Medicare Advantage to see payment increase, not cut

Government payments to health insurers as part of the Medicare Advantage program will not be cut, as originally proposed, but will instead rise, the Obama administration announced Monday. 

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The Centers for Medicare and Medicaid Services (CMS) announced a proposed rate cut of 0.95 percent in February under the Medicare Advantage program, where the government contracts with private insurers for seniors’ care.

On Monday, though, the CMS in its final announcement revealed there instead would be an increase of 1.25 percent, not a cut. 

The health insurance industry and some lawmakers in both parties had fought the cuts, but the Obama administration stressed that the new rate is not because of a change in policy but because of changes in actuarial estimates. 

Namely, the administration is now estimating a higher growth rate in health spending, which brings up the payments under Medicare Advantage.

“The changes are not changes in policy, but rather in the actuaries’ re-estimate of growth,” Sean Cavanaugh, CMS deputy administrator, said on a call with reporters. 

A CMS fact sheet likewise emphasized that the change is not “discretionary.”

In the previous two years, the administration has proposed cuts to Medicare Advantage only to end up not implementing them in the final announcement. 

After the passage of ObamaCare in 2010, though, the program did see significant cuts — its spending was brought down to be more in line with traditional Medicare and to help fund the law’s coverage expansion. 

Medicare Advantage now spends about 2 percent more per person than traditional Medicare, according to the Medicare Payment Advisory Commission. 

After the cut was initially proposed in February, the health insurance industry had waged an ad campaign arguing that the proposed cuts would be harmful to seniors.

About 16 million people, or one-third of Medicare beneficiaries, use Medicare Advantage.  

Bipartisan groups of 239 members of the House and 53 members of the Senate also wrote to the administration to urge against the cuts. 

“The newly proposed cuts could represent a significant threat to the health and financial security of seniors in our congressional districts who rely on their MA plans to meet their health care needs,” the House members wrote.