Adding dental, vision and hearing benefits to traditional Medicare without adjusting Medicare Advantage payments could increase premiums for plans and lower rebates by up to 73%, according to a new insurer industry-funded report.
The analysis released Tuesday by top insurance lobbying group AHIP comes as Congress is considering adding the benefits as part of a $3.5 trillion infrastructure package. Payments to MA plans have also come under increased scrutiny as spending has outpaced traditional Medicare.
AHIP strongly urged the MA benchmark, which determines the payments for plans, to be adjusted if the new benefits are added.
“Asking 27 million Americans to pay for new dental, vision and hearing benefits in lieu of services they affirmatively chose and have come to rely on is unnecessary and unfair,” said Matt Eyles, AHIP’s president and CEO in a statement.
An MA benchmark is calculated based on the historical spending of traditional Medicare in a certain area. Currently, benchmarks are not adjusted to account for the additional benefits, the analysis developed by Wakely Consulting said.
“Excluding these costs from Part C benchmarks would reduce potential [Centers for Medicare & Medicaid Services] expenditures on these new benefits by shifting liability to [Medicare Advantage organizations], and in many cases, beneficiaries (for example, member premiums would increase for plans that had insufficient rebate to cover the cost of the new benefits),” the analysis said.
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Wakely looked at 2021 MA benefit offerings, enrollment, rebate levels, star ratings and premiums to create the analysis.
AHIP added that the new benefits could also affect the amount of rebate dollars that plans get, which are used to fund supplemental benefits like those that tackle social determinants of health.
MA plans submit bids that are compared to the benchmark, and they get a rebate if the bid is lower than the benchmark. MA rebates have been increasing steadily from 2016 through 2020, according to an analysis from the Medicare Payment Advisory Commission, which advises Congress on Medicare.
The report projects that if the benchmark stays the same, plans would have on average between 48 and 73% fewer rebate dollars.
“That amounts to $970-$1,056 a year that senior or person with disabilities would lose in added benefits that close gaps in care, improve health equity, or offset the impact of social factors on people’s health,” a release on the analysis said.
AHIP added that 98% of eligible Medicare beneficiaries have access to an MA plan that offers dental, hearing or vision.
“People also can choose to have coverage for dental, vision and hearing through individual dental policies, Medicare Supplement (Medigap) policies with dental, vision and hearing coverage, employer-provided coverage for working seniors, and the Medicaid program in states where adult dental coverage is provided,” the release said.
It remains unclear whether CMS will agree to change benchmarks if the benefits get added. Democrats are also still speculating how to pay for the $3.5 trillion package and are considering some drug pricing reforms such as giving Medicare the power to negotiate lower prices as a potential pay-for.
The analysis though comes amid increased scrutiny of the gap in spending between MA and traditional Medicare. An analysis from Kaiser Family Foundation discovered that CMS paid $7 billion more on MA than traditional Medicare in 2019.
Part of the reason for the discrepancy was more comprehensive coding of diagnoses to increase beneficiary risk scores and lead to overpayments, Kaiser said.
MedPAC called for changes to MA’s benchmark policy that could lead to a 2% cut in payments to plans.
At the same time, President Biden’s 2022 budget called for reining in MA plan payments to help shore up the Medicare Hospital Insurance Fund set to run out of money by 2024.