Medicare Advantage cuts still in the cards for some insurers


Some insurers still expect to see Medicare Advantage rates drop next year, even though the Centers for Medicare & Medicaid Services reversed course on proposed rate cuts earlier this week.

Instead of lowering rates for Medicare Advantage plans as initially proposed, CMS opted to boost them by 0.4 percent. Despite the rolled back reductions, industry analysts believe the total effect could amount to a payment reduction of 3 percent to 4 percent, reported Bloomberg.

For example, after analyzing the CMS final rate notice, Humana determined its Medicare Advantage 2015 payment rates will fall by about 3 percent. The insurer, which gets more than 60 percent of its revenue from Medicare Advantage plans, had predicted a 3.5 percent to 4 percent decrease based on the CMS proposed rates, Reuters reported.

Aetna agreed, saying it would receive lower reimbursements next year. "Despite CMS's actions, Medicare Advantage plans will still face rate decreases for 2015," Aetna spokeswoman Kendall Marcocci said in a statement.

Even some health analysts think the final rates will amount to lower reimbursements. "This is a tough series of cuts," John Gorman, executive chairman of Washington, D.C., consulting firm Gorman Health Group, told Bloomberg. He added, "2014 and 2015 from a rate standpoint are likely to be the two worst years in Medicare Advantage in well over a decade."

What's more, the lower payments could lead to fewer enrollments in Medicare Advantage plans next year, particularly if some insurers leave the program or reduce benefits. "In 2015 the availability of additional benefits and reduced out-of-pocket costs is going to be reduced pretty dramatically in many markets," Gorman said. "The products themselves are going to be a lot less attractive in 2015 to beneficiaries."

To learn more:
- read the Reuters article
- see the Bloomberg article

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