Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Some—Not All—Analysts Lower Estimates of Medicare Advantage Cuts

By John Reichard, CQ HealthBeat Editor

February 24, 2014 -- After a more thorough evaluation of preliminary 2015 rate changes announced last week in the Medicare Advantage program, industry analysts in some cases have said the hit won't be as big as they thought.

Industry forecasts prior to the announcement forecast that Medicare officials would propose cuts to Medicare Advantage plans of 6 percent to 7 percent next year. But now some stock seers see the reductions coming in at closer to 4 percent. Others stuck to higher estimates, however.

The Centers for Medicare and Medicaid Services (CMS) issued a statement last week suggesting the cuts would total 1.9 percent. But industry sources and stock analysts said the figure failed to account for all the factors affecting reimbursement.

"Reports from leading industry analysts show broad consensus that the CMS proposal, if finalized, would result in Medicare Advantage payment cuts of at least 4 percent in 2015 and likely much higher once other changes are factored in," America's Health Insurance Plans (AHIP) said in a recently issued statement.

Meanwhile, CMS issued a statement linking cuts to lower premiums, suggesting that beneficiaries are helped, not hurt, through cuts.

Republicans are stepping up their attacks on the health law on the grounds that cuts to Medicare Advantage under the overhaul (PL 111-148, PL 111-152) are driving up out of pocket costs to seniors. As plans tighten networks to lower their costs, more seniors are losing access to their doctors, they charge.

Humana, a big player in the Medicare Advantage market, said in a Securities and Exchange Commission filing last week that it now expects cuts in 2015 to be in the 3.5 percent to 4 percent range. Before the announcement it put them in the 6 percent to 7 percent range.

An AHIP roundup of excerpted quotes from investment firms put the cuts as high as 8 percent to 9 percent.

But defenders of the cuts noted they are part of health law changes that gradually bring down payment rates to Medicare Advantage plans to the same level as those for other Medicare providers. The private plan program in Medicare was originally created to bring savings to Medicare, not to add to its outlays.

Asked to comment on the industry assessments of at least a 4 percent cut, CMS spokesman Aaron Albright said in a statement, "The proposed changes for 2015 for Medicare Advantage are smaller than those implemented in 2014. As we've seen over the past few years, efforts to reduce overpayments for medical services have corresponded with falling premiums for consumers. Since the ACA became law, enrollment in Medicare Advantage has increased by nearly 33% while premiums have fallen by 10%, and premiums for Part B have remained flat."

A consumer advocacy group, the Center for Medicare Advocacy, said in a recent statement that a 2009 study showed per enrollee payments for Medicare Advantage plans in 2009 were 13 percent higher than for traditional Medicare. "The ACA changes will bring that difference down to 1 percent by 2017. Yet even then, many private MA plans will be paid more than comparable care would cost in traditional Medicare."

It added that even with health law cuts the Congressional Budget Office has projected that enrollment in Medicare Advantage will climb from 13 million in 2013 to 18 million by 2019.

Publication Details