Medicare Advantage program managers say they will cut federal risk-adjustment payments to Medicare Advantage plan issuers when it looks as if the plans are making enrollees look sicker than they really are.
The change could cut risk-adjustment payments by $4.7 billion from now through 2032, or about 0.075% of the $6.3 trillion that the federal government expects to pay the plans over the next decade.
The Centers for Medicare and Medicaid Services announced the move to the new approach, which will base the risk-adjustment payments partly on the results of CMS audits, Monday, in a new final rule set to appear in the Federal Register Wednesday.
Matt Eyles, the CEO of America's Health Insurance Plans, and Mary Beth Donahue, the CEO of the Better Medicare Alliance, a group for Medicare Advantage plan issuers and other Medicare Advantage program supporters, are objecting to the new, "extrapolation-based" approach.
The new final rule "is unlawful and fatally flawed, and it should have been withdrawn instead of finalized," Eyles said in a statement.
Donahue said the Better Medicare Alliance is still reviewing the final rule, but she said in a statement it could lead to "an environment of higher premiums and fewer benefits."
"We encourage CMS to work with stakeholders to put in place solutions that are transparent and fair," she said.
What It Means
The change might affect clients who have Medicare Advantage plan coverage, but it's not clear how much a 0.075% change in federal payments would change insurers' interest in the Medicare Advantage program.
The Medicare Advantage Program
Medicare is a federal program provide that provides health insurance for people over 65, many people who qualify for Social Security disability insurance payments and people with severe kidney disease in the United States.
The Medicare Advantage program gives private insurers and other private health coverage providers a chance to use a combination of federal money and enrollment premium payments to provide coverage that looks to the enrollees like an alternative to Original Medicare, rather than something that simply fills the many holes in Original Medicare coverage.
Medicare Advantage plans cover about 30 million of the 65 million Medicare enrollees.
About 14 million enrollees have Medicare supplement insurance, or standardized private insurance policies that fill Original Medicare coverage gaps, rather than looking like an alternative to Original Medicare.
