Do GOP Rep. Ellmers’ claims of cuts to Medicare Advantage plans hold up?

03/06/2014 2:56 PM

03/07/2014 4:12 AM

Rep. Renee Ellmers this week joined fellow Republicans who say the Obama administration is slashing Medicare Advantage to pay for the health care law.

Ellmers and other House Republicans sent a letter to the administration this week, calling for “immediate reversal of their plans to make painful cuts to Medicare Advantage to pay for Obamacare.”

The recent spate of political warnings about Medicare Advantage stem from a Feb. 21 announcement of preliminary figures used to compute the rates Medicare will pay to private providers for Medicare Advantage plans in 2015.

The warnings, however, don’t square with the assessment of Medicare experts and the federal agency that runs the program. They say there’s a reason for the rate reductions _ to phase out overpayments to insurance companies.

Research by the Medicare Payment Advisory Commission, an independent congressional agency that advises Congress, shows that it paid 14 percent more per beneficiary than traditional Medicare in 2009, the year before the Affordable Care Act was passed.

The health care law began to shrink the overpayments in 2012.

The rate reductions, mandated by the Affordable Care Act, are not new. Well before President Barack Obama’s health care law was passed, Medicare Advantage rate payments had been adjusted annually.

Medicare is a federally subsidized health care program largely for people over age 65. Medicare Advantage is a type of Medicare health plan offered through private insurers that receives funds from the federal government to provide the benefits that the program covers _ hospitalization, known as Medicare Part A, and medical insurance, known as Part B. Most plans also include Medicare prescription drug coverage, and some offer extra coverage, such as vision and gym memberships.

About 15 million people nationwide _ 29 percent of all Medicare beneficiaries _ have opted for Medicare Advantage.

Ellmers, a Republican from Dunn who has become one of the leading House critics of the health care law, claimed in a press release this week that rate adjustments would mean seniors would face higher out-of-pocket costs and limited access to providers. She also said North Carolina’s 460,000 Medicare Advantage enrollees could lose their health insurance plans because of the proposed changes in the amounts the government pays to those plans.

For such a wholesale loss of insurance coverage to occur, as Ellmers suggests, every Medicare Advantage plan in the state would have to react exactly the same way to the rate reductions, an extremely unlikely scenario, according to Marc Steinberg, deputy director of health policy at Families USA, a liberal advocacy group.

“Each plan will behave differently,” he said. “Some plans can absorb these reductions just fine. Others that are unable to provide care at a reasonable cost, well then they need to reassess their business models. That’s not necessarily a bad thing.”

Moreover, the nonpartisan Congressional Budget Office reported last year that Medicare Advantage would continue to grow.

“As we’ve seen over the past few years, efforts to reduce overpayments for medical services have corresponded with falling premiums for consumers,” according to a statement from the federal Centers for Medicare and Medicaid Services.

Since the Affordable Care Act became law in 2010, enrollment in Medicare Advantage has increased nearly 33 percent, the agency said, while premiums have fallen by 10 percent and premiums for Part B have been flat.

The insurance industry, however, says that “another round of payment cuts would be devastating” to people with Medicare Advantage plans, according to Karen Ignagni,, president and CEO of America’s Health Insurance Plan’s (AHIP), the industry trade group.

Ellmers cited a Feb. 27 report by the consulting company Oliver Wyman for the insurance industry that said the 2015 rate changes would lead to benefit reductions and premium increases, costing seniors $35 to $75 per month.

Jack Hoadley, a member of the Medicare advisory commission, said such increases are “not the pattern we’ve seen.” A research professor at the Health Policy Institute at Georgetown University. Hoadley said enrollment in Medicare Advantage has gone up and is now higher than it has ever been.

“It’s hard for me to say from there that we’re going to get dramatic flight away from the plans,” he said.

Ellmers also argued that the 2015 rate reductions will be “on top of the $200 billion that is scheduled to be removed over the next 10 years to pay for Obamacare.”

But the federal health officials have said that the more than $200 billion in savings to Medicare would include about $68 billion from reducing overpayments to private insurers in Medicare Advantage through 2016.

The proposed changes for Medicare Advantage in 2015 are smaller than those put into place in 2014, according to the Medicare and Medicaid agency

Many members of Congress have asked the agency not to raise the rates paid to insurance companies for Medicare Advantage in 2015. Ellmers, a nurse, signed on to such a letter along with other members of the House GOP Doctors Caucus. North Carolina’s senators, Republican Richard Burr and Democrat Kay Hagan, made the same appeal in a letter with 38 other senators earlier in February.

The health care law has been the Republicans’ biggest weapon against Hagan as she seeks re-election this year

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