Reuters) – The Obama administration on Monday rolled back some of the more controversial cuts proposed for privately managed Medicare health plans used by the elderly following pressure from insurance companies and lawmakers.
The Centers for Medicare and Medicaid Services (CMS) said that on average, reimbursement for such Medicare Advantage plans in 2015 would rise 0.4 percent, reversing what is said was a 1.9 percent average reduction proposed in February.
Analysts were still parsing the numbers, but said that the final decision appeared to be a win for insurers, who along with a broad swath of Republicans and Democrats in Congress had lobbied the government to keep payments level. The proposed cuts had also figured into Republicans’ criticism of President Barack Obama’s healthcare law.
“They were asking for flat (reimbursement) but no one ever thought they would get close to it,” said Ipsita Smolinski, managing director of Capitol Street, a healthcare consulting firm based in Washington, D.C.
“In many parts of the country, including New York, Medicare Advantage works very well. They’ve shouldered their share already and this proposed cut would have been disproportionate, hurting seniors who would lose doctors or pay more. We’re glad the administration heeded our call and reversed the policy,” Democratic Senator Charles Schumer said in a statement. New York has the most Medicare Advantage members in the country.
KEEPING RATES STEADY
Private insurers manage Medicare benefits for about 15 million of the 50 million elderly or disabled Americans eligible for the program. Humana said it was studying the announcement, while other insurance industry officials had no immediate comment.
CMS, part of the U.S. Department of Health and Human Services, said on Monday that it had adjusted several of the factors that had made up the proposed cut for 2015. Insurers’ analysis of the proposed reimbursement rates had estimated the reduction at 4 percent to 7 percent.
My impression is that CMS would like to implement these cuts faster than they are … but they are phasing them in due to political pressure,” said Kim Monk, managing director at Capital Alpha Partners, a public policy research firm.