New Report: Seniors to Lose Benefits and Choices as a Result of CMS’ Proposed Cuts to Medicare Advantage

For Immediate Release
February 27, 2014

Contact:
Robert Zirkelbach
202-778-8493

 CMS proposal would cut Medicare Advantage payments
by 5.9 percent in 2015;

Seniors to face $420-$900 in higher costs, reduced benefits
next year if cuts are finalized

Washington, D.C. – Seniors and people with disabilities enrolled in Medicare Advantage plans would face premium increases and benefit reductions of $35-$75 per month, or $420-$900 next year, if new Medicare Advantage payment cuts recently proposed by the Centers for Medicare and Medicaid Services (CMS) take effect next year, according to a new analysis by Oliver Wyman prepared for America’s Health Insurance Plans. 

On Friday, February 21, CMS, the Medicare agency, released the 2015 advance notice, which include proposed changes to Medicare Advantage payments for next year.  According to the new report from Oliver Wyman, these changes, if finalized, would result in a 5.9 percent cut to Medicare Advantage payments in 2015.  This would result in seniors facing benefit reductions and premium increases of $35-$75 per month, or $420-$900 for the year, according to the report.

A previous analysis by Oliver Wyman found that Medicare Advantage payments were cut by 4-6 percent last year, which resulted in cost increases and benefit cuts of $30-$70 per month for beneficiaries.  If the new changes proposed by CMS are implemented, the program would be hit by a double-digit cut over just a two-year period, causing cost increases and benefit reductions for seniors of $65-$145 per month, or as much as $1,740 over two years, according to the latest Oliver Wyman analysis. 

Cuts of this magnitude could result in a “high degree of disruption in the MA market,” including the “potential for plan exits, reductions in service areas, reduced benefits, provider network changes, and MA plan disenrollment,” the report stated.

“CMS should keep Medicare Advantage payment rates flat next year to protect seniors from harmful cuts that would cause them to face higher costs and lose benefits and choices upon which they rely today,” said AHIP President and CEO Karen Ignagni.

Ignagni noted that the Medicare Advantage program has strong bipartisan support, citing a recent letter from a bipartisan group of 40 senators urging CMS to “maintain payment levels that will allow MA beneficiaries to be protected from disruptive changes in 2015.”  A broad array of organizations – representing employers, providers, consumers, and health care stakeholders – also sent letters urging the agency to keep rates flat to protect seniors from further harm. 

The Oliver Wyman analysis notes that the rate cuts proposed by CMS “would disproportionally affect beneficiaries with low incomes, including the 41% of MA enrollees with annual incomes below $20,000 for whom the potential increase in out-of-pocket costs would constitute a significant burden.”

Final Medicare Advantage payment rates will be announced on April 7, 2014. Seniors will see the impact of any new payment cuts in late October 2014, when they begin enrolling in their 2015 Medicare Advantage coverage.

To view the full report click here.

AHIP’s Coalition for Medicare Choices (CMC) recently launched is largest-ever mobilization to urge Washington to protect seniors by maintaining current payment levels in 2015. The advocacy campaign includes television, digital, print, and display advertising in key markets around the country and in Washington, D.C. and grassroots mobilization of CMC’s 1.5 million Medicare Advantage beneficiaries. To learn more about the CMC, visit www.MedicareChoices.org and follow the coalition on Twitter (@ProtectMyMA) and  Facebook.

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