Feds rumble with Medicare Advantage plans

By staff Writer

September 28, 2010 at 08:00 PM

Share & Print

Centers for Medicare and Medicaid Services head Donald Berwick has announced Medicare Advantage premiums, which are paid by 11.3 million seniors, will be dropping by 1 percent. This news surprised many, who believed premiums were set to rise. MA premiums rose an average of 15 percent last year.

Officials credited the Affordable Care Act with giving them a stronger hand in negotiations with insurers. Some 300 plans were initially refused Medicare participation after they threatened to raise premiums.

"These plans unfairly proposed to increase out-of-pocket expenses for beneficiaries while increasing their own profit margins," Berwick says. "We said, 'No, you have to do better.'"

Following this bold move by the feds, the plans agreed to "improve their benefits by $13 per member per month, or 5 percent, on average." Seven plans that did not alter their bids were denied participation, Berwick notes.

Gorman Health Group CEO John Gorman called the meeting with Medicare officials a "beat-down."

"This was night-and-day different from the Bush years," Gorman says. "Insurers succumbed to the government's demands and stayed in the Medicare market because they have become much more dependent on Medicare business."

NOT FOR REPRINT