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Insurance industry applauds CMS for Medicare Advantage rate increase

Reimbursement rate good for payer business, Medicare beneficiaries

The Centers for Medicare & Medicaid Services (CMS) reversed a February proposal to decrease Medicare Advantage (MA) rates by 0.95 percent, announcing this week a 1.25 percent rate increase for next year that should increase revenue by more than 3 percent.

For years, insurers have voiced their opposition to cuts to the program. Now, it appears as though the Obama administration finally is listening to the health insurance industry. 

Since its implementation in 2003, the MA program--introduced to increase competition--has taken some significant blows in the form of proposed cuts to the program, as politicians claim the program pays too much to insurers, reported the Hill.

Medicare Advantage good for business

Insurers continue to fight for the program--for instance, by making $28 million in federal campaign contributions across the 2012 and 2014 cycles--because it's good for their business. Humana, for example, receives about two-thirds of its revenue from the program, noted the article. Following this week's MA rate announcement, Humana shares rose about 1 percent to $180 in after-hours trading, FierceHealthPayer previously reported.

Additionally, America's Health Insurance Plans (AHIP) has launched lobbying campaigns each time the administration proposed Medicare Advangate cuts. AHIP argues that cuts to the program would negatively impact seniors. The administration has not been immune to this lobbying effort, the Hill said.

The Medicare Rights Center released a statement applauding CMS for "heeding calls from consumer advocates, pharmacists, case managers, and others to build a better Part D appeals process."

Private plans help cut government Mediare spending

When the Affordable Care Act was implemented in 2010, government spending for MA beneficiaries was as much as 13 percent higher than for those enrolled in traditional Medicare, FierceHealthPayer previously reported. Now, the federal government spends close to 2 percent more per MA beneficiary

AHIP noted that insurers' bids are 6 percent lower than traditional Medicare, reported the Hill. The difference between the bids and the actual payments is used to provide extra benefits, which proves to be popular among seniors.

"The finalized policies will continue to strengthen the growing Medicare Advantage program, and continue the successful implementation of the Affordable Care Act's reforms that improve quality and provide greater protections for beneficiaries and value for taxpayers," CMS said in the announcement.

For more:
- here's the Hill article
- read the Medicare Rights Center statement
- check out the CMS statement

Related Articles:
CMS increases Medicare Advantage payments, reverses February proposal
CMS proposes slight decrease in Medicare Advantage rates for 2016
Medicare Advantage cuts still in the cards for some insurers