The federal government proposes to pay health insurers about 1 percent less in 2016 for a Medicare program that offers private health plans to seniors, which is sure to draw the ire of the industry.
The proposed rate notice announced Friday would be for Medicare Advantage, which provides private health plans that cover Medicare Part B and D and covers about one-third of Medicare beneficiaries.
Altogether new payment policies adopted by the Centers for Medicare and Medicaid Services will reduce payments by 0.9 percent in 2016. However, after taking into account changes to coding for payments, there will be positive growth of almost 1.1 percent on average, said Sean Cavanaugh, deputy administrator of the agency, in a Friday call with reporters.
The agency noted that health plans would be affected differently by the payment growth.
“Plans that have shown quality improvement and have demonstrated a focus on customer satisfaction would see additional growth,” the agency said Friday.
The payment model is part of a larger effort by the agency to shift payments toward the quality of care provided and not the quantity.
Major insurers such as Aetna and Humana have come out strong against any future cuts to the program.
The insurers signed on to a letter from the advocacy group Better Medicare Alliance to agency director Marilyn Tavenner seeking to reverse cuts made by “discretionary payment policies. These have been real cuts, not merely reductions in rate of projected growth,” the Feb. 17 letter reads.
The alliance, comprised of providers, doctors and hospitals, also touted a letter from more than half the Senate to the agency calling for a halt to cuts.
“Regulatory policy changes that affect the program’s funding, year after year, are creating disruption and confusion among beneficiaries,” reads the letter signed by both Republicans and Democrats.
The alliance funded a study that found Medicare Advantage enrollees have seen their maximum annual out-of-pocket costs increase up to $761 since 2012. The program has been hurt by a 2 percent cut due to sequestration, a 3 percent premium tax that went into effect last year and lower rebates, according to the study conducted by the research firm Milliman.
The alliance did not have an immediate comment on the preliminary rates.
CMS wants comments on the proposed rates by March 6 and will announce final rates on April 6.
