Article
of Interest
04/09/2014
What is Medicare Advantage?
According to www.medicare.gov,
a Medicare Advantage plan is “a type of Medicare health plan offered by a
private company that contracts with Medicare to provide you with all your Part
A and Part B benefits. Medicare Advantage Plans include Health Maintenance
Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans,
Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re
enrolled in a Medicare Advantage Plan, Medicare services are covered through
the plan and aren’t paid for under Original Medicare. Most Medicare Advantage
Plans offer prescription drug coverage.”
Medicare Advantage Cuts –
Originally Proposed
As of February 2014, Medicare Advantage
reimbursement was set to be slashed by 1.9%. The consequences of Medicare
Advantage cuts are costly both from the insurer’s side as well as the
beneficiary’s side. Cuts were originally proposed as part of the provisions of
the Affordable Care Act, which set forth reductions in reimbursement totaling
about $156 billion over approximately a decade. The impetus to reduce
reimbursement stems from at least the perception that insurers are reimbursed
at a higher rate for Medicare Advantage plans than for traditional
fee-for-service plans.
Medicare Advantage Cuts –
Opposition
Organizations such as the American Medical
Association have been extremely vocal, launching lobbying efforts to try to
reverse the proposed cuts. Additionally, some of the larger insurers are understandably
up in arms as these cuts directly affect their bottom lines. To put this in
perspective, a company such as Humana, has approximately 2.5 million Medicare
Advantage beneficiaries and about 3.3 million enrolled in Medicare Part D,
accounting for more than 70% of their revenue. A 5% reduction would be extremely
detrimental to this caliber of a company.
Medicare Advantage Cuts –
Consequences to Beneficiaries
Cutbacks to Medicare Advantage plans would
have substantial consequences to beneficiaries/enrollees as well. If cutbacks
have an immediate impact on insurer’s bottom lines, how do you think they will
try to recoup those losses? Costs would be passed on to beneficiaries in the
form of premium increases and/or higher out of pocket expenses. These plans
will become more costly and possibly even unaffordable for a vast number of
enrollees. Additionally, the cost associated with these plans on the insurer
side would cause many doctors to no longer accept patients with Medicare
Advantage coverage. The adage “you can keep your doctor” will again come to the
forefront. Doctors will continue to leave these networks, requiring
beneficiaries to find new physicians or pay the out-of-network consequences.
Medicare Advantage Cuts –
Officially Reversed for 2015
Evidently, the pushbacks from insurers as well
as the aggressive lobbying which has taken place have caused CMS to rethink, at
least for 2015, whether these cutbacks are indeed a good idea. As of April
2014, these cutbacks have actually been reversed and increases will take place.
The original 1.9% reduction has turned into approximately a 4% increase.
Lobbyists, insurers, and beneficiaries can breathe a bit easier at least in the
short run.
How Do the Medicare
Advantage Proposed Cuts Affect Medicare plans?
These are basically separate programs. There
still may be substantial cuts to traditional Medicare reimbursement.
Review www.medicare.gov to
find out the official information on all Medicare programs including Medicare
Advantage.
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