Medicare Advantage beneficiaries are on average paying more for less as a result of federal payment rate cuts implemented each plan year from 2012-2015.
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WASHINGTON, D.C. – Medicare Advantage beneficiaries are on average paying more for less as a result of federal payment rate cuts implemented each plan year from 2012-2015. Medicare Advantage enrollees who need the most care have seen their maximum annual out-of-pocket costs increase by up to $761 since 2012. While seniors and people with disabilities in 211 U.S. counties now have no access to Medicare Advantage general enrollment plans.
Most troubling for the more than 17 million Medicare Advantage beneficiaries nationwide is the fact that some Medicare Advantage cuts have yet to go into effect.
These are among the findings of a new report conducted by Milliman on behalf of the Better Medicare Alliance.The full report can be found here.
Authored by Brett Swanson and Eric Goetsch, the report, “Medicare Advantage Funding Cuts and the Impact on Beneficiary Value,” quantifies the annual beneficiary impact over a period of time during which a series of federal policy changes resulted in annual federal funding reductions to Medicare Advantage. These policy changes include the American Tax Relief Act (ATRA), budget sequestration, the Affordable Care Act, the conclusion of the Quality Bonus Payment Demonstration, and other discretionary regulatory payment cuts.
Declining “value add” for Medicare Advantage beneficiaries. The report measured the annual actuarial value by county of each general enrollment Medicare Advantage benefit plan in the country for each year from 2012-2015. In the report “value add” is defined as the value of benefits provided to a plan’s beneficiaries above traditional Medicare that are not funded through member premiums. The report determined that “Medicare Advantage value add for beneficiaries has been decreasing every year from 2012 to 2015.”
As a result, the report finds that, on average, Medicare Advantage beneficiaries have experienced a cumulative decline in the annual value add of their coverage of up to approximately $295 since 2012. This decline has been felt by Medicare Advantage beneficiaries in the form of benefit reductions and premium increases.
Soaring maximum out-of-pocket costs. Medicare Advantage beneficiaries who need the most care have seen their maximum annual out-of-pocket costs soar by up to $761. The report states that “those individuals receiving services more regularly would be most impacted by these changes. In addition, if cost sharing gets high enough, it may trigger some individuals to not seek needed medical care to avoid paying the cost sharing.”
Rural Medicare beneficiaries losing access. The annual rate cuts are also causing seniors and people with disabilities in some rural areas to lose access to Medicare Advantage. According to the report, the number of counties not served by Medicare Advantage general enrollment plans has almost quadrupled from 55 counties in 2012 to 211 counties in 2015.
More cuts may be coming. Looking ahead, the report states “it is also important to be aware of further changes scheduled to occur in 2016. Many of these changes will put continued pressure on revenue payments to Medicare Advantage Organizations and, consequently, possibly on beneficiaries as well through additional benefit reductions and premium increases.”
To view the full Milliman report, please click here.
About Medicare Advantage
Also known as Medicare Part C, Medicare Advantage is the part of Medicare that provides high-quality and affordable healthcare coverage. More than 17 million Medicare beneficiaries (approximately one third of individuals eligible for Medicare) rely on Medicare Advantage for their health and financial security, including medical, prescription drugs, behavioral, vision, dental, fitness and wellness benefits. Medicare Advantage focuses on prevention, coordinated care, better management of chronic conditions, and new provider payment models that reward value over volume. As a result of these innovations, Medicare Advantage is enhancing seniors’ and individuals with disabilities’ health and well-being, while driving systemic improvements in care delivery.
About the Better Medicare Alliance
The Better Medicare Alliance (BMA) is a new coalition of providers, plans, beneficiaries and advocates who believe Medicare Advantage is better for seniors and people with disabilities and better for the healthcare system as a whole. For more information please visit www.bettermedicarealliance.org, and follow BMA on Twitter and Facebook.
Milliman is among the world’s largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit www.milliman.com.