“It’s President Biden who is proposing to cut Medicare Advantage.”
Sen. Tom Cotton (R-Ark.) in a tweet on February 6, 2023
More than 60 million folks depend on Medicare for well being protection, and elevating the alarm about potential cuts to this system is a perennial speaking level amongst each Republicans and Democrats.
On Feb. 6, Sen. Tom Cotton (R-Ark.) took a swing at President Joe Biden on Twitter after Biden tweeted that House Republicans have been threatening to chop Social Security and Medicare.
“It’s President Biden who is proposing to cut Medicare Advantage, a program used by almost 4 in 10 Arkansas seniors,” Cotton wrote.
It wasn’t clear from Cotton’s tweet which Biden proposal he was referring to, and his workplace didn’t reply to requests for remark.
It’s President Biden who’s proposing to chop Medicare Advantage, a program utilized by virtually 4 in 10 Arkansas seniors. This can be a mistake. https://t.co/2GFxa0AT7z
— Tom Cotton (@TomCottonAR) February 6, 2023
Medicare Advantage insurance policies, administered by means of Medicare-approved personal insurance coverage firms, bundle the standard Medicare program’s separate hospital, medical, and prescription drug protection into one plan.
The plans are non-obligatory and might decrease out-of-pocket prices whereas providing different advantages, together with imaginative and prescient and dental providers, that aren’t included within the authentic Medicare program.
About 28 million folks, or practically half of these eligible for Medicare, have been enrolled in Medicare Advantage plans in 2022, according to KFF.
The Centers for Medicare & Medicaid Services not too long ago introduced two proposed modifications that might have an effect on Medicare Advantage insurers:
- One is a rule change, set to take impact April 3, that’s supposed to extend the federal government’s potential to audit Medicare Advantage plans and get well previous overpayments.
- The different is an annual replace that will modify Medicare Advantage’s danger adjustment mannequin, which determines how a lot the federal government pays insurers for beneficiaries’ reported well being situations.
Health care coverage consultants stated it’s most definitely that Cotton’s tweet was referring to the rule change supposed to extend the federal government’s potential to get well overpayments.
The rule change would return billions of {dollars} to the federal authorities and is more likely to cut back personal insurers’ income, although consultants say the reductions can be minimal in contrast with general spending.
Those firms may, in flip, improve enrollees’ out-of-pocket prices or cut back advantages, consultants stated. But it’s unclear if that can occur.
Meanwhile, the second change — an annual replace to the charges paid to Medicare Advantage insurers — will cut back funds to Medicare Advantage insurers. But the reductions shall be offset by different program modifications which are projected to yield a 1% improve in Medicare Advantage spending per individual in 2024.
A gaggle that lobbies for Medicare Advantage plans despatched a memo to lawmakers that stated proposed modifications would have an effect on 30 million beneficiaries, Politico reported.
What Is the Proposed Rule Change to Medicare Advantage?
The federal authorities pays personal insurance coverage firms for Medicare Advantage per affected person, making changes to the quantities primarily based on the well being of a beneficiary.
The sicker a Medicare Advantage affected person is, the more cash a personal insurer will obtain from the federal authorities to cowl the price of care. Experts stated there’s been a longtime concern that Medicare Advantage insurers have a monetary incentive to establish preexisting situations amongst enrollees.
Auditors from the federal authorities overview medical information to substantiate whether or not sufferers have the ailments that their personal insurers listed, KHN has reported. These audits confirmed that non-public insurers had listed situations for sufferers that might not be verified, leading to tens of millions of {dollars} of overpayments to Medicare Advantage insurers.
When overpayments are recognized, personal insurers should pay again the distinction to the federal authorities.
The administrative rule change that will permit the federal government to recoup overpayments is a brand new model of a rule proposed in 2018, beneath the Trump administration. The closing rule comes after the federal government spent years figuring out the way to establish and get well overpayments, consultants stated.
“The essence of this rule is to set up procedures whereby the Medicare program can recoup the overcharge,” stated Joseph Antos, a well being coverage professional on the American Enterprise Institute, a conservative-leaning suppose tank.
From 2023 by means of 2032, estimates present, the federal authorities will get well $4.7 billion in overpayments from main insurance coverage firms together with Humana, UnitedHealthcare, and Aetna. That cash represents about one-fifth of 1% of federal funds to Medicare Advantage plans throughout that interval, according to Dara Corrigan, director of Medicare’s Center for Program Integrity.
Though the rule change is anticipated to scale back personal medical health insurance firms’ revenues from Medicare Advantage plans, the Department of Health and Human Services doesn’t think about that to be a “cut.”
“Auditing plans and recouping funds puts money back in the Medicare trust funds when big insurance companies get caught taking advantage of the Medicare program,” Kamara Jones, a spokesperson for the division, informed PolitiFact. This is about “holding our seniors’ health care to the standard they deserve.”
CMS can also be required by regulation to make sure correct funds and forestall fraud, waste, and abuse.
Experts stated they might not characterize the rule change as a “cut.”
The federal authorities is trying to keep away from paying greater than it ought to, stated Paul Ginsburg, a senior fellow on the University of Southern California Schaeffer Center for Health Policy and Economics. “To me, that is simply running the program better and more efficiently to protect the integrity of the federal funds being used for it.”
How Will Enrollees Be Affected?
It’s troublesome to find out whether or not Medicare Advantage enrollees will really feel the rule modifications.
“My read of the evidence is that reductions in payments to Medicare Advantage plans are largely borne by the plans themselves, either through lower profits or cost reductions,” stated Matthew Fiedler, a senior fellow with the University of Southern California-Brookings Schaeffer Initiative for Health Policy.
A 2022 evaluation from Avalere, a well being care consulting firm, discovered that the rule change may end in beneficiaries going through larger prices or fewer plan choices or advantages.
Because personal insurers’ income shall be decreased, firms may cross alongside these prices to enrollees in small methods, together with slight will increase in insurance coverage premiums or out-of-pocket prices and, in some circumstances, fewer advantages, the American Enterprise Institute’s Antos stated.
Antos stated he didn’t anticipate drastic value will increase or profit reductions that will encourage enrollees to show to non-Medicare Advantage plans.
CMS estimated that the opposite proposed 2024 updates to the best way Medicare Advantage insurers shall be paid will end in a few 3% discount in funds to Medicare Advantage insurers in 2024. But the company stated that different modifications to the Medicare Advantage program would offset that discount and yield a 1% improve in spending per individual in 2024.
An insurers’ lobbying group stated CMS didn’t present ample details about the way it arrived on the 1% determine. “Consequently, there is no way to validate the accuracy” of that estimate, a spokesperson stated.
The proposed 2024 changes are usually not a minimize, however are a part of “the routine annual process of implementing the law as far as how Medicare Advantage plans are paid,” USC’s Ginsburg stated.
Our Ruling
Cotton stated, “It’s President Biden who is proposing to cut Medicare Advantage.”
Experts stated Cotton possible was referring to a current rule change that permits the federal government to get well overpayments to insurers and is anticipated to scale back insurers’ income. Those firms may, in flip, elevate enrollees’ out-of-pocket prices or cut back advantages. It is unclear whether or not that can occur.
Another proposed change, an annual replace to the charges paid to Medicare Advantage insurers, will cut back funds to insurers. But reductions shall be offset by different modifications which are anticipated to yield a 1% improve in funds to insurers per individual in 2024.
Experts say it’s inaccurate to characterize the modifications as a “cut” to Medicare Advantage. We fee it False.
PolitiFact researcher Caryn Baird contributed to this report.
Sources
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