The Medicare Payment Advisory Commission is saying that Medicare Advantage, on average, expends “about 2 percent more per person,” according to a recent report in The Hill, over “traditional Medicare.”
The report, by Peter Sullivan, also adds, that The Centers for Medicare and Medicaid Services (CMS) had suggested a rate cut of .95 percent in those instances in which the government contracts with private insurers to dispense care to senior citizens.
Now, CMS says a 1.25 increase is forthcoming. The Obama administration also chimed in, “the new rate is not because of a change in policy but because of changes in actuarial estimates,” so says Sullivan’s Hill article.
The Hartford Courant says the health care industry is vexed over a drawn-out shift in Medicare policy, translating into insurance companies being paid less per person to manage federally backed Medicare Advantage coverage. The U.S. Centers for Medicare and Medicaid Services proposed its most recent reductions in February, 2014, affecting plans insurers will offer to prospective customers in the fall of 2015. Less government money for insurance companies actually squeezes their profits. As a result, Cigna is cutting 950 employees globally, 70 of whom are located in Connecticut.
Insurers can attempt to preserve their bottom lines in several ways: narrowing physician networks, changing plan benefits, or increasing out of pocket costs for policyholders.
The number of lawmakers escalating efforts to block the Obama administration’s recommended cuts to Medicare Advantage is increasing. Those reductions are expected to be in place by April 1. In a letter, dated March 11, 2014, approximately 200 members of the House implored the administration to keep Medicare Advantage rates level or run the risk of negatively impacting seniors’ care. Obama officials and Democrats counter the reductions are justified as Medicare Advantage is overpaid when compared with traditional Medicare.
Federal officials are proposing a 2 percent reimbursement cut, on average, for Medicare Advantage plans, in 2015.