I recently wrote about the potential for Medicare Advantage mayhem this fall (2013) because of significant payment cuts that were announced in February by CMS (Centers for Medicare and Medicaid Services). Insurance companies that run Medicare Advantage plans said the proposed cuts would require big changes to Advantage plans – and these changes would hurt seniors.
The latest news is that CMS will not follow through on the proposed 2% payment cuts to Medicare Advantage plans. Instead, CMS will increase payments by 3%. Wow.
This is good news for people enrolled in Medicare Advantage plans. Had the 2% cuts gone through, it was likely that some plans would introduce (or increase) monthly premiums.
In Arizona, most of our HMO plans are zero premium. If several companies introduced a premium for their 2014 plans while one or two remained at zero, there would be lots of movement to the zero premium plans – and things would be crazy this coming Open Enrollment Period (October 15 – December 7).
From what I have read about this “win” for insurance companies, we can expect a quiet Medicare Advantage market this fall. I hope this is the case.
An Associated Press article says:
Many Medicare Advantage plans will ultimately get paid less next year due to several other variables like a premium tax that is called for in the health care overhaul, the massive federal law that aims to cover millions of uninsured people. Analysts also expect insurer profits from the plans to be strained by the growing cost of care.
But their finances won’t be squeezed so tightly that they have to chop benefits, raise rates by large amounts or leave markets entirely, as some on Wall Street initially feared.
“I think what CMS did here was to buy stability for the program,” said Dan Mendelson, president of the market analysis firm Avalere Health. “Most beneficiaries will not see dramatic changes going forward into next year.”
The AP article also says:
The shares of several health insurers rose sharply in extended trading Monday following the CMS announcement. Medicare Advantage plans have become a key source of growth for insurers, which receive about $10,000 per member to provide customers with basic Medicare coverage topped with vision or dental coverage, or premiums lower than standard Medicare rates.
So Medicare Advantage will continue to be a profitable business for insurance companies, and seniors and disabled Medicare beneficiaries won’t be forced to shop for a new plan.