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HHS Officials: 2012 Medicare Advantage Premiums to Fall, Enrollment Will Rise

By Dena Bunis, CQ HealthBeat Editor

September 15, 2011 -- Federal officials say the fact that Medicare Advantage premiums will go down on average by 4 percent next year and that enrollment is projected to go up by 10 percent proves that the naysayers were wrong when they said the health care overhaul would mean the end of these managed-care plans.

"We can say with complete accuracy that despite projections in 2010 that the program will decline, that this year the program has grown,'' Jonathan Blum, deputy administrator of the Centers for Medicare and Medicaid Services, said in a conference call with reporters.
Not so fast, say health industry representatives.

"All of the projections were showing the big drop in enrollment would be starting in 2013 and beyond,'' said Robert Zirkelbach, press secretary for America's Health Insurance Plans. "You can't cut $200 million from Medicare Advantage and expect there not to be a significant impact on the program." The health law (PL 111-148, PL 111-152) actually calls for $136 billion in direct cuts to Medicare Advantage payments but the insurance industry says there will be another $70 billion in indirect losses.

"The plans know what the law is,'' Blum said. "They have very smart actuaries. They can calculate the future. If we were going to see pullouts we would have seen them by now but we haven't."

In 2010, the Congressional Budget Office (CBO) estimated that Medicare Advantage enrollment will drop from 11.7 million enrollees in 2011 to 7.5 million in 2018 and then start trending back up in 2019.

CBO had projected a leveling out of enrollment in 2011 but there has been a steady increase. There were nearly 7 million seniors enrolled in Medicare Advantage plans in 2006, 11.9 million this year and 13 million are projected for 2012. About 24 percent of Medicare recipients enroll in these plans.

Federal officials did not want to speculate about future enrollment. But Blum attributed the drop in premiums—from an average of $33.48 a month this year to $32 a month next year—to an increasingly competitive environment and the tools the health law gave negotiators at the Center for Medicare and Medicaid Services (CMS) to wring savings from the plans.

Blum pointed out that 2012 will be the first year the plans will be able to receive quality bonuses, a $6.7 billion program based on a five-star measurement. Those bonuses were designed to both cushion the blow of Medicare Advantage payment cuts and to show a commitment to quality improvement.

Blum said CMS officials also were careful to measure total beneficiary cost changes to make sure that any premium decreases aren't offset by large increases in co-payments or deductibles. And plans also are retaining supplemental benefits that CMS tracks, such as vision and hearing care.

The open enrollment period for Center for Medicare and Medicaid Services plans has been moved up this year, said Health and Human Services Secretary Kathleen Sebelius. That is designed to give seniors more time to review any plan changes and make their choices, and also ensure they will get their insurance cards in time for the new plan year beginning Jan. 1. The open enrollment period will begin Oct. 15 and close Dec. 7.

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