The battle over the future of Medicare Advantage plans — the private insurance coverage that supplements traditional Medicare — heated up this week in Washington.
The Obama administration plans to cut funding to insurance companies offering Medicare Advantage by 2.3 percent next year as part of the Patient Protection and Affordable Care Act. Supporters say the reductions can be made without reducing the quality of care, while opponents insist that is not true because providers will have to make up the revenue the only place they can — from patients.
They also say it’s unlikely Congress will allow the cuts to stand, given the history of the so-called “doc fix,” legislation that gets passed every year to annul what are supposed to be automatic reductions in payments to physicians.
This week the health insurance industry launched a new television and online ad campaign against the cuts to Medicare Advantage, the Reuters news service reported on Wednesday.
A group called the Coalition for Medicare Choices will be presenting a 30-second commercial that says the 14 million seniors who use Medicare Advantage plans will each face cuts of $50 to $90 per month, even though, Reuters points out, the reductions are aimed at insurance companies, not Medicare enrollees.
A woman in the commercial claims, however, that “seniors will pay more, get less and lose choices” if the reductions take effect.
Meanwhile the UnitedHealth Group and other insurance companies have told the Centers for Medicare and Medicaid Services that the reimbursement reduction is unworkable because it assumes a 25 or 30 percent decrease in payments to doctors, one that will not stand, according to a report in Businessweek.
“CMS is assuming a 30 percent cut to physician payments that everyone in Washington knows will never take effect,” Businessweek quoted Robert Zirkelbach of the America’s Health Insurance Plans lobbying group, as saying.
“To prevent the MA program from going into a tailspin, the agency needs to implement a solution that will be big enough to solve the problem,” AHIP President Karen Ignagni said in a March 1 letter to the CMS, according to Businessweek.
On the other side of the debate, supporters of the president’s healthcare plan pointed to a new report from the Government Accountability Office that said the CMS overpaid Medicare Advantage plans by anywhere from $3.2 to $5.1 billion between 2010 and 2012.
The reason, according to the GAO, is that the CMS does not correctly adjust for differences in how Medicare Advantage plans code medical diagnoses, compared to how they are coded in traditional Medicare.
Rep. Henry Waxman (D-Calif.) was among those supporters of cuts to Medicare who said the GAO report underscores his position.
“While CMS has continued to strengthen the Medicare Advantage program, today’s GAO report provides evidence that there is yet more to do,” Waxman said in a prepared statement. “One of the best ways to protect Medicare for generations to come is to ensure that the program isn’t overspending for care and services.”
The tension over the future of Medicare Advantage funding was increased this week by the imposition of the spending cuts known as the sequester across a wide swath of the federal government. Those cuts also add up to about 2.3 percent of spending.