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From Health Law Daily, November 22, 2013

AHIP urges CMS to resist further cuts to Medicare Advantage plans

By Melissa Skinner, JD

America’s Health Insurance Plans (AHIP) President and CEO, Karen Ignagni attempted to raise awareness of the growing concerns for the future of Medicare Advantage (MA) through a public appeal to the Centers for Medicare and Medicaid Services (CMS). In a letter to CMS and an accompanying news release, AHIP claims that recent developments including, most notably, the implementation of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) will lead to severe cuts to MA, threatening the quality and cost of coverage for the plan’s over 14 million participants. In turn, AHIP urged CMS to resist further cut-backs that could undermine and limit funding for what AHIP believes is the future of MA, high-value provider networks.

Individuals enrolled in Medicare Advantage, or Medicare Part C, constitute roughly 28 percent of all Medicare beneficiaries. Medicare Advantage plans are approved by Medicare and offer Medicare Part A and B benefits through private health plans. While Medicare provides a fixed monthly payment to the private insurers offering these plans and although the plans must follow the rules of Medicare, the plans can and do vary to the extent of the amount of out-of-pocket costs and the manner in which services are received. Most of the private plans offered under MA also include prescription drug, or Medicare Part D, coverage.

According to AHIP, the stability of MA is in danger due a culmination of recent developments in the health care industry, including the increase of health care costs, over $200 billion in funding cuts to MA in the next decade under the PPACA, and reductions in MA plans due to health insurance tax beginning in 2014 that will yield a loss of $500-$1,000 per beneficiary per year. AHIP notes that due to these circumstances, MA faces an underfunding crisis which will result in MA beneficiaries experiencing a five percent increase in premiums in the next year, rising out-of-pocket costs, and, for beneficiaries in over 2,000 counties with enrollment rates of over 60 percent of all MA participants, fewer provider options.

In the face of these projections, AHIP has developed certain strategies for battling underfunding including the creation of high-value provider networks. AHIP claims these networks, consisting of smaller numbers of physicians who have a history of providing high quality care at competitive prices, adhere to CMS’s MA standards and at the same time support the underlying goals of the new health care reform legislation of providing high quality care at low costs. These networks reportedly function effectively based on a system of ongoing performance evaluation, referrals, and shared health information. While acknowledging the current funding cuts as a reality, AHIP’s recent public pleas implore CMS to refrain from further cuts that would undercut AHIP’s future vision for MA in the form of high-value provider networks.

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