Government
Projected update for Medicare Advantage may lead to cuts
■ Health plans say spending estimates for Medicare beneficiaries could result in a 5% rate decrease and ultimately prompt some plans to drop out.
By Chris Silva — Posted March 13, 2009
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Washington -- Medicare private plans may be in line for rate cuts starting in 2010 under spending projections released Feb. 20 by the Centers for Medicare & Medicaid Services.
CMS announced that the National Per Capita Medicare Advantage Growth Percentage for next year -- an estimation of how much more the program will need to spend on all beneficiaries -- will be only 0.5%. This could result in a 5% cut in Medicare Advantage payments, according to America's Health Insurance Plans.
Based on internal calculations and other market estimates, AHIP believes such a reduction could force health plans to increase premiums for seniors and cut back on benefits provided, said Robert Zirkelbach, a spokesman for the association. It also could prompt some plans to start pulling out of Medicare Advantage, which would impact payments made to physicians, he added.
Zirkelbach noted that the CMS growth percentage estimate assumes that the roughly 21% cut in Medicare payments to physicians that is set for Jan. 1, 2010, will go through. AHIP anticipates that Congress will intervene before that happens, as it has every year since 2002. "We don't think seniors should be forced to pay high premiums to offset a physician payment cut that everybody knows is not going to occur."
On Feb. 20, CMS also announced that the standard deductible for Medicare beneficiaries enrolled in the prescription drug program would increase from $295 in 2009 to $305 in 2010. The advance notice is issued 45 days before the final rates are announced.
Avalere Health, a public policy advisory company based in Washington, D.C., estimated that enrollment in Medicare Advantage prescription drug plans has grown by 730,000 individuals since mid-2008, as seniors sought lower up-front premiums and greater predictability in out-of-pocket spending. More than 9 million people, or 34% of all Medicare Part D enrollees, receive prescription drug benefits through Medicare Advantage plans, a Feb. 24 Avalere analysis stated.
In addition, premiums for Medicare Advantage prescription drug plans increased by 13% on average in 2009, the firm found.
