Tuesday, April 7, 2015

CMS gives another boost to Medicare Advantage plans

Centers for Medicare and Medicaid Services (CMS)
April 6, 2015
Fact Sheet: Moving Medicare Advantage and Part D Forward

On April 6, CMS released final updates to the Medicare Advantage and
Part D programs through the 2016 Rate Announcement and Call Letter. The
finalized policies will continue to strengthen the growing Medicare
Advantage program, and continue the successful implementation of the
Affordable Care Act's reforms that improve quality and provide greater
protections for beneficiaries and value for taxpayers.

Recent Trends in Medicare Advantage and Part D

* Enrollment continues to grow – MA enrollment has increased by 42
percent since passage of the Affordable Care Act in 2010 to an all-time
high of more than 16 million beneficiaries, with nearly 30 percent of
Medicare beneficiaries enrolled in an MA plan.

* Plan quality continues to improve – In 2015, 60 percent of MA
enrollees will be enrolled in a 4 or 5 star plan, compared to an
estimated 17 percent back in 2009.

* Premiums remain affordable – Average premiums today are lower than
before the Affordable Care Act went into effect, dropping 6 percent
between 2010 and 2015.

2016 Rate Announcement

Expected Average Change in Revenue

1.05% - 2016 Advance Notice
3.25% - 2016 Rate Announcement

Effective Growth Rate

1.7% - 2016 Advance Notice
4.2% - 2016 Rate Announcement

Updated Growth Rate

The 2016 rate announcement reflects an underlying per capita growth of
1.9 percentage points of additional FFS spending for 2014 and 2015 and
0.6 percent for 2016, and 0.1 percent for the assumption that Congress
will enact the pending legislation to permanently fix the SGR. The
updated growth rates reflect the Office of the Actuaries' best estimate
of Medicare spending and are not the product of discretionary CMS
policy. The underlying per capita FFS costs continue to demonstrate a
historically slow health care growth rate and that growth rate remains
below the per capita gross domestic product growth rate. Initial
information from Medicare actuaries suggests that contributing factors
behind the change from the preliminary growth rate include higher than
expected spending on inpatient hospitalizations and some intermediary
services such as therapy, rural health clinics and federally qualified
health centers. As always, when changes occur, we'll continue to watch
developments closely and work to understand these factors in greater detail.

Value-Based Contracting

In January 2015, the Secretary announced the Administration's vision for
moving the health care system toward paying providers based on quality
rather than the quantity of care they provide. In the Call Letter, CMS
continues to signal an intention to begin working with plans
participating in Medicare Advantage to better understand, through a
voluntary effort, the extent to which they use value-based payment
models to compensate providers offering services to their enrollees.



Morning Consult
March 30, 2015
Seniors Love Their Medicare (Advantage)
By Meghan McCarthy

Whether enrolled in traditional Medicare or Medicare Advantage, Morning
Consult polling shows Americans aged 65 and older expressing high levels
of satisfaction with their federal health benefits. But when asked about
individual pieces of their insurance—like prescription drug coverage,
the benefits that are covered, and preventive care—seniors using
Medicare Advantage reported higher satisfaction rates, sometimes by

The poll of 3,975 seniors found that 85 percent of seniors on
traditional Medicare said they were satisfied with their plan, compared
to 88 percent of seniors on Medicare Advantage.

Despite registering nearly identical satisfaction levels for the overall
programs, 80 percent of seniors on Medicare Advantage said they were
satisfied with the overall cost of their plans, compared to 68 percent
of traditional Medicare seniors. The gap in satisfaction appeared in
every individual measure, with Medicare Advantage proving more popular
every time.

Robert Berenson, a Medicare expert at the Urban Institute who previously
served on the Medicare Payment Advisory Commission, said seniors on
Medicare Advantage often get more benefits and have to pay less out of
pocket, because the federal government ends up paying more per
beneficiary when compared to traditional Medicare.

"Medicare Advantage plans provide better benefits, and overall costs are
less, but plans get paid more—with favorable selection—to be able to do
that," Berenson said in an interview. A March MedPAC report found that
Medicare Advantage plans would be paid 2 percentage points more than
traditional Medicare in 2015.

Berenson also noted that traditional Medicare often covers the sickest
and poorest seniors, and they might have a more negative view of their
insurance, and health care in general.

With more seniors signing up for the program, insurers are getting more
help from Congress to pressure the Obama administration to protect
payment rates from any reductions.



Comment by Don McCanne

CMS has done it again. For the fourth year in a row, CMS has used
innovative methods to boost the payment rates for Medicare Advantage
plans, more than compensating for the required reductions in
overpayments mandated by the Affordable Care Act.

Although this year's Advance Notice called for a 1.05% increase in
Medicare Advantage revenue, CMS has responded to an intensive campaign
orchestrated by AHIP - the insurance lobby organization - by increasing
revenue by 3.25% instead. Members of both parties in Congress were
involved in this lobbying function - 239 from the House and 53 from the

Although many factors are considered when determining payment increases
for Medicare Advantage plans, this year's surprise discovery of new
funds was predominantly in the updated effective growth rate of
fee-for-service (FFS) Medicare - a rate of 4.2% as opposed to their
Advanced Notice estimate of 1.7%. They explain that this is their "best
estimate" of FFS Medicare spending and "not the product of discretionary
CMS policy," though they say, "the underlying per capita FFS costs
continue to demonstrate a historically slow health care growth rate."

This continued overpayment to private Medicare Advantage plans has
allowed the insurers to offer greater benefits with lower out-of-pocket
costs, and that is what has made the plans popular - demonstrated by a
40 percent increase in enrollment between 2010 and 2015. Little is said
about the fact that the majority of the overpayments are retained by the
insurers for administrative costs and profits. Robert Berenson confirms
how these overpayments have made the plans more popular in polls such as
that from Morning Consult, whereas "traditional Medicare often covers
the sickest and poorest seniors, and they might have a more negative
view of their insurance, and health care in general." The Happy Healthy
are in the private plans, and the Sad Sick are in traditional Medicare.

The march to Medicare privatization moves forward, aided and abetted by
both Democrats and Republicans in Congress and in the Administration.
Enabling better benefits and lower beneficiary costs for private
Medicare Advantage plans, while leaving those in the traditional, less
expensive FFS Medicare program devoid of these additional benefits,
continues to incentivize the shift to private plans. Next week another
step forward will occur with the enactment of the "SGR fix" which will
expand somewhat the use of premiums and deductibles in the traditional
Medicare program, but not in the Medicare Advantage plans.

Where is citizen action on all of this? Are we headed to "Medicare for
None" with "Private Plans for All." Keep in mind that the purpose of
privatization is to shift the costs of health care from the government
(collectivism) to individuals (freedom). That surely cannot be what
Martin Luther King Jr meant when he dreamed of being "free at last."
What are we doing to his dream?

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