By Brandon Moseley
Alabama Political Reporter
The Obama administration is planning new cuts to the embattled Medicare Advantage program. The new round of cuts for 2014 likely mean that seniors will have to pay a larger portion of their healthcare expenses through higher premiums and/or higher copays and deductibles. Some seniors could lose their coverage altogether.
The Center for Medicare Services (CMS) announced the new cuts come in a required regulatory filing of 2.3% in the reimbursement rates CMS pays to insurance companies which operate the Medicare Advantage plans. The Medicare Advantage Plans are services administered by private for-profit or non-profit providers.
Seniors leave traditional Medicare for the Medicare Advantage Plans (normally a HMO or a PPO) to receive maximum out of pocket coverage not found in traditional Medicare. In traditional Medicare the senior is responsible for 20% of the Medicare Part B charges; but there is no maximum out of pocket amount where Medicare takes over and some seniors accrue massive debts from a major illness. Typically such plans offer a maximum out of pocket amount of between $4000 and $7000 for 2013 and a per month premium ranging between $0 a month to $150. Medicare Advantage plans typically also have copayments seniors pay until they reach the annual maximum out of pocket amount for the year.
CMS justifies the reduction because it believes that the overall costs of the Medicare Advantage program will shrink by 3.2% next year. They do not however provide much explanation for how they expect that 2014 medical expenses are to drop so radically next year.
28% of all Medicare beneficiaries receive their benefits through Medicare Advantage plans.
Also beginning in 2014 the Obama administration is planning to begin to implement $200 billion in cuts to Medicare Advantage plan as the Patient Protection and Affordable Care Act (more commonly referred to as Obamacare) goes into effect. Those 2014 cuts could be delayed so as not to influence the 2014 midterm elections, but at some point seniors will likely feel the financial pain.
Senator Marco Rubio (R) from Florida wrote to CMS urging them not to cut Medicare Advantage, “This assumption is highly problematic because – even though it almost certainly will turn out to be wrong – it translates into lower funding to support the health benefits of the 14 million Medicare beneficiaries who are currently enrolled in MA [Medicare Advantage] plans.”
Medicare Advantage plans face competition from Medicare Supplements. Medicare Supplements, also known as Medigap policies, pay all or most of the traditional Medicare deductibles and copayments but since it is private insurance applicants have to go through medical underwriting.
In original reporting by Health Plan Week, United American Corporation CEO Richard Barasch said that some of the Medicare Advantage plans will simply go out of business. Barasch said, “There are going to be some markets that at these rates, if they go the way they’re going, it’s going to be very hard for Medicare Advantage to survive.” “I think it’s going to be sort of a market-by-market, company-by-company exercise.”
Medicare Advantage operators in Alabama include Blue Cross Blue Shield, United Healthcare, Humana, Windsor, Health Springs, and UAB’s Viva.
Most seniors with Medicare Advantage plans are trapped by law in their plans and are not allowed to leave the Medicare Advantage plan and purchase Medicare Supplement coverage except during the period between October 15 and December 7th and then their new coverage doesn’t go into effect until January 1. Seniors who do not switch out of their plan during open enrollment will automatically be reenrolled in their company’s new plan on January 1 even if it has gotten more expensive or has less benefits…….if they still have a plan at all.