Proposed Medicare Advantage Cuts Will Disrupt Care for Beneficiaries

Proposed payment cuts to Medicare Advantage (MA) could cause many beneficiaries to lose access to MA plans and cause great disruption to the market, according to a new report by Oliver Wyman for America's Health Insurance Plans.

Proposed payment cuts to Medicare Advantage (MA) could cause many beneficiaries to lose access to MA plans and cause great disruption to the market, according to a new report by Oliver Wyman for America’s Health Insurance Plans (AHIP).

Proposed payment policies in combination with the phase-in of cuts under the Affordable Care Act and other legislative and regulatory cuts will mean a 1.2% reduction in payments to MA plans in 2016, the report found. This reduction even takes into account 1.7% and 0.2% increases from both the ratebook change and the change in plans’ Star ratings for 2016, respectively.

After calculating a range of potential outcomes, Oliver Wyman determined that monthly premiums or benefit changes per member could be as much as $20, which can be a significant burden for the 37% of MA enrollees with annual incomes below $20,000.

“The potential for higher premiums and reduced benefits could result in a significant amount of upheaval in the MA market that will likely affect virtually all of the approximately 16 million Medicare beneficiaries enrolled in [MA organizations],” according to the report.

Some of the expected upheaval includes potential plan exits, reduction sin service areas, and reduced MA enrollment as plan value declines from 2014 to 2016. AHIP and Oliver Wyman expect that individuals who are more likely to need medical services will be adversely affected if they are forced out of MA into Medicare fee-for-service, which lacks coordinated care.

“Over the last two years, Medicare Advantage rates have been cut by approximately ten percent,” AHIP President and Chief Executive Officer Karen Ignagni said in a statement. “Another cut this year would jeopardize the care coordination and benefits upon which millions of seniors rely. We urge CMS to protect beneficiaries from any further disruption and provide stability to the coverage they depend on.”