Friday, the Centers for Medicare & Medicaid Services announced proposed rates that officials said could mean payment reductions of 1.9 percent for the private plans in the program. But insurers, who have led a fierce lobbying campaign against payment reductions, say the Medicare Advantage plans would sustain a far deeper cut. That's because the lower payment rates will be combined with new health law fees on health plans, a phase-out of the "star rating" system that helped buffer the reductions for Medicare Advantage plans in prior years and Medicare cuts in the automatic federal spending cuts known as "sequestration" (Carey, 2/24).

Related, earlier KHN coverage: Bipartisan Group Of Senators Concerned About Medicare Advantage Cuts (Carey, 2/18).

The Associated Press/Washington Post: Medicare Advantage Plans May Face Cuts
Cuts are on the table next year for Medicare Advantage plans, the Obama administration says. The politically dicey move affecting a private insurance alternative highly popular with seniors immediately touched off an election-year fight. The announcement gave new ammunition to Republican critics of President Barack Obama’s health care law, while disappointing some Democratic senators who had called on the administration to hold rates steady. Insurers are still hoping to whittle back the cuts or dodge them altogether (2/22). 

Reuters: U.S. Government Seeks To Cut Medicare Payments To Insurers
The U.S. government on Friday proposed a cut in payments to private health insurers for 2015 Medicare Advantage plans, a move Republican lawmakers said would hurt benefits for the elderly and disabled. The proposal, released in a document by a division of the U.S. Department of Health and Human Services, appeared to cut payments by more than the 6 to 7 percent the insurance industry had expected, one Wall Street analyst said (Humer, 2/21).

Politico: Major Spending Cut Proposed For Medicare Advantage
The Obama administration is proposing a major cut in 2015 payments to Medicare Advantage, in a move that is sure to set off a ferocious campaign by the insurance industry to reverse the decision and likely will further complicate the health care politics of the midterm elections. An annual notice released Friday after the markets closed would reduce Medicare Advantage spending by 3.55 percent. The figure is based on trends in health care spending, which has grown at a historically low pace in recent years. The annual rate adjustment -- which is only one of the payment changes -- is calculated through a complicated set of formulas, and analysts were still sorting out the 148-page proposal that CMS released late in the afternoon to assess the total impact on the increasingly popular program for seniors (Norman, 2/21). 

Kaiser Health News also tracked weekend health policy headlines, including reports about proposed Medicare Advantage rates (2/23).

In other news related to Medicare -

Kaiser Health News: Medicare Data Show Wide Differences In ACOs’ Patient Care
The release is the first public numbers from Medicare of how patient care is being affected by specific networks. These accountable care organizations, or ACOs, are among the most prominent of Medicare’s experiments in changing the ways physicians and health care facilities work together and are paid. The ACOs will be able to keep some of the money they save, but they also take on some of the financial risk if their patients end up being costly (Rau, 2/21).

The New York Times: Plan To Limit Some Drugs in Medicare Is Criticized
An alliance of drug companies and patient advocates, joined by Democrats and Republicans in Congress, is fiercely opposing an Obama administration proposal that would allow insurers to limit Medicare coverage for certain classes of drugs, including those used to treat depression and schizophrenia. Opponents warn that the proposal, if enacted, could harm patients. Federal officials say it would lower costs and reduce overuse of the drugs. The proposed rule, which would lift a requirement that insurers cover “all or substantially all” drugs in certain treatment areas, is just one of a series of changes to the drug program that are being opposed by the unlikely alliance (Thomas and Pear, 2/21).

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