Administration Caves On Scheduled MA Cuts

By  //  April 10, 2014

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LOOMING MIDTERM ELECTIONS, PRESSURE FROM INSURERS DRIVE CMS DECISION

ABOVE VIDEO: C-SPAN video showing Congressman John Barrow (D, GA) recently speaking on the floor of the House of Representatives about efforts he is working on with Republicans and Democrats in the House of Representatives to prevent cuts to Medicare Advantage benefits.

In February, the Obama administration announced proposed Medicare Advantage (MA) rates that officials said could mean payment reductions of 1.9 percent for the private plans in the popular program that covers 30 percent of Medicare beneficiaries.

Jonathan-Blum

CMS Deputy Administrator, Jonathan Blum

Under intense pressure from the insurance industry and in the midst of a busy election season, during which cuts to the program promise to be a key focus for politicians and voters, the Centers for Medicare and Medicaid Services (CMS) announced on Monday that they were shelving the controversial MA cuts and instead increasing payments by 0.4 percent.

CMS made the announcement in a press release entitled “CMS Ensures Higher Value and Quality for Medicare Health and Drug Plans.

“The policies announced today will provide improved benefits in Medicare Advantage and the Prescription Drug Plans while keeping costs low for Medicare beneficiaries,” said Jonathan Blum, CMS principal deputy administrator.“We believe that plans will continue their strong participation in the Medicare Advantage program in 2015 and beneficiaries will continue to have access to a wide array of high quality and affordable Medicare health and drug plans.”

INSURERS AND POLITICIANS PRESSURE CMS TO SHELVE MA CUTS

The announcement was surprising in light of the fact that cuts to MA plans had been estimated by the nonpartisan Congressional Budget Office to reduce MA payments by $156 billion, or 22 percent of the $716 billion in Medicare spending reductions the Affordable Care Act (ACA, aka Obamacare) calls for over the next decade.

Medicare advantage cuts

Cuts to MA plans had been ear-marked for $200 million of the $716 billion in Medicare spending reductions Obamacare calls for over the next decade.

Insurers and other Medicare Advantage advocates, focusing on their contention that cuts could cause premium increases and benefit reductions, spent millions on a public relations blitz seeking to head off the cuts, and dozens of Democrats joined Republicans in calling on the administration to avoid cutting benefits for seniors and creating a backlash among seniors in the midterm elections.

GOP CALLS FOR LONG-TERM FIX

However, CMS’ reversal has not entirely quelled Republican protests, with several members of the GOP echoing the concerns of Rep. Pete Sessions (TX), who said, “Today’s announcement from CMS doesn’t change the fact that ObamaCare still cuts the Medicare Advantage program that our seniors rely on.”

House Speaker John Boehner called for a more permanent, long-term fix for the MA cuts that are such a large chunk of the ACA Medicare spending reductions. (Hancock, Kaiser Health News, 4/7; Easley, The Hill, 4/8; Murphy, Associated Press, 4/7).


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