Proposed Payment Changes Put Medicare Advantage Coverage at Risk
Check out AHIP’s New Infographic on Who is Covered by Medicare Advantage
Washington, DC – Low-income and minority Medicare beneficiaries continue to rely on the high-quality health care coverage provided by Medicare Advantage plans, according to a new report released by America’s Health Insurance Plans (AHIP). The new report follows the Centers for Medicare & Medicaid Services’ (CMS) recent announcement of an additional cut to Medicare Advantage payments next year at a time when the program is already facing significant payment cuts and a new health insurance tax included in the health care reform law.
Medicare Advantage is the part of Medicare through which private health plans provide comprehensive medical coverage to seniors and other Medicare beneficiaries. More than 14 million Americans, or roughly 28 percent of all Medicare beneficiaries, have chosen to enroll in a Medicare Advantage plan because of the better services, higher-quality care and additional benefits these plans provide.
A wide range of research clearly demonstrates that Medicare Advantage plans are more effective than the fee-for-service part of Medicare at addressing crucial patient care issues facing the nation, including reducing preventable hospital readmissions, increasing primary care visits, and managing chronic illnesses.
“Medicare Advantage is a lifeline for millions of low-income and minority Medicare beneficiaries who rely on the high-quality coverage and innovative programs and services these plans provide,” said AHIP President and CEO Karen Ignagni.
The new report, based on data from the Medicare Current Beneficiary Survey (MCBS), is an update to previous research showing the value Medicare Advantage provides to low-income and minority Medicare beneficiaries. Key findings from the new report include the following:
- Nationwide, 28 percent of all Medicare beneficiaries were enrolled in Medicare Advantage plans. Thirty-one (31) percent of African-American Medicare beneficiaries and 38 percent of Hispanic beneficiaries were enrolled in Medicare Advantage plans.
- Forty-one (41) percent of Medicare beneficiaries with Medicare Advantage coverage had incomes of $20,000 or less. By comparison, 37 percent of all Medicare beneficiaries had incomes of $20,000 or less.
- Twenty-seven (27) percent of Medicare beneficiaries with incomes of $10,000 or less were enrolled in Medicare Advantage plans. Thirty-three (33) percent of Medicare beneficiaries with incomes between $10,000 and $20,000 chose Medicare Advantage plans; 31 percent of beneficiaries with incomes between $20,000 and $30,000 were enrolled in Medicare Advantage.
- Sixty-one (61) percent of all minority (nonwhite) beneficiaries enrolled in Medicare Advantage in 2011 had incomes of $20,000 or less; 59 percent of African-American and 75 percent of Hispanic Medicare Advantage beneficiaries had incomes of $20,000 or less. By comparison, 36 percent of White Medicare Advantage enrollees had incomes of $20,000 or less.
Proposed Medicare Advantage Payment Changes Will Hurt Seniors
CMS last week unexpectedly proposed a 2.2 percent reduction in Medicare Advantage payments for 2014, which will result in significant disruption for the millions of seniors and people with disabilities who rely on this critically important part of Medicare. These cuts will compound the $200 billion in Medicare Advantage cuts and the new health insurance tax included in the health care reform law:
- The Congressional Budget Office projects that the reform law’s payment cuts alone will result in three million fewer people enrolled in Medicare Advantage.
- Actuaries at Oliver Wyman estimate that the health insurance tax will result in seniors facing $220 in higher out-of-pocket costs and reduced benefits next year and $3,500 in additional costs over the next ten years.
The cumulative impact of the new proposed payment reduction, the reform law’s funding cuts, and new health insurance tax will reduce Medicare Advantage payments next year by more than eight percent, or approximately $11 billion. These cuts will result in seniors facing higher out-of-pocket costs, reduced benefits, and fewer health care choices.
“Washington cannot tax and cut Medicare Advantage this much and not expect seniors to be harmed,” Ignagni said in a statement released on Wednesday.